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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

#121

Post by cinquemb »

vkou wrote: post #40
abetusk wrote: post #17

Earlier quoted context omitted.

It's the difference between pseudonymity and anonymity. Saying that I've transferred B bitcoin to identity A doesn't tie that identity to a "real" person, it just says whoever holds A's identity (secret keys) can do other transactions with the bitcoins A holds. In practice this gets complicated as some exchanges require a valid government ID (drivers license say) and that's why these so-called "tumbling" services spr…

> Presumably even sending bitcoin from an identity that's tied to your meat space identity directly to another identity that you create provides a layer of protection. But then any transaction from your second, secret identity that compromises you will retroactively compromise all other transactions made from that identity. Your opsec has to consistently be perfect.

This is true, which is why it makes sense that one would throw away one's secret identity (and creating another) after each and every transaction to mitigate agaisnt this.

Not to say one is in the clear even if they do such, because as some say, metadata kills…

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

#122

Post by smichel17 »

home_boi wrote: post #109
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…

From the utilitarian perspective, what is the point of financial privacy (from the government)? It looks like money laundering and purchases of illegal substances seem to be the biggest "benefits". Those are benefits that aren't beneficial to the government or the people that are governed.

Spending habits can reveal a ton of information about a person. At that point, financial privacy has the same justification as encrypted communication or any other kind of privacy: protecting people from Government overreach. Knowledge is power.

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

#123

Post by yorwba »

ryanlol wrote: post #93
ramchip wrote: post #87

Earlier quoted context omitted.

But why? Was it dirty money somehow?

Nah, I was charged with other crimes (none of which had a financial incentive, according to LE or the courts). While at it they "subpoenad" my bank account history, saw a bunch of wires from normal European exchanges and then one wire from a Chinese account. Never cared to ask about the European ones (I verified that they didn't ask the exchanges directly either.), but the Chinese one was apparently particularly inte…

Can you give more information about the crimes you were charged with?

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

#124

Post by ryanlol »

yorwba wrote: post #123
ryanlol wrote: post #93

Earlier quoted context omitted.

Nah, I was charged with other crimes (none of which had a financial incentive, according to LE or the courts). While at it they "subpoenad" my bank account history, saw a bunch of wires from normal European exchanges and then one wire from a Chinese account. Never cared to ask about the European ones (I verified that they didn't ask the exchanges directly either.), but the Chinese one was apparently particularly inte…

Can you give more information about the crimes you were charged with?

Pretty boring.

50700 counts of aggravated unauthorized access to computer systems for making some scripts to drop a bot on lots of coldfusion site. Incl https://news.ycombinator.com/item?id=5552756

1 count of the same https://news.ycombinator.com/item?id=6637426

1 of the same + bonus charge for possibly starting a SMTP server on the domain https://news.ycombinator.com/item?id=5098218

Credit card fraud for sharing some cards on IRC and unsuccessfully trying to use a few.

Money laundering for receiving a wire of ~6.5k euros from China.

There might be something more, but that's all I can remember for now. Mostly pretty silly things anyway.

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

#125

Post by MichaelGG »

curun1r wrote: post #108
MichaelGG wrote: post #82

Earlier quoted context omitted.

If you illegally sell $10 worth of drugs, then record your front store of selling $10 of Tylenol (that you don't actually buy or sell) then the $10 of drug money has been fully taxed.

There's taxes from the supply chain of Tylenol that don't get paid when it's $10 in illegal drugs that are actually sold. Much like Bitcoin, with a black market you can only tax at the egress points when the money needs to touch a regulated financial entity whereas an all-legal system can tax any time money changes hands.

Certainly that's someone else's crime, and they need to launder their own proceeds.

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

#126

Post by MichaelGG »

ryanlol wrote: post #124
yorwba wrote: post #123

Earlier quoted context omitted.

Can you give more information about the crimes you were charged with?

Pretty boring. 50700 counts of aggravated unauthorized access to computer systems for making some scripts to drop a bot on lots of coldfusion site. Incl https://news.ycombinator.com/item?id=5552756 1 count of the same https://news.ycombinator.com/item?id=6637426 1 of the same + bonus charge for possibly starting a SMTP server on the domain https://news.ycombinator.com/item?id=5098218 Credit card fraud for sharing som…

Wait, you're HTP Ryan?

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

#127

Post by yorwba »

ryanlol wrote: post #124
yorwba wrote: post #123

Earlier quoted context omitted.

Can you give more information about the crimes you were charged with?

