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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

#71

Post by allovernow »

GBiT wrote: post #70

I think this year we will see the first international orders to miners do not process some addresses and freeze that coins. I know a lot of here thinks, that it's not possible, but bitcoin has only a few big miners. And if they will get orders they will have to comply or fight it in courts. It's not possible to mine anonymously, because you need hundreds of millions to invest into miners and a lot of power.

I imagine it isn't impossible to rent a warehouse under some shell company and fill it with mining hardware in a random non-us country without anyone knowing the owners' identities.

Re: A 96 Bitcoin ransom payment ends up on Bitfinex

#72

Post by MockObject »

samatman wrote: post #46
samatman wrote: post #38

Earlier quoted context omitted.

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 take…

Apparently the actual answer (I did say I'm not a lawyer!) is "it depends". https://en.wikipedia.org/wiki/Possession_of_stolen_goods The state-level standard appears to vary, the most common case is 'should have known', rather than 'knew for a fact'. With Bitcoin, where all transactions are a matter of public record, I'd hazard that 'should have known' is baked-in. It will be interesting to see what case law is estab…

> With Bitcoin, where all transactions are a matter of public record, I'd hazard that 'should have known' is baked-in.

Who should have known what? After receiving any bitcoin (can't be before!) everyone is obliged to figure out if the coin came from a ransomware attack? How? And what do they do if some of the coin was so tainted?

Re: A 96 Bitcoin ransom payment ends up on Bitfinex

#73

Post by PeterisP »

age_bronze wrote: post #67

Is ransom payment even considered "stolen" in the usual sense? You have willingly paid that, nobody took that from you without permission. I wouldn't be surprised if ransom has it's own different definition. Forcing an innocent to hand over bitcoins they had no clue they were tainted will make everyone lose trust in bitcoin and cryptocurrencies in general. What's the point of anonymity when trading when you're culpab…

For large amounts such as this one IMHO the key issue is that the recipient can be questioned about the source of the BTC - are they themselves related to the actual crime in question? And searched for evidence of the same.

If they're innocent, they will generally be able to identify the counterparty to whom they sold the goods or services valued at close to $1M, and the goods&services may then lead to the culprit; because (here's the thing) if they "just" did a fully anonymous $1M cash or cash-equivalent transaction, then they're not really innocent in many jurisdictions, because for large amounts money laundering laws generally (nuances depend on country) require you to identify the other party or not do it. Selling something anonymously for $10 in cash is innocent, but selling something intentionally anonymously for $1M in cash (or BTC) generally is a crime of money laundering by itself, no matter where the money came from.

The original article assumes (with no grounding, but just as an example) that the 'innocent recipient' might be some over-the-counter broker. That broker is legally required to 'know your customer'. And if they don't know their customers, well, then they're not innocent and deserve to lose their money.

The same applies to Bitfinex itself - they're required to know from whom they got these 96 BTC. If they don't, well, it's their problem, why not fine them the equivalent of 96 BTC or more for that.

Re: A 96 Bitcoin ransom payment ends up on Bitfinex

#74

Post by PeterisP »

rini17 wrote: post #34
JumpCrisscross wrote: post #12

Earlier quoted context omitted.

> 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?

I'not saying that it's going to happen, but it certainly seems plausible to have laws that merchants who violate some blacklist forfeit their daily turnover, there are existing laws with much, much harsher consequences.

Re: A 96 Bitcoin ransom payment ends up on Bitfinex

#75

Post by mceoin »

I wonder how this would go down in Australia. Precedent set from Gamer's vs Natwest is that the buyer retains ownership rights, so long as they purchased the product in good faith that the seller owned the original product or had the right to sell it. So if I buy your stolen car without knowing it is actually yours and was stolen, I retain ownership of the car and you have no legal remedy to retrieve it from me.

https://jade.io/article/67364

Re: A 96 Bitcoin ransom payment ends up on Bitfinex

#76

Post by hiisukun »

age_bronze wrote: post #67

Is ransom payment even considered "stolen" in the usual sense? You have willingly paid that, nobody took that from you without permission. I wouldn't be surprised if ransom has it's own different definition. Forcing an innocent to hand over bitcoins they had no clue they were tainted will make everyone lose trust in bitcoin and cryptocurrencies in general. What's the point of anonymity when trading when you're culpab…

A quick test for "willingly" as you put it, is not due to force, fraud, or fear.

I would think that a ransom situation would likely qualify as some type of duress. Deciding whether the criminal act is "theft" (ie. stolen) or "fraud" or something else is probably missing the point.

And certainly, some aspect in the exchange (pay money for this encryption key) did not involve permission: the encryption of the files!

But, how to restore things after a wrong has occurred? I agree with your point that there is a risk of committing a greater wrong against an innocent party. Hence the special protections of currency as a unique type of property in the article. Does bitcoin fit this model? An interesting discussion!

