15 ms·

Publication of Cryptocurrency Enforcement Framework

168 points by AndrewBissell 6y ago

HenryKissinger 6y ago
Direct PDF link: https://www.justice.gov/ag/page/file/1326061/download https://www.justice.gov/ag/page/file/1326061/download
traeregan 6y ago
TL;DR An overview of how cryptocurrency works, how it is used for illicit purposes, many case studies of said purposes, and a reminder that ongoing enforcement will continue to broaden. There’s not much new information here.
- rkagerer 6y ago
  Does it talk much about DeFi?
kache_ 6y ago
No government enforcement will matter for cryptocurrency as long as confidential transactions schemes aren't broken. https://eprint.iacr.org/2015/1098.pdf https://eprint.iacr.org/2015/1098.pdf
- grantjpowell 6y ago
  Ring signatures are cool tech, but it's important to point out ring signature plausible deniability promises only work _in the absence of outside (off chain) information_. When coupled with outside information (Cooperation with exchanges and other large holders, timing attacks of IP addresses, etc). The plausible deniability you get from ring signatures can be much lower in practice Edit: Here's a really good video with some of the core monero contributors on EAE attacks https://www.youtube.com/watch?v=iABIcsDJKyM https://www.youtube.com/watch?v=iABIcsDJKyM
- Barrin92 6y ago
  Of course it does because everything that even remotely touches the non-shadow economy, starting a business, investing in publicly traded firms, interacting with everything that isn't crypto, paying taxes or anything that touches the rest of the world is subject to governance. You can invent a hundred new crypto technologies, if you want to actually do something useful with crypto other than betting on crypto exchanges or buying heroin online you'll need to have some sort of legal recognition.
  - arcticbull 6y ago
    And then good answers to questions like "so where did you say this money came from again?"
- lawn 6y ago
  By the same logic then no government enforcement would matter if we're talking about coins and bills, because they too are untraceable.
Mc_Big_G 6y ago
“The United States has been enormously successful blocking terrorists, rogue regimes, and their supporters from funding their activity using traditional currencies,” Have they though? How much money has been proven to be laundered through the traditional banking systems, with the support of the banks. This argument against crypto currencies is equivalent to the pedo arguments about cryptography. It's simply BS. The market cap of all crypto currencies combined is insignificant compared to the cap of fiat currencies used in illicit activities. There is little to no threat from crypto that we don't already have with fiat. The "threat" is a red herring.
- mensetmanusman 6y ago
  FBI only focuses on political terrorism, not economic terrorism from those at the top.
- vmception 6y ago
  The actual PDF is pretty well balanced. They talk about the legitimate use cases and various narratives of cryptocurrency proponents, some narratives of skeptics, as well as its actual potential and use and research by non-enforcement government agencies. The DOJ is an enforcement agency and will naturally talk more about how to disrupt evolving criminal enterprises. This document goes into depth on how various threats and illegal activities are modeling and disrupted.
- kube-system 6y ago
  > How much money has been proven to be laundered through the traditional banking systems, with the support of the banks. Basically any news story you hear about money laundering involves traditional banking systems.
glennvtx 6y ago
The biggest promise of crypto is that it is immune to government censorship / control. It can free us from the hidden taxation of inflation, and government coercion. I for one don't want government to be able to regulate / control / trace transactions.
- vkou 6y ago
  The hidden taxation of inflation is a feature. It creates an incentive for people to invest, instead of, like dragons, uselessly sitting on a pile of money.
  - qertoip 6y ago
    The opposite is true: inflation takes away the hard earned value that could otherwise be invested.
    - smorephism 6y ago
      Yes, that's the idea: the price of sitting on a dragon's hoard of cash that's not doing anything is that its value decreases over time, so you are incentivized to actually do something with it.
      - megous 6y ago
        Your economics are weird. Making a stupid analogy doesn't help it. There are no dragons, just individual people making decisions about how much to save and for what purpose, and when to spend it, based on their individual circumstances. Holding on to savings is neither positive nor negative, and should be a personal decision based on individual's circumstances (that's where the most detailed information are available about what's good for the individual), not something forced/influenced from the top by blunt whole market manipulation via forced depreciation of value of money, by some committee. All you've achieved by forced depreciation is forcing people to make needless risks, just to keep value of their savings, while they're trying to save up for something (like starting a business, or buying a flat, or safety of mind). Whole class of brokers, and traders, and lenders, who pray on this situation benefit, of course.
qertoip 6y ago
Good to see they at least recognized legitimate uses of cryptocurrencies.
vmception 6y ago
> In most circumstances, the Department does not liquidate seized or forfeited AECs (Anonymity Enhanced Cryptocurrencies), as doing so allows them to re-enter the stream of commerce for potential future criminal use. Moon Cannon for Monero! > Some AECs, however, offer features, such as public view keys, that potentially can facilitate the fulfillment of AML/CFT obligations, depending upon the implementation of such features. Nice, also a Moon Cannon for Monero! DOJ PAAAAMPPP!
- deleted 6y ago
  [deleted]
SirensOfTitan 6y ago
Remember the FinCEN investigation from just a couple weeks ago: https://www.buzzfeednews.com/article/jasonleopold/fincen-files-financial-scandal-criminal-networks https://www.buzzfeednews.com/article/jasonleopold/fincen-fil... Governments don't care about the crime banks encourage and enable, as long as it's large enough. The US has failed to enforce incredible amounts of money laundering through traditional currencies. Whether that failure is the result of incompetence or something more sinister is the question. Outside of a cultural movement toward more anarchist, distributed power systems, I can't see anything good coming from the state dipping its heels into more data streams like this. It's largely obvious that the US government, for the foreseeable future, is largely dissonant from what's actually good for its public. Drugs are a fairly powerful anecdote illustrating that end: opiate producers (like most capitalist businesses) aren't punished for causing a nation-wide epidemic, while users of proportionally less harmful drugs like LSD, MDMA, or Marijuana are punished quite harshly.
seibelj 6y ago
Hmm... a large contingent of people on HN claim blockchain is 100% worthless and no better than a centralized database. Then why is the Department of Justice saying: > At the outset, it bears emphasizing that distributed ledger technology, upon which all cryptocurrencies build, raises breathtaking possibilities for human flourishing. These possibilities are rightly being explored around the globe, from within academia and industry, and from within government — including our own. So what is it - our government is full of confused people, or HN is?
- lawn 6y ago
  Despite the hate on HN it should be obvious that cryptocurrencies aren't 100% worthless. For that there must be no valuable use case, but even the same people will also say there are illegal use cases, defeating their own point. (If you still want a legal use case then I suggest how WikiLeaks could still accept donations in Bitcoin when all other payment processors and banks blocked them.)
- robertakarobin 6y ago
  Why not both?
  - williamtwild 6y ago
    Looking at the current administration I can say with 100% certainty that the US government is lacking in just about every way possible right now.
- anamexis 6y ago
  I mean, when it comes to the potential of a given technology, I think I know who I'll generally trust between HN consensus and the United States Department of Justice.
- paulgb 6y ago
  I haven't read the full report yet, but do they point out any examples? I think the main contention of many of us on HN is that blockchain as a technology (as opposed to Bitcoin as a store of value) is proposed for a lot of things, but examples that wouldn't be better served by a database are basically non-existent.
BTCOG 6y ago
Hi, federal agents and banksters.
chiph 6y ago
If William Gibson had put that statement into one of his early novels, people would have lauded it. We are living in the cyberpunk future.

