5 ms·

Bitcoin is a tool for tax evasion and money exchange on criminal assets. It turns out that also some geeks like to use it to bypass banks incompetence on intern

by Iv 8y ago

Bitcoin is a tool for tax evasion and money exchange on criminal assets. It turns out that also some geeks like to use it to bypass banks incompetence on international funds transfers but tax evasion is the use that drives BTC's value. The cult is just a small visible part of it but is a pretty minor aspect of it. BTC would exist without the cultists as long as Russian or Saudi assets need to be transfered without too much oversight.

prostoalex 8y ago
> BTC would exist without the cultists as long as Russian or Saudi assets need to be transfered without too much oversight Liquidity, though.
- askmike 8y ago
  Exactly: No crypto in it's current state is liquid enough for any serious moving of money. Slipping, fees (and potential hedging costs) will eat you if you need to to move serious money. As such it only works for entities who don't have vast amounts of capital, eg. people who can't afford an army of tax lawyers to create complex legal tax evasion schemes to pay less tax than the rest of us.
  - stryk 8y ago
    If I'm moving stolen money (or magic math coins or whatever) I don't give a damn about the fees - it's 100% profit either way. It costs money to have it laundered, whether that goes to a shady lawyer(s) or a Bitcoin processor who cares, it doesn't matter it's all profit for the thief.
    - JumpCrisscross 8y ago
      > I don't give a damn about the fees - it's 100% profit either way If I worked in your criminal enterprise, I'd could tell your deputies "look at this chump, throwing money away. I'll hire trucks to haul cash and boost our profits by 20%. Help me 'replace' the leader and I'll split those gains with you."
      - stryk 8y ago
        That's not how dirty money works if you want to get away with it. You need to launder it -- put it into something legitimate and, most importantly, get something back out of it that looks legitimate enough to pass casual scrutiny -- for this service anything and anyone, legit or not, is going to take a cut (or "fee"). It's the cost of doing criminal business. And if you're in a criminal enterprise and you even talk to the other members of the ent. about how you're going to move your money you ain't gonna be in the enterprise very long. That type of dirt you do by your lonesome or you die.
        JumpCrisscross 8y ago
        Needing to pay fees is different from not "giv[ing] a damn about the fees." I understand I have to pay a broker's fee when I buy and sell stock. That doesn't mean I'm indifferent to its level. Using Bitcoin to surreptitiously move large quantities of funds is almost always riskier and more expensive than traditional money-laundering techniques.
        stryk 8y ago
        And how may I ask did you come to this conclusion? Have you ever actually laundered dirty money?
        JumpCrisscross 8y ago
        > Have you ever actually laundered dirty money? No. My knowledge comes from anti-money laundering training. Depending on how fast one needs to move, money laundering fees go from 5% to 30%. Bitcoin is cheaper than that per se. But include the costs of anonymising and cleanly cash out, and you're just adding cost and risk over a wire transfer between fronts.
        stryk 8y ago
        No man, there's so much more exposure that way. And remember, this is a criminal enterprise. Those people who run your fronts could just as easily rob/kill you and take it for themselves, and given the chance they will. With bitcoins you can 1) do it yourself, no middlemen other than the bitcoin processor who doesn't give a flying right-hand fuck where the money comes from, and 2) do it far, far, far quicker than traditional methods. A thief isn't going to give a damn about fees, I'm tellin ya, in the end it's all profit for them. Get in, get it, and get out. If I hit a lick for $100k, flip it in a couple days while interacting with not another soul but lose 30k to fees, I'm still up 70k that's a good lick. and if I paid the 30k to not have to deal with ANYONE face-to-face (least of all other criminals) that's worth it in spades because I'm not spending MY 30k, I'm spending YOUR 30k.
  - jonhendry18 8y ago
    "No crypto in it's current state is liquid enough for any serious moving of money" It's more liquid than real estate, which is widely used for money laundering.
    - sgt101 8y ago
      I don't think so. If someone put 5K BTC up for sale on one day the price of the whole market would be disrupted, but similar sales happen in London and New York every day and the market seems unbothered.
      - mike10010100 8y ago
