8 ms·

I believe privacy advocates needs to be more involved in the financial sector for there to be any meaningful change and provide counter proposals to balance. T

I believe privacy advocates needs to be more involved in the financial sector for there to be any meaningful change and provide counter proposals to balance. The problem now is that a lot of cryptocurrencies are prime targets for money laundering, financing organized crime and terrorism networks. I often get shat on when mentioning that, especially by loud proponents of cryptocurrencies, but it is a real issue that must be resolved. Our old-fashioned bank system is far from perfect but it is harder to do illegal things unnoticed, banks report thousands of cases to authorities every year. Cryptocurrencies is the future, and we should not let our guard down allowing criminal elements to exploit it.

ve55 6y ago
We are happily open to suggestions on ways to stop crime that don't involve collecting any additional data, but I think you'll find it very difficult to come up with systems that satisfy both stakeholders here, as the way I see it they are at a constant impasse.
AnthonyMouse 6y ago
> The problem now is that a lot of cryptocurrencies are prime targets for money laundering The issue is that you can't actually solve this. It's already over. The premise of money laundering rules is that you have two conspiring parties transferring illicit gains between one another and the regulations have the bank as an intermediary informing on them to the government. The existence of cryptocurrency makes it possible to do this without an intermediary party. It has already happened and you can't put the genie back in the bottle. It doesn't matter how you regulate above-board exchanges and transactions in the US because the illicit transaction can occur digitally outside of the sphere of influence of a given country without using any of the intermediaries being subjected to the regulations. What it means is that all the costs of AML and KYC regulations are no longer buying you anything because actual criminals now have an end-run around them, but they're still costing you something, as the law abiding people trying to comply with the rules, for as long as they remain on the books.
- ajkdhcb2 6y ago
  Bitcoin is traceable, so it is quite solvable until more people use Monero
  - AnthonyMouse 6y ago
    Bitcoin has a public transaction record but the parties