168 points by AndrewBissell 6y ago

Direct PDF link: https://www.justice.gov/ag/page/file/1326061/download https://www.justice.gov/ag/page/file/1326061/download

traeregan 6y ago

TL;DR An overview of how cryptocurrency works, how it is used for illicit purposes, many case studies of said purposes, and a reminder that ongoing enforcement will continue to broaden. There’s not much new information here.

rkagerer 6y ago
Does it talk much about DeFi?

kache_ 6y ago

No government enforcement will matter for cryptocurrency as long as confidential transactions schemes aren't broken. https://eprint.iacr.org/2015/1098.pdf https://eprint.iacr.org/2015/1098.pdf

grantjpowell 6y ago
Ring signatures are cool tech, but it's important to point out ring signature plausible deniability promises only work _in the absence of outside (off chain) information_. When coupled with outside information (Cooperation with exchanges and other large holders, timing attacks of IP addresses, etc). The plausible deniability you get from ring signatures can be much lower in practice Edit: Here's a really good video with some of the core monero contributors on EAE attacks https://www.youtube.com/watch?v=iABIcsDJKyM https://www.youtube.com/watch?v=iABIcsDJKyM
Barrin92 6y ago
Of course it does because everything that even remotely touches the non-shadow economy, starting a business, investing in publicly traded firms, interacting with everything that isn't crypto, paying taxes or anything that touches the rest of the world is subject to governance. You can invent a hundred new crypto technologies, if you want to actually do something useful with crypto other than betting on crypto exchanges or buying heroin online you'll need to have some sort of legal recognition.
- arcticbull 6y ago
  And then good answers to questions like "so where did you say this money came from again?"
lawn 6y ago
By the same logic then no government enforcement would matter if we're talking about coins and bills, because they too are untraceable.

