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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

#191

Post by StanislavPetrov »

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…

>The language used by law enforcement is quite alarming, it suggests that they should be privy to ALL transactions made, regardless of reasonable suspicion.

Unfortunately this is exactly their position, which they have made quite clear - and it isn't limited to financial transactions. Its the same line of "reasoning" they use to decry the use of encryption. They want to eliminate the concept of privacy all together and be privy to all of your transactions, communications and behavior to ensure nobody is "breaking the law". This was the whole idea behind the Orwellian "Total Information Awareness" program that was so obviously antithetical to freedom that the government was forced to change the name (while continuing to develop the program). In my opinion its far better to live in a free society where we are legally entitled to privacy and a few bad actors get away with crimes than the alternative.

https://en.wikipedia.org/wiki/Total_Information_Awareness

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

#192

Post by jack_pp »

vmception wrote: post #150
DennisP wrote: post #143

Earlier quoted context omitted.

There's little practical difference between: a) I give you my wallet, and you immediately send the coins to a new address to protect against my (potential) copy of the wallet, or b) I just send the coins to your new address myself. Either way, the blockchain records a transfer from my address to your new address.

The difference is in the liability incurred. So you're the blockchain analysis firm for the Department of Justice, and you're like "omg omg look the coins are moving! omg omg look its going to a centralized exchange account lets go subpoena the records and find out who has the KYC and identifying information behind that account." DOJ busts down the door "aha! got you!" If it was the person that actually hacked or did…

I always wondered about this but can't criminals just get some kyc info from the black market or even some homeless person and withdraw money in that person's name? Why bother with obfuscating wallets chain hopping if all that matters is to not be asociated with the name that ultimately withdraws from an exchange

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

#193

Post by pliny »

mdavis6890 wrote: post #165
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…

It's important to realize that attribution - knowing which human got which money when - is actually very important in many contexts, particularly when a lot of money is involved. This allows for an un-do button in the case of mistakes, fraud, etc. If I'm wiring my down payment for a house for $200k, it's nice to know that if I fat-finger the receiving account I can get the money back. How would you feel paying your d…

Voluntary attribution is a solved problem in cryptography, so you can stay private if everything goes well and prove you are the sender or receiver for a given transaction if you need it reversed.

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

#194

Post by vmception »

Cthulhu_ wrote: post #27
raesene9 wrote: post #19

Earlier quoted context omitted.

Depends on the country. Definitely in the UK if you make a lot of large cash transactions without a good business reason, you'll get scrutiny. This is one of the reasons that common fronts for crime are companies that would be expected to handle a lot of cash :) Also the major advantage of cryptocurencies in crime is their international nature. It means I can sit in a country that has no extradition treaty with the p…

> This is one of the reasons that common fronts for crime are companies that would be expected to handle a lot of cash :) Or a large amount of smaller companies for which 5K in revenue a month won't look suspicious (I'm thinking of stuff like these small phone (repair) shops, and there was a massage parlor down the road that was open frequently but never saw any customers. Still managed to stay open for years. Maybe…

Custom pillows, by appointment only, was probably the most obvious and rational front I’ve ever seen.

Create customer records of as many high dollar value appointments as you want!

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

#195

Post by ucha »

mdavis6890 wrote: post #165
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…

It's important to realize that attribution - knowing which human got which money when - is actually very important in many contexts, particularly when a lot of money is involved. This allows for an un-do button in the case of mistakes, fraud, etc. If I'm wiring my down payment for a house for $200k, it's nice to know that if I fat-finger the receiving account I can get the money back. How would you feel paying your d…

Attribution is important but you don't need the government to be able to do it without your authorization. You can very well have private unattributable transactions that you decide to disclose to the authorities only if you need and want to.

If you send your coins from wallet A to wallet B with CoinJoin, it's not possible for a third party to identify this transaction, but you can disclose the seed of wallet A and sign a transaction from wallet B thus proving ownership of both.

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

#196

Post by [deleted] »

n_ary wrote: post #61
exo762 wrote: post #46

Earlier quoted context omitted.

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.

> You can use cryptocurrency which hides all of your transactions (like zcash) Nit: only if you use zcash shielded wallets(very rare & resource hungry) are your assets private. Most wallets use transparent addresses, which is kind of similar to normal ones. Given current landscape, only monero is defacto private.

