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A 96 Bitcoin ransom payment ends up on Bitfinex

jpkoning.blogspot.com

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Re: A 96 Bitcoin ransom payment ends up on Bitfinex

#31

Post by nkrisc »

martindevans wrote: post #13
blakesterz wrote: post #2

I know soooo very little about crypto currency, but his idea here makes sense, at least to me, but what do I know. Is it possible to create a registry like this, or is this never going to work? "Given bitcoin traceability and the ease of getting an injunction, one can imagine that it might make sense for insurers, bitcoin exchanges, and over-the-counter traders to build some sort of private "ransom registry". The mom…

What stops fraudulent reports? e.g. 1. I pay you 1 BTC 2. Wait until I receive whatever I paid for 2. Now I tell you to send me 0.5BTC or else I'll report the entire 1BTC as ransom payment. The blacklist is just a new and very powerful tool for additional fraud!

Presumably the registry could also have some mechanism of identifying those making the reports (maybe limited to insurance companies), and not just accept random reports of ransom payments. That makes it less ideal, sure, but it could help prevent the scenario you posed.

Re: A 96 Bitcoin ransom payment ends up on Bitfinex

#32

Post by iguy »

samatman wrote: post #26
ramraj07 wrote: post #23

If Bitcoin isn't granted money status, that would suck. We can't hold downstream buyers accountable for the money. However, I still see this as a good thing; if the hackers did sell 96 Bitcoin to one single buyer, then we can now start a paper trail (or physical evidence) on what the single buyer gave them in return (paper money transfer?)

"We" absolutely can. If one were to sell a sports car in exchange for a pile of marked bills taken from a bank robbery, one would rapidly find oneself in hot water. Receiving stolen goods is a crime.

But where does this stop, legally? (Really asking, I don't know.) If you immediately used these bills to buy a different car, then I imagine that could be reversed. But if you (say) paid your laundromat repair-man his salary with these bills, for the next few years, surely he (and his landlord, and his local grocery store) would be in the clear?

Edit: after reading TFA, this is the crucial point (in English law, I guess): "Banknotes, coins, and other highly-liquid paper instruments have a very special legal status. ... was granted to banknotes centuries ago in order to ensure that ... money remained highly liquid. If every merchant had to verify...". Interesting case.

Re: A 96 Bitcoin ransom payment ends up on Bitfinex

#33

Post by derefr »

michaelt wrote: post #14
aphextim wrote: post #8

Earlier quoted context omitted.

The thing is that 96 bitcoin could be thrown through a mixer of sorts. Take the 96 bitcoin, split it into 96 different addresses with 1 bitcoin, then mix those 96 individual addresses to multiple new addresses and then reassemble them elsewhere. This is a horrible explanation, but explains the general idea. You could also mix from Bitcoin to Monero or another currency and back again through various pairs. There are l…

If we follow the stolen-property example, if a stolen car is broken up and sold as parts, and I buy a widget from it, the fact the car was broken into 96 bits doesn't make the widget any less stolen, no matter how many hands it passes through.

The analogy doesn’t hold.

A car with a stolen part does not, itself, become a stolen car, because there’s a clear division between the part and the car itself. The only thing the police would want to seize as stolen property from you is the stolen part—they’d get you to take it out of your car, and be on their way.

Cryptocurrency is less like car parts, and more like gold: putting the crypto through a mixer is like melting some (unknowingly) stolen gold jewellery into a batch of non-stolen gold, forming new gold bars, and then selling those. Is the whole batch of gold now “tainted” by the stolen gold? Does it all need to be seized as stolen property? If not, then what does need to be seized? An equal shaving of gold from each buyer’s new bar?

If it were possible to figure out which mixer recipient was the original jewellery thief, you could just seize their mixed assets, since those assets should be equal in value to the stolen input assets. But the whole point of a mixer is to destroy that linkage, such that you have no idea who any of the recipients are.

Re: A 96 Bitcoin ransom payment ends up on Bitfinex

#34

Post by rini17 »

JumpCrisscross wrote: post #12
aphextim wrote: post #8

Earlier quoted context omitted.

The thing is that 96 bitcoin could be thrown through a mixer of sorts. Take the 96 bitcoin, split it into 96 different addresses with 1 bitcoin, then mix those 96 individual addresses to multiple new addresses and then reassemble them elsewhere. This is a horrible explanation, but explains the general idea. You could also mix from Bitcoin to Monero or another currency and back again through various pairs. There are l…

> 96 bitcoin could be thrown through a mixer One, mixer output could be, by default, added to the registry as laundering proceeds. Or two, the subunits could be traced through the mixer, thus retaining their black marks.

This may result in tainting large part of bitcoin in circulation.

If someone buys a coffee with tainted coins, is the cafeteria now responsible for querying the registry to reject the transaction? Or it risks to have whole daily turnover, if spent together, end up tainted?

Re: A 96 Bitcoin ransom payment ends up on Bitfinex

#35

Post by GuthL »

mbreese wrote: post #18
spzb wrote: post #5

Earlier quoted context omitted.

Not a cryptocurrency expert either but I suspect there will always be someone willing to launder the cryptocoins for a large enough commission.

How can you launder something with a traceable serial/transaction number? I don’t think it’s possible. The best you can do is mix it with enough other transactions that it becomes murky as to the final destinations. Ex: If half of the bitcoins used to buy a car were fraudulent, would you need to return half the car?