Mc_Big_G 6y ago

“The United States has been enormously successful blocking terrorists, rogue regimes, and their supporters from funding their activity using traditional currencies,” Have they though? How much money has been proven to be laundered through the traditional banking systems, with the support of the banks. This argument against crypto currencies is equivalent to the pedo arguments about cryptography. It's simply BS. The market cap of all crypto currencies combined is insignificant compared to the cap of fiat currencies used in illicit activities. There is little to no threat from crypto that we don't already have with fiat. The "threat" is a red herring.

mensetmanusman 6y ago
FBI only focuses on political terrorism, not economic terrorism from those at the top.
vmception 6y ago
The actual PDF is pretty well balanced. They talk about the legitimate use cases and various narratives of cryptocurrency proponents, some narratives of skeptics, as well as its actual potential and use and research by non-enforcement government agencies. The DOJ is an enforcement agency and will naturally talk more about how to disrupt evolving criminal enterprises. This document goes into depth on how various threats and illegal activities are modeling and disrupted.
kube-system 6y ago
> How much money has been proven to be laundered through the traditional banking systems, with the support of the banks. Basically any news story you hear about money laundering involves traditional banking systems.

glennvtx 6y ago

The biggest promise of crypto is that it is immune to government censorship / control. It can free us from the hidden taxation of inflation, and government coercion. I for one don't want government to be able to regulate / control / trace transactions.

vkou 6y ago
The hidden taxation of inflation is a feature. It creates an incentive for people to invest, instead of, like dragons, uselessly sitting on a pile of money.
- qertoip 6y ago
  The opposite is true: inflation takes away the hard earned value that could otherwise be invested.
  - smorephism 6y ago
    Yes, that's the idea: the price of sitting on a dragon's hoard of cash that's not doing anything is that its value decreases over time, so you are incentivized to actually do something with it.
    - megous 6y ago
      Your economics are weird. Making a stupid analogy doesn't help it. There are no dragons, just individual people making decisions about how much to save and for what purpose, and when to spend it, based on their individual circumstances. Holding on to savings is neither positive nor negative, and should be a personal decision based on individual's circumstances (that's where the most detailed information are available about what's good for the individual), not something forced/influenced from the top by blunt whole market manipulation via forced depreciation of value of money, by some committee. All you've achieved by forced depreciation is forcing people to make needless risks, just to keep value of their savings, while they're trying to save up for something (like starting a business, or buying a flat, or safety of mind). Whole class of brokers, and traders, and lenders, who pray on this situation benefit, of course.

qertoip 6y ago

Good to see they at least recognized legitimate uses of cryptocurrencies.

vmception 6y ago

> In most circumstances, the Department does not liquidate seized or forfeited AECs (Anonymity Enhanced Cryptocurrencies), as doing so allows them to re-enter the stream of commerce for potential future criminal use. Moon Cannon for Monero! > Some AECs, however, offer features, such as public view keys, that potentially can facilitate the fulfillment of AML/CFT obligations, depending upon the implementation of such features. Nice, also a Moon Cannon for Monero! DOJ PAAAAMPPP!

deleted 6y ago
[deleted]

SirensOfTitan 6y ago

Remember the FinCEN investigation from just a couple weeks ago: https://www.buzzfeednews.com/article/jasonleopold/fincen-files-financial-scandal-criminal-networks https://www.buzzfeednews.com/article/jasonleopold/fincen-fil... Governments don't care about the crime banks encourage and enable, as long as it's large enough. The US has failed to enforce incredible amounts of money laundering through traditional currencies. Whether that failure is the result of incompetence or something more sinister is the question. Outside of a cultural movement toward more anarchist, distributed power systems, I can't see anything good coming from the state dipping its heels into more data streams like this. It's largely obvious that the US government, for the foreseeable future, is largely dissonant from what's actually good for its public. Drugs are a fairly powerful anecdote illustrating that end: opiate producers (like most capitalist businesses) aren't punished for causing a nation-wide epidemic, while users of proportionally less harmful drugs like LSD, MDMA, or Marijuana are punished quite harshly.

seibelj 6y ago

Hmm... a large contingent of people on HN claim blockchain is 100% worthless and no better than a centralized database. Then why is the Department of Justice saying: > At the outset, it bears emphasizing that distributed ledger technology, upon which all cryptocurrencies build, raises breathtaking possibilities for human flourishing. These possibilities are rightly being explored around the globe, from within academia and industry, and from within government — including our own. So what is it - our government is full of confused people, or HN is?

lawn 6y ago
Despite the hate on HN it should be obvious that cryptocurrencies aren't 100% worthless. For that there must be no valuable use case, but even the same people will also say there are illegal use cases, defeating their own point. (If you still want a legal use case then I suggest how WikiLeaks could still accept donations in Bitcoin when all other payment processors and banks blocked them.)
robertakarobin 6y ago
Why not both?
- williamtwild 6y ago
  Looking at the current administration I can say with 100% certainty that the US government is lacking in just about every way possible right now.
anamexis 6y ago
I mean, when it comes to the potential of a given technology, I think I know who I'll generally trust between HN consensus and the United States Department of Justice.
paulgb 6y ago
I haven't read the full report yet, but do they point out any examples? I think the main contention of many of us on HN is that blockchain as a technology (as opposed to Bitcoin as a store of value) is proposed for a lot of things, but examples that wouldn't be better served by a database are basically non-existent.

BTCOG 6y ago

Hi, federal agents and banksters.

chiph 6y ago

If William Gibson had put that statement into one of his early novels, people would have lauded it. We are living in the cyberpunk future.