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Why the feds took down one of Bitcoin’s largest exchanges

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Re: Why the feds took down one of Bitcoin’s largest exchanges

#111

Post by TheCoelacanth »

jnbiche wrote: post #98
TheCoelacanth wrote: post #86

Earlier quoted context omitted.

Under US law, no. Money laundering requires the intent to conceal the origin of proceeds from certain specific unlawful activities or to avoid financial reporting requirements. Hiding the origin of lawfully obtained money is legal.

This is absolutely not true, at least in the US. If you are a business that transmits even 100% lawful funds without registering with FINCEN and registration as a MSB in your jurisdiction, you can and will be charged with money laundering.

That would only be if you used the tumbler for the purpose of avoiding financial reporting requirements.

Simply using a tumbler is not illegal.

For instance, if someone used legally obtained money to buy bitcoin, put them through a tumbler, then used the bitcoin to buy drugs. That would not be money laundering because it does not hide the proceeds of a crime or avoid any financial reporting requirements.

On the other hand, if the drug dealer took the bitcoin that they were paid with and put it through a tumbler, that would be money laundering because they would be hiding the origin of the proceeds from selling drugs.

Re: Why the feds took down one of Bitcoin’s largest exchanges

#112

Post by 21 »

microsage wrote: post #35

> The language in the indictment about BTC-e’s “criminal design” mimics the indictment against Liberty Reserve — an anonymous currency service taken down by law enforcement in 2013 — which also accused the online exchange of having a “criminal design” and a system “designed so that criminals could effect financial transactions under multiple layers of anonymity.” Basing the indictment on the intent of the design - so…

There is no such thing as privacy from the state when dealing with money.

I don't know your salary and income, you don't know mine, but the state wants to know this for everybody.

This is the law of the land pretty much anywhere, and any large scale operations which try hiding this from the state (not from you and me) will be in trouble.

So if you don't do the KYC/AML thing, that can be called "criminal by design" since KYC/AML is kind of universal in the western world (including Bulgaria/Cyprus/BVI)

Re: Why the feds took down one of Bitcoin’s largest exchanges

#113

Post by SAI_Peregrinus »

FRex wrote: post #30

>Money laundering is the process of transforming the profits of crime and corruption into ostensibly "legitimate" assets. >A cryptocurrency tumbler is a service offered to mix potentially identifiable or 'tainted' cryptocurrency funds with others, with the intention of confusing the trail back to the fund's original source. English might not be my native language but I can see lots of parallels. I never actually cons…

One minor difference with Bitcoin is that there are no serial numbers. Every bitcoin is identical to every other bitcoin. The blockchain tracks transaction source, destination, and amount, but there's no way to identify a specific bitcoin. Such a concept is actually meaningless, there are no bitcoins, just transactions.

This means that when a mixer or exchange wallet gets the bitcoins they can't be individually tracked anymore. This doesn't really matter in practice since all transactions are public.

Re: Why the feds took down one of Bitcoin’s largest exchanges

#114

Post by 21 »

necessity wrote: post #64

Aside from theft - of which the only evidence is money passing through the wallet of people associated with him - it seems that no crime was committed. Another attack on Bitcoin, and the war on drugs continues to kill more than the drugs themselves.

Like it or not, the lack of KYC/AML is in itself a crime. Maybe you should rephrase "Nothing which I would consider a crime happened"

Re: Why the feds took down one of Bitcoin’s largest exchanges

#115

Post by 21 »

honestlyreally wrote: post #26
chx wrote: post #22

> There are many legitimate uses of Bitcoin What are those. I have claimed here and will repeatedly do so -- there are none. I mean, sure, there are a few companies which integrate the sell-your-bitcoins-buy-our-product in one go but the volume of that is near irrelevant. And no, international transfers do not count as a usage because not only the sender needs to buy bitcoins the seller needs to sell them too...

Very bizarre to state the obvious use cases, then nullify it with handwaving. The current cost to move $10m of bitcoin across international borders is about $1. Attempt the same via conventional means and you'll quickly realise it's benefits go beyond monetary efficiency. As for current working use cases Factom[0] stores an auditable timestamped data trail in a merkle tree structure, which is then anchored into the b…

I agree with you that bitcoin is a terrific innovation, with many use cases.

But at the moment moving $10m through bitcoin is not one of them.