        > If someone put 5K BTC up for sale on one day the price of the whole market would be disrupted https://techcrunch.com/2018/01/15/researchers-finds-that-one-person-likely-drove-bitcoin-from-150-to-1000/ https://techcrunch.com/2018/01/15/researchers-finds-that-one...
mixmastamyk 8y ago
Would like to read more.
daturkel 8y ago
Do you have any sources for your claim that Bitcoin is used for large Russian/Saudi assets? It seems like the volume of BTC traded for illicit purposes is large in aggregate, but I'm not sure I've seen evidence of individual transfers being big. There are many ways that bad or unscrupulous actors can transfer money now that are actually less risky than Bitcoin.
- zhte415 8y ago
  I'm not commenting on the use of Bitcoin for Russian/Saudi interests, simply some information on Money Laundering and Terrorist Financing. Money Laundering tends to be smallish sums deposited over time, resulting in large amounts. You can't wash 100MM in one go. Terrosist Financing tends to be a very large number of small transactions from multiple global sources in a very short space of time into one account/wallet/location. Like crowd-sourcing, in fact exactly the same as crowd-sourcing. Less risky than Bitcoin? In the end you have to get it out of the blockchain to be useful, so that's where the pointers from a law-enforcement perspecive are.
  - omeid2 8y ago
    I have zero interest in Bitcoin, but the idea that terrorists finance happens through cryptocurrency is very naive. Terrorism is sponsored on the ground, with goods, not money that you have to convert to some other money first, and then buy things you need.
    - zhte415 8y ago
      This is correct. International funding does happen. Funds travel across regions, countries, territoritories, very quickly, to enable the passing of goods on the ground.
- Iv 8y ago
  Look at the BTC price fluctuations when another round of sanctions is added on Russia, when Cyprus cracked down on tax evaders or wduring the Saudi corruption crackdown. Everytime it peaks.
zeth___ 8y ago
A rather odd tool for tax evasion that has a record of the evaded tax for all eternity. It is vastly easier to launder money through regular channels than through a method that by it's definition records every transaction.
ComputerGuru 8y ago
That’s media sensationalism. BTC is not remotely anonymous and is useless as a tax evasion mechanism. Your money still has to go through someone to turn into BTC, and that’s the same as any other money laundering operation. Once their books are audited, your “safe haven” is worth nothing.
- LateRuin 8y ago
  Vice has a good video on drug dealers lining up to use a Bitcoin ATM every day somewhere in an American ghetto. Bitcoin is 100% about drug dealing, gambling, and tax avoidance. You would have to be a total moron to go through all the hoops to use it otherwise. Its kinda like running desktop linux in that way.
  - JumpCrisscross 8y ago
    A lot of Bitcoin volume is criminal in nature. What is contested is that a large fraction of criminal fund flows go through Bitcoin. For the same reasons it sucks for individuals (volatile, slow, expensive, publicly recorded, difficult to spend and difficult to convert), it sucks for criminals.
  - scrollaway 8y ago
    > You would have to be a total moron to go through all the hoops to use it otherwise. Its kinda like running desktop linux in that way. So, what, you'd have to be a total moron to go through the hoops of installing Linux as well? Do you think before you comment? Your 100% figure is wrong given that I, at least, don't match any of your description. You can't go around claiming this kind of nonsense.
  - askmike 8y ago
    In most countries there are no hoops. In most places in Europe it's harder go get a bank account than to get bitcoin. Does that mean only morons go through all the hoops of obtaining bank accounts?
- simias 8y ago
  I don't completely agree, you can move BTC around, mix it and exchange it for other cryptocurrencies while leaving only a very small trail. You don't have to involve other people directly, you don't have to carry duffel-bags of cash across borders etc... Of course if your money starts in your "books" before being converted into cryptocurrency then yeah, it's useless. But that's not the use case, it's more about laundering money that's not in the books to begin with (corruption, black market, undeclared sales etc...). I believe that right now the main deterrent to this scenario is the same reason people don't use cryptocurrencies for legit use cases: it's wildly unstable and you have to convert it to dollars or some other "fiat" to do anything with it.
swfsql 8y ago
>Bitcoin is a tool for tax evasion and money exchange on criminal assets You just made it more appealing and useful, since taxation is theft. Some "criminal" assets are incorrectly classified as criminal, so that's another +1 for Bitcoin.