Pretty boring. 50700 counts of aggravated unauthorized access to computer systems for making some scripts to drop a bot on lots of coldfusion site. Incl https://news.ycombinator.com/item?id=5552756 1 count of the same https://news.ycombinator.com/item?id=6637426 1 of the same + bonus charge for possibly starting a SMTP server on the domain https://news.ycombinator.com/item?id=5098218 Credit card fraud for sharing som…

I realize now that I somehow misparsed your comment as saying that you had been charged for other crimes as a result of that transaction, but when rereading it now, the causality is actually in the opposite direction. I guess once they had a solid case for one, they just threw in everything else they found suspicious? Thanks for being so open.

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

#128

Post by [deleted] »

MichaelGG wrote: post #126
ryanlol wrote: post #124

Earlier quoted context omitted.

Pretty boring. 50700 counts of aggravated unauthorized access to computer systems for making some scripts to drop a bot on lots of coldfusion site. Incl https://news.ycombinator.com/item?id=5552756 1 count of the same https://news.ycombinator.com/item?id=6637426 1 of the same + bonus charge for possibly starting a SMTP server on the domain https://news.ycombinator.com/item?id=5098218 Credit card fraud for sharing som…

Wait, you're HTP Ryan?

[deleted]

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

#129

Post by ryanlol »

yorwba wrote: post #127
ryanlol wrote: post #124

Earlier quoted context omitted.

Pretty boring. 50700 counts of aggravated unauthorized access to computer systems for making some scripts to drop a bot on lots of coldfusion site. Incl https://news.ycombinator.com/item?id=5552756 1 count of the same https://news.ycombinator.com/item?id=6637426 1 of the same + bonus charge for possibly starting a SMTP server on the domain https://news.ycombinator.com/item?id=5098218 Credit card fraud for sharing som…

I realize now that I somehow misparsed your comment as saying that you had been charged for other crimes as a result of that transaction, but when rereading it now, the causality is actually in the opposite direction. I guess once they had a solid case for one, they just threw in everything else they found suspicious? Thanks for being so open.

>I guess once they had a solid case for one, they just threw in everything else they found suspicious?

Yep, it tends to be an easy extra charge to slap on anyone who isn't keeping very good books.

As MichaelGG said, a fake crime.

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

#130

Post by t0mbstone »

swinglock wrote: post #27
ineedasername wrote: post #8

This is what I never understood about bitcoins's reputation, especially earlier on, about its supposed anonymity. I suppose that's much less the case now. But it always seemed odd that people considered it at all anonymous when the blockchain kept a record of everything. Sure it might not be immediately identifiable with a specific individual, but unless it was a wholly closed system, entry & exit points would always…

Bitcoin was not designed to be anonymous but this seems to be really difficult to grasp. You don't even have to scratch the surface of Bitcoin to learn that at its core Bitcoin is a distributed ledger, powered by the "blockchain" which is open book for anyone to follow every transaction ever made. This is not a separate tracking system, it's the very fundamentals of how Bitcoin is able to function and it makes no eff…

Bitcoin can be anonymous. All you have to do is mine the coins while you are on an anonymous internet connection (such as tor and a public wifi hotspot).

Another way for bitcoins to be anonymous is to use a "mixer". If you send your coins to a very large wallet (that contains a lot of money owned by a lot of other people), and then whoever controls that wallet then distributes those coins to a bunch of other newly created addresses (which you control the keys for), then there would be no way to tell whose money was sent to those wallets. It might be your money. It might be a thousand other people's money. This is called bitcoin laundering.

Transactions are always traceable, though. People might think their bitcoins are safe and anonymous, but then they use their own personal computer on their own personal internet connection to actually spend the bitcoins on something illegal. Guess what? News flash! The NSA and who knows how many other government agencies have been monitoring internet traffic since the 90s! Ever heard of Carnivore? How about NarusInsight? Do you honestly think they can't track P2P traffic? Do you honestly think that your P2P bitcoin spending transaction can't be traced back to your IP and to your address? They can probably track a lot of Tor traffic, too.

The only way bitcoin is anonymous is if someone keeps every single step of the entire process anonymous. Mining/purchasing has to be anonymous. Storage has to be anonymous (no third party wallets). Using an exchange has to be anonymous (good luck with that). Selling the coin (or purchasing something with it) has to be anonymous. The chain is only as strong as its weakest link, and each link has many potential attack vectors.

For example, you might think you are using a perfectly safe bitcoin "mixer" service, but for all you know, the feds are actually the ones operating the mixer service, and are tracing every single transaction from start to end.

So yeah. The long and short of it is that Bitcoin is heavily monitored and traced, which is why the government allows it to exist.

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