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The rise of crypto laundries: how criminals cash out of Bitcoin

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Re: The rise of crypto laundries: how criminals cash out of Bitcoin

#41

Post by exo762 »

m00dy wrote: post #13

I can tell one of the ways that is missing in the article. Let's say, you have a lot of Bitcoins and your buddy is a bitcoin miner. You craft your transaction such a way that you put all your coins as transaction fee. You send your transaction only to your buddy. Your buddy picks it up and solves the puzzle afterwards. Fees will be converted to brand new coins.

You can still trace the money by looking at the block explorer. All you did is thrown them in coinbase address. This is no different from coinjoin.

Re: The rise of crypto laundries: how criminals cash out of Bitcoin

#42

Post by koheripbal »

m00dy wrote: post #13

I can tell one of the ways that is missing in the article. Let's say, you have a lot of Bitcoins and your buddy is a bitcoin miner. You craft your transaction such a way that you put all your coins as transaction fee. You send your transaction only to your buddy. Your buddy picks it up and solves the puzzle afterwards. Fees will be converted to brand new coins.

Your "buddy" would have to be a large mining pool for this to work, and even then it would be noticeable on the blockchain that this happened.

Worst idea to launder ever.

Re: The rise of crypto laundries: how criminals cash out of Bitcoin

#43

Post by danlugo92 »

helsinkiandrew wrote: post #10
pibechorro wrote: post #4

Probably easier for any serious criminal to just deal in cash and make deposits at the big banks, they have a long history of taking cartel money.

But cash isn't that useful if you're holding a company to ransom on the other side of the world. And normal bank transfers are very traceable. Banks need to report any transactions greater than $10K (or a series of smaller transactions that make up $10K). The consequences of a bank not reporting far exceed any profit they would make from it.

If you show up at the correct bank with a $1million briefcase you will be taken to a closed office and they will serve you.

Re: The rise of crypto laundries: how criminals cash out of Bitcoin

#44

Post by Taek »

flotzam wrote: post #33
m00dy wrote: post #13

I can tell one of the ways that is missing in the article. Let's say, you have a lot of Bitcoins and your buddy is a bitcoin miner. You craft your transaction such a way that you put all your coins as transaction fee. You send your transaction only to your buddy. Your buddy picks it up and solves the puzzle afterwards. Fees will be converted to brand new coins.

Brand new coins, but wouldn't they still look suspicious if the block's coinbase is outlandishly large?

Also you'd be able to see which transaction paid the large fee and what the history is.

Might go unnoticed if the original coins weren't suspicious, but if an investigator is already looking at the original transaction because they suspect it was involved in crime, this type of jump is unlikely to throw them off the trail.

Re: The rise of crypto laundries: how criminals cash out of Bitcoin

#45

Post by tudorizer »

lifeisstillgood wrote: post #37

I am fascinated by the rise of 'chain analysis' companies - that started as 'aint it fun' and became 'hey we can help the cops track ransomware' quite quickly. The thing that fascinates me is ... we could do (very similar) analysis on "normal" bank accounts - on a much larger scale but still. I wonder how much criminal activity would be revealed?

Well, on "normal" bank accounts you would be hit by international policies and cover-ups, while on public ledgers, the only barrier is the tech.

Re: The rise of crypto laundries: how criminals cash out of Bitcoin

#46

Post by exo762 »

MikeDelta wrote: post #39
ccity88 wrote: post #14

I get that money laundering is always linked to criminal activity, but how have we always just accepted the lack of personal privacy when it comes to finance? Privacy is a feature, not a bug; and whilst crypto may not be the way forward, I hope one day we can reach a solution that has both privacy and also safety. The language used by law enforcement is quite alarming, it suggests that they should be privy to ALL tra…

I understand your point. However, privacy cannot shield one from tax and legal obligations. It is not just the proceeds from criminal activities, but also tax evasion (from the rich or companies) and terrorism financing.

You can use cryptocurrency which hides all of your transactions (like zcash) and pay your taxes as a law abiding citizen. There is no conflict here. Tax systems rely on citizens reporting anyway.

Re: The rise of crypto laundries: how criminals cash out of Bitcoin

#47

Post by danlugo92 »

Cthulhu_ wrote: post #23
wesleywt wrote: post #17

Why go through all that trouble when regular banks already launder cash for you.

Do explain, because I don't believe you actually know how banks work. Banks will flag up dubious transactions - uncommon large ones, frequent smaller ones, a sudden stop or start in transactions, etc. They've got big fraud (and money laundering) prevention teams on there, currently using machine learning to detect suspicious activity. I mean there's bound to be laundering going on via banks, but it's risky. Heard abo…

The biggest tax haven on earth is the United States, but they only serve you if you 1) are not american 2) are not citizen of the few countries they have tax treaties with.

Re: The rise of crypto laundries: how criminals cash out of Bitcoin

#48

Post by kd913 »

ccity88 wrote: post #14

I get that money laundering is always linked to criminal activity, but how have we always just accepted the lack of personal privacy when it comes to finance? Privacy is a feature, not a bug; and whilst crypto may not be the way forward, I hope one day we can reach a solution that has both privacy and also safety. The language used by law enforcement is quite alarming, it suggests that they should be privy to ALL tra…

Data can be stored, transparent but open for legitimate purposes. I don't think it's a good idea to go to the other extreme for complete anonymity in a case like this whether the consequences result in massive criminal activities.

E.G. I trust my medical data to my doctor with some reasonable confidence they are using it responsibly.

Same thing here, I can trust my financial institutions with my data, but I want it to be open to authorities to look for criminal activity. I would ideally like that data to be placed under some legislation a la the GDPR to ensure it's used responsibly.

To be clear, I would much rather my data be sold to some advertisers than for corruption/criminal activity to exist.

Re: The rise of crypto laundries: how criminals cash out of Bitcoin

#49

Post by mattmanser »

Cthulhu_ wrote: post #23
wesleywt wrote: post #17

Why go through all that trouble when regular banks already launder cash for you.

Do explain, because I don't believe you actually know how banks work. Banks will flag up dubious transactions - uncommon large ones, frequent smaller ones, a sudden stop or start in transactions, etc. They've got big fraud (and money laundering) prevention teams on there, currently using machine learning to detect suspicious activity. I mean there's bound to be laundering going on via banks, but it's risky. Heard abo…

I assume he's alluding to the recent banking scandals of money laundering by big players like HSBC.

Re: The rise of crypto laundries: how criminals cash out of Bitcoin

#50

Post by Taek »

alcio wrote: post #29
mgerullis wrote: post #18

Earlier quoted context omitted.

Is it possible to send out transactions without sending them to the mempool?

yes, you can email it to your miner buddy. it's possible to spot such transactions if they violate transaction forwarding rules (aka standardness rules) but not consensus rules. for example, a transaction greater than 100kB is not standard but still valid.

Law enforcement watches the mempool, they can spot such transactions anyway because they know it didn't ever show up in their mempool logs.
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