Re: A 96 Bitcoin ransom payment ends up on Bitfinex

#77

Post by PeterisP »

Jach wrote: post #60
stanferder wrote: post #37

Earlier quoted context omitted.

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.

Thus the concept of 'tainted bitcoins' isn't likely to last very long, if bitcoin is to continue to be used at all, especially when the creation of new bitcoins keeps going down. This is similar to nearly all paper currency having trace amounts of cocaine et al. on it. ( https://en.wikipedia.org/wiki/Contaminated_currency#In_the_U... ) If people no longer did trades involving cash with such traces, cash payments woul…

If using mixers as such is made explicitly illegal (it's not yet anywhere as far as I know, but it could change), there's no need to have some particular BTC tainted forever because we can follow the money trail.

Let's suppose we see some nontrivial amount (so, not $100 but $100k) of BTC being cashed out to dollars or by buying some legal goods, and we see that this BTC recently passed through a mixer. KYC means that the exchange or merchant will identify "oh, that's Bob". And we can ask Bob - well, where did that money came from? And either he can provide some evidence that he got that money in a legitimate transaction from Charlie (who can then be processed in the same manner), or he can be convicted either of (a) using a mixer if he did so himself; (b) violating money laundering laws by doing large anonymous transactions if he did get money from some 'Charlie' that can't be identified; or (c) violating money laundering laws by refusing to disclose the source of these large cash-like payments.

It's not as simple and some particular nuances of the existing laws would need to be adjusted to make this process work, but that's something governments could and would do.

Not for small amounts that can obviously be laundered easily and nobody cares about that, but it would be quite plausible to ensure that no legit organization would touch a million dollars worth of BTC without ensuring a proper paper trail of how it got there; and anybody intentionally passing 100 BTC through a mixer would just make it difficult for themselves to spend those 100 BTC - because every recipient of large amounts will ask for a proper source for your funds, and a mixer is not one.

Re: A 96 Bitcoin ransom payment ends up on Bitfinex

#78

Post by zelon88 »

Canada wrote: post #45

There already is such tracking going on, exchanges do freeze balances sometimes. The problem is that if the stolen coin gets traded before exchanges can freeze them you wind up with a lot of innocent people holding those coins and it's not practical to freeze those later. Consider these two scenarios: A stolen bike vs a stolen sack of coffee. In the case of the bike, if you can find it you can take it back from someo…

Your coffee bean analogy isn't sound.

If someone steals a 50lb bag of beans and sells them to me, I am now in possession of 50lbs of stolen property. If I sell 25lbs of the beans before the police catch me, they will confiscate the remaining 25lbs of beans and those beans become evidence. Then I will go to jail for receiving stolen property. Then the victim will sue me in civil court for reimbursement of 50lbs of beans.

Just because you can flip something that's stolen doesn't mean it's gone forever. The victim in either case doesn't care which beans or coins they get. They just want the value of n coins. You could probably skip giving him any coins at all and just reimburse him a dollar amount for the value of his property.

Re: A 96 Bitcoin ransom payment ends up on Bitfinex

#79

Post by rahimnathwani »

Canada wrote: post #45

There already is such tracking going on, exchanges do freeze balances sometimes. The problem is that if the stolen coin gets traded before exchanges can freeze them you wind up with a lot of innocent people holding those coins and it's not practical to freeze those later. Consider these two scenarios: A stolen bike vs a stolen sack of coffee. In the case of the bike, if you can find it you can take it back from someo…

You said "Bitcoin works like the coffee example not the bike." after "Now you can't identify your distinct stolen coffee anymore."

But you can identify distinct stolen/tainted Bitcoin. Just like you can identify distinct stolen banknotes.

The difference (according to the article) is that banknotes have special legal status meaning that they're effectively fungible after being spent.

Re: A 96 Bitcoin ransom payment ends up on Bitfinex

#80

Post by nybble41 »

nradov wrote: post #69
age_bronze wrote: post #67

Is ransom payment even considered "stolen" in the usual sense? You have willingly paid that, nobody took that from you without permission. I wouldn't be surprised if ransom has it's own different definition. Forcing an innocent to hand over bitcoins they had no clue they were tainted will make everyone lose trust in bitcoin and cryptocurrencies in general. What's the point of anonymity when trading when you're culpab…

Yes wrecking trust in cryptocurrencies would be an excellent outcome for everyone. And there is no true anonymity (never has been).

"Forcing an innocent to hand over bitcoins they had no clue they were tainted" shouldn't wreck trust in cryptocurrencies, but rather in the organization unjustly harming those innocents—i.e. the government. If anything the fact that they had to track down each individual recipient and force them to transfer the funds, rather than simply pressuring some bank or other intermediary, ought to increase trust in cryptocurrencies.
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