[deleted]

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

#197

Post by vmception »

jack_pp wrote: post #192
vmception wrote: post #150

Earlier quoted context omitted.

The difference is in the liability incurred. So you're the blockchain analysis firm for the Department of Justice, and you're like "omg omg look the coins are moving! omg omg look its going to a centralized exchange account lets go subpoena the records and find out who has the KYC and identifying information behind that account." DOJ busts down the door "aha! got you!" If it was the person that actually hacked or did…

I always wondered about this but can't criminals just get some kyc info from the black market or even some homeless person and withdraw money in that person's name? Why bother with obfuscating wallets chain hopping if all that matters is to not be asociated with the name that ultimately withdraws from an exchange

They can and do. You can buy "Fullz" which are a random ID leaked from a prior massive hack or just plain old phishing, and create exchange accounts. Any new darknet marketplace merchant starts off by selling Fullz and tutorials for like $1 and to get their reputation up.

I would say the lack of major prosecutions on this is because criminals still launder the money first and don't want to frame people (or have the exchange account frozen so soon), and DA/prosecutors use their discretion to tell when its unlikely the person in question was the actual person they are looking for, for now. Some people likely are getting framed, judging from televised arbitration shows like Judge Judy where the entertainer keeps cutting off the defendant who calmly says their bank account was compromised, and awards everything to the plaintiff.

This isn't crypto specific and is for bank and brokerage accounts too. Most darknet money-isolating tutorials talk about trading stocks in a brokerage account with stolen/recreated credentials as well.

Unless an account in your name wire transferred money directly for a shipping container full of cocaine, you would never find out that someone has opened a bank/brokerage/crypto account in your name and was operating it like a normal person accumulating money and occasionally trading.

Think of it like being a victim of identity fraud but the fraudster improves your credit score by acting normally and responsibly for you. That's literally whats happening pretty often.

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

#198

Post by vmception »

jack_pp wrote: post #192
vmception wrote: post #150

Earlier quoted context omitted.

The difference is in the liability incurred. So you're the blockchain analysis firm for the Department of Justice, and you're like "omg omg look the coins are moving! omg omg look its going to a centralized exchange account lets go subpoena the records and find out who has the KYC and identifying information behind that account." DOJ busts down the door "aha! got you!" If it was the person that actually hacked or did…

I always wondered about this but can't criminals just get some kyc info from the black market or even some homeless person and withdraw money in that person's name? Why bother with obfuscating wallets chain hopping if all that matters is to not be asociated with the name that ultimately withdraws from an exchange

Going back to your question, then why bother with the other stuff?

Not everyone wants fiat. Not now, not eventually. They are able to obtain goods and services in crypto. They are able to pay developers, buy games, invest in other crypto/projects ensuring the success or perception of success of people they like, control crypto networks with voting power, create exchanges and other infrastructure. There is no "eventually buy a multimillion dollar house how do I do that inconspicuously or maybe I can buy it with crypto in the future". It's just recognizing that it is possible whenever you want, but also not a priority or a necessary addition to what people value in this world.

It's fungible enough for all the purposes that many individuals with dirty crypto or organizations with dirty crypto care about.

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

#200

Post by rokobobo »

derefr wrote: post #168
vyrotek wrote: post #126

After learning about how expensive stolen art is exchanged as a proxy for cash from "This is a robbery" on Netflix I started to wonder if laundering is really needed with crypto. There are probably clever ways to just exchange wallet ownership instead.

Laundering is needed if you want to (enable the people you trade with to) ever spend the black-market money on white-market goods. Without that, your trading partner ends up holding a "dirty" wallet — just as if you gave them a suitcase full of marked bills. That wallet still holds value — all dirty money does — but it's a lot less value than cleaned money. Databases of stolen credit card numbers sell for not-much mo…

And the idea with stolen art is that "dirty art" should theoretically always trade at roughly the same discount to "clean art," and in fact, over time, as gaps in the provenance become easier to patch up through fabrication, the discount should reduce. In that sense, "dirty art" is an investment, so the immoral of the super-rich are fine holding it forever. Also, no need to pay estate taxes if it's already an undisclosed asset on a yacht somewhere.
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