So, it is slightly more complicated than a serial number. In some sense, everytime you make a transaction, you burn all the input coins and creates new coins for the same value, each assign to the respective recepient. Tracking them is not straight forward. Most OTC are not very tech savvy and I can imagine one either being criminal but stupid for bringing it to Bitfinex or simply non criminal but did not do their due diligence and KYC the seller (which is very surprising knowing the space)

Re: A 96 Bitcoin ransom payment ends up on Bitfinex

#36

Post by derefr »

JumpCrisscross wrote: post #12
aphextim wrote: post #8

Earlier quoted context omitted.

The thing is that 96 bitcoin could be thrown through a mixer of sorts. Take the 96 bitcoin, split it into 96 different addresses with 1 bitcoin, then mix those 96 individual addresses to multiple new addresses and then reassemble them elsewhere. This is a horrible explanation, but explains the general idea. You could also mix from Bitcoin to Monero or another currency and back again through various pairs. There are l…

> 96 bitcoin could be thrown through a mixer One, mixer output could be, by default, added to the registry as laundering proceeds. Or two, the subunits could be traced through the mixer, thus retaining their black marks.

Many upstanding people—and even large companies like payment processors!—process their received funds through a mixer “just to be safe”, i.e. to escape any coincidental untoward paper-trail that attaches to their funds two or three steps back.

You know how they say that every US dollar bill has a little cocaine on it? Using your suggestion, every dollar bill would be marked tainted as drug proceeds.

Re: A 96 Bitcoin ransom payment ends up on Bitfinex

#37

Post by stanferder »

londons_explore wrote: post #21

An evildo-er wanting to hide bitcoins has many routes to do so: * A Mixer * gamble on one of many online casinos * buy physical darknet goods with them * Hack someones account on an exchange and use it. * The above, but use the coins to 'pump-n-dump' a tiny altcoin. Be one of many 'investors' making money out of the change in altcoin price. * Go margin trading with them, but make sure to loose them all in a margin ca…

What if governments define every output to a mixer transaction to count as receiving stolen goods if any of the inputs are the result of criminal activity?

Apart from that, every option you suggested just hands the problem off to the next person. Eventually people won't want to transact at all because they don't want to receive tainted bitcoins.

Re: A 96 Bitcoin ransom payment ends up on Bitfinex

#38

Post by samatman »

iguy wrote: post #32
samatman wrote: post #26

Earlier quoted context omitted.

"We" absolutely can. If one were to sell a sports car in exchange for a pile of marked bills taken from a bank robbery, one would rapidly find oneself in hot water. Receiving stolen goods is a crime.

But where does this stop, legally? (Really asking, I don't know.) If you immediately used these bills to buy a different car, then I imagine that could be reversed. But if you (say) paid your laundromat repair-man his salary with these bills, for the next few years, surely he (and his landlord, and his local grocery store) would be in the clear? Edit: after reading TFA, this is the crucial point (in English law, I gu…

The limit is practical, not legal. (IANAL).

In practice, the law is not trying to 'get' people who innocently receive stolen money or goods. In the example you gave, it would be up to prosecutorial discretion what to do; trying to claw back one salary's worth of already-spent money is probably not worthwhile.

But if someone shows up and tries to deposit a couple grand worth of marked bills, they can expect to be taken into a police station for questioning, and should fully cooperate: this makes it unlikely that the penalty will extend further than confiscation of the stolen cash.

The important thing to realize is: if any of this goes to trial, the prosecution only needs to prove that the money is stolen. It doesn't need to prove the receiver knew it was stolen; that's not what the crime is here, that knowledge makes it a worse crime, accessory to robbery.

Re: A 96 Bitcoin ransom payment ends up on Bitfinex

#39

Post by shkkmo »

mbreese wrote: post #18
spzb wrote: post #5

Earlier quoted context omitted.

Not a cryptocurrency expert either but I suspect there will always be someone willing to launder the cryptocoins for a large enough commission.

How can you launder something with a traceable serial/transaction number? I don’t think it’s possible. The best you can do is mix it with enough other transactions that it becomes murky as to the final destinations. Ex: If half of the bitcoins used to buy a car were fraudulent, would you need to return half the car?

If bitcoin is not treated as legal currency, then the person you bought the car from would be required to return half the coins you have them to the original owner as they would qualify as stolen property.

This risk would have to be managed by contracts, insurance, and/or quick exchange for safer assets.

Re: A 96 Bitcoin ransom payment ends up on Bitfinex

#40

Post by penagwin »

iguy wrote: post #32
samatman wrote: post #26

Earlier quoted context omitted.

"We" absolutely can. If one were to sell a sports car in exchange for a pile of marked bills taken from a bank robbery, one would rapidly find oneself in hot water. Receiving stolen goods is a crime.

But where does this stop, legally? (Really asking, I don't know.) If you immediately used these bills to buy a different car, then I imagine that could be reversed. But if you (say) paid your laundromat repair-man his salary with these bills, for the next few years, surely he (and his landlord, and his local grocery store) would be in the clear? Edit: after reading TFA, this is the crucial point (in English law, I gu…

Well there's two ways you can be in trouble. The first is if you knew the money was stolen, then you can go to jail. The second is if you didn't know it was stolen but it's then seized - leaving you with no money.

As for your example I'm not sure. Said repairman would unlikely be in legal trouble, but I don't know if the money would be seized or not.

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