by Iv 8y ago

prostoalex 8y ago

> BTC would exist without the cultists as long as Russian or Saudi assets need to be transfered without too much oversight Liquidity, though.

askmike 8y ago
Exactly: No crypto in it's current state is liquid enough for any serious moving of money. Slipping, fees (and potential hedging costs) will eat you if you need to to move serious money. As such it only works for entities who don't have vast amounts of capital, eg. people who can't afford an army of tax lawyers to create complex legal tax evasion schemes to pay less tax than the rest of us.
- stryk 8y ago
  If I'm moving stolen money (or magic math coins or whatever) I don't give a damn about the fees - it's 100% profit either way. It costs money to have it laundered, whether that goes to a shady lawyer(s) or a Bitcoin processor who cares, it doesn't matter it's all profit for the thief.
  - JumpCrisscross 8y ago
    > I don't give a damn about the fees - it's 100% profit either way If I worked in your criminal enterprise, I'd could tell your deputies "look at this chump, throwing money away. I'll hire trucks to haul cash and boost our profits by 20%. Help me 'replace' the leader and I'll split those gains with you."
    - stryk 8y ago
      That's not how dirty money works if you want to get away with it. You need to launder it -- put it into something legitimate and, most importantly, get something back out of it that looks legitimate enough to pass casual scrutiny -- for this service anything and anyone, legit or not, is going to take a cut (or "fee"). It's the cost of doing criminal business. And if you're in a criminal enterprise and you even talk to the other members of the ent. about how you're going to move your money you ain't gonna be in the enterprise very long. That type of dirt you do by your lonesome or you die.
      - JumpCrisscross 8y ago
        Needing to pay fees is different from not "giv[ing] a damn about the fees." I understand I have to pay a broker's fee when I buy and sell stock. That doesn't mean I'm indifferent to its level. Using Bitcoin to surreptitiously move large quantities of funds is almost always riskier and more expensive than traditional money-laundering techniques.
        stryk 8y ago
        And how may I ask did you come to this conclusion? Have you ever actually laundered dirty money?
        JumpCrisscross 8y ago
        > Have you ever actually laundered dirty money? No. My knowledge comes from anti-money laundering training. Depending on how fast one needs to move, money laundering fees go from 5% to 30%. Bitcoin is cheaper than that per se. But include the costs of anonymising and cleanly cash out, and you're just adding cost and risk over a wire transfer between fronts.
        stryk 8y ago
        No man, there's so much more exposure that way. And remember, this is a criminal enterprise. Those people who run your fronts could just as easily rob/kill you and take it for themselves, and given the chance they will. With bitcoins you can 1) do it yourself, no middlemen other than the bitcoin processor who doesn't give a flying right-hand fuck where the money comes from, and 2) do it far, far, far quicker than traditional methods. A thief isn't going to give a damn about fees, I'm tellin ya, in the end it's all profit for them. Get in, get it, and get out. If I hit a lick for $100k, flip it in a couple days while interacting with not another soul but lose 30k to fees, I'm still up 70k that's a good lick. and if I paid the 30k to not have to deal with ANYONE face-to-face (least of all other criminals) that's worth it in spades because I'm not spending MY 30k, I'm spending YOUR 30k.
- jonhendry18 8y ago
  "No crypto in it's current state is liquid enough for any serious moving of money" It's more liquid than real estate, which is widely used for money laundering.
  - sgt101 8y ago
    I don't think so. If someone put 5K BTC up for sale on one day the price of the whole market would be disrupted, but similar sales happen in London and New York every day and the market seems unbothered.
    - mike10010100 8y ago
      > If someone put 5K BTC up for sale on one day the price of the whole market would be disrupted https://techcrunch.com/2018/01/15/researchers-finds-that-one-person-likely-drove-bitcoin-from-150-to-1000/ https://techcrunch.com/2018/01/15/researchers-finds-that-one...

mixmastamyk 8y ago

Would like to read more.

daturkel 8y ago

Do you have any sources for your claim that Bitcoin is used for large Russian/Saudi assets? It seems like the volume of BTC traded for illicit purposes is large in aggregate, but I'm not sure I've seen evidence of individual transfers being big. There are many ways that bad or unscrupulous actors can transfer money now that are actually less risky than Bitcoin.

zhte415 8y ago
I'm not commenting on the use of Bitcoin for Russian/Saudi interests, simply some information on Money Laundering and Terrorist Financing. Money Laundering tends to be smallish sums deposited over time, resulting in large amounts. You can't wash 100MM in one go. Terrosist Financing tends to be a very large number of small transactions from multiple global sources in a very short space of time into one account/wallet/location. Like crowd-sourcing, in fact exactly the same as crowd-sourcing. Less risky than Bitcoin? In the end you have to get it out of the blockchain to be useful, so that's where the pointers from a law-enforcement perspecive are.
- omeid2 8y ago
  I have zero interest in Bitcoin, but the idea that terrorists finance happens through cryptocurrency is very naive. Terrorism is sponsored on the ground, with goods, not money that you have to convert to some other money first, and then buy things you need.
  - zhte415 8y ago
    This is correct. International funding does happen. Funds travel across regions, countries, territoritories, very quickly, to enable the passing of goods on the ground.
Iv 8y ago
Look at the BTC price fluctuations when another round of sanctions is added on Russia, when Cyprus cracked down on tax evaders or wduring the Saudi corruption crackdown. Everytime it peaks.

zeth___ 8y ago

A rather odd tool for tax evasion that has a record of the evaded tax for all eternity. It is vastly easier to launder money through regular channels than through a method that by it's definition records every transaction.

ComputerGuru 8y ago

That’s media sensationalism. BTC is not remotely anonymous and is useless as a tax evasion mechanism. Your money still has to go through someone to turn into BTC, and that’s the same as any other money laundering operation. Once their books are audited, your “safe haven” is worth nothing.

LateRuin 8y ago
Vice has a good video on drug dealers lining up to use a Bitcoin ATM every day somewhere in an American ghetto. Bitcoin is 100% about drug dealing, gambling, and tax avoidance. You would have to be a total moron to go through all the hoops to use it otherwise. Its kinda like running desktop linux in that way.
- JumpCrisscross 8y ago
  A lot of Bitcoin volume is criminal in nature. What is contested is that a large fraction of criminal fund flows go through Bitcoin. For the same reasons it sucks for individuals (volatile, slow, expensive, publicly recorded, difficult to spend and difficult to convert), it sucks for criminals.
- scrollaway 8y ago
  > You would have to be a total moron to go through all the hoops to use it otherwise. Its kinda like running desktop linux in that way. So, what, you'd have to be a total moron to go through the hoops of installing Linux as well? Do you think before you comment? Your 100% figure is wrong given that I, at least, don't match any of your description. You can't go around claiming this kind of nonsense.
- askmike 8y ago
  In most countries there are no hoops. In most places in Europe it's harder go get a bank account than to get bitcoin. Does that mean only morons go through all the hoops of obtaining bank accounts?
simias 8y ago
I don't completely agree, you can move BTC around, mix it and exchange it for other cryptocurrencies while leaving only a very small trail. You don't have to involve other people directly, you don't have to carry duffel-bags of cash across borders etc... Of course if your money starts in your "books" before being converted into cryptocurrency then yeah, it's useless. But that's not the use case, it's more about laundering money that's not in the books to begin with (corruption, black market, undeclared sales etc...). I believe that right now the main deterrent to this scenario is the same reason people don't use cryptocurrencies for legit use cases: it's wildly unstable and you have to convert it to dollars or some other "fiat" to do anything with it.

swfsql 8y ago

>Bitcoin is a tool for tax evasion and money exchange on criminal assets You just made it more appealing and useful, since taxation is theft. Some "criminal" assets are incorrectly classified as criminal, so that's another +1 for Bitcoin.