For one, I don't need to be an op-sec expert to ensure that my money doesn't just vanish because I made a mistake or something was hacked somewhere.

Re: Why the feds took down one of Bitcoin’s largest exchanges

#116

Post by freddie_mercury »

honestlyreally wrote: post #26
chx wrote: post #22

> There are many legitimate uses of Bitcoin What are those. I have claimed here and will repeatedly do so -- there are none. I mean, sure, there are a few companies which integrate the sell-your-bitcoins-buy-our-product in one go but the volume of that is near irrelevant. And no, international transfers do not count as a usage because not only the sender needs to buy bitcoins the seller needs to sell them too...

Very bizarre to state the obvious use cases, then nullify it with handwaving. The current cost to move $10m of bitcoin across international borders is about $1. Attempt the same via conventional means and you'll quickly realise it's benefits go beyond monetary efficiency. As for current working use cases Factom[0] stores an auditable timestamped data trail in a merkle tree structure, which is then anchored into the b…

I have moved USD across international borders hundreds of times for free. Every international bank supports it.

The same is probably true of EUR but I have no experience with it.

You have mixed transferring a currency with converting one currency into another. You meant transferring $10m of USD to EUR isn't free. Which is true. But neither is converting $10m of Bitcoin to Ethereum.

Re: Why the feds took down one of Bitcoin’s largest exchanges

#117

Post by rvern »

closeparen wrote: post #104
MichaelGG wrote: post #51

Earlier quoted context omitted.

It's privacy. Money laundering is a fake crime and propaganda by governments with prosecutors unable to find real crime. It's as bad as calling copyright infringement "theft" or even "piracy", though the later term has been pretty watered down. Or how banks push the idea of "Identity theft" as if someone stole your identity versus the bank failing to verify your identity. We don't call encryption "information launder…

This is pretty easy to reason about: the electorate benefits from information privacy more than it could benefit from thought police. The electorate would benefit less from total financial privacy than it does from the ability to enforce taxes and civil judgements.

> The electorate would benefit less from total financial privacy than it does from the ability to enforce taxes and civil judgements.

I'm not so sure about that.

Re: Why the feds took down one of Bitcoin’s largest exchanges

#118

Post by wcummings »

rkowalick wrote: post #47
ethbro wrote: post #16

Earlier quoted context omitted.

Randomly swapping coins is an attempt to address anonymity. https://en.m.wikipedia.org/wiki/Cryptocurrency_tumbler

This is basically money laundering, right?

It's only money laundering if the source of coins is illicit. You can legally tumble clean coins all day long.

Re: Why the feds took down one of Bitcoin’s largest exchanges

#119

Post by jnbiche »

TheCoelacanth wrote: post #111
jnbiche wrote: post #98

Earlier quoted context omitted.

This is absolutely not true, at least in the US. If you are a business that transmits even 100% lawful funds without registering with FINCEN and registration as a MSB in your jurisdiction, you can and will be charged with money laundering.

That would only be if you used the tumbler for the purpose of avoiding financial reporting requirements. Simply using a tumbler is not illegal. For instance, if someone used legally obtained money to buy bitcoin, put them through a tumbler, then used the bitcoin to buy drugs. That would not be money laundering because it does not hide the proceeds of a crime or avoid any financial reporting requirements. On the other…

> Simply using a tumbler is not illegal.

Right, but operating a tumbler without FINCEN registration and a MSB license is illegal. Even if the money put through it is entirely legal.

Re: Why the feds took down one of Bitcoin’s largest exchanges

#120

Post by jnbiche »

MichaelGG wrote: post #106
konschubert wrote: post #89

Earlier quoted context omitted.

It is only money laundering if is done with money that is the result of a crime. Just like a trader is only a fence when he trades stolen good. Therefore, by definition, money laundering is assisting a crime. If the crime had a victim, then, by proxy, laundering the money of the crime is not victimless either.

Simply not true. Look up Hawala, a money transfer system that's been around for over 1000 years. Use it in the US and be prepared to deal with money laundering charges, regardless of the lack of crime. Or just try having your small business make repeated $9000 deposits of completely legit and clean money. Money laundering is now about not reporting all your financial movements to the government. It's surpassed the ev…

> Money laundering is now about not reporting all your financial movements to the government.

It's surprising how many people are unaware of this, even on a forum composed of fairly informed people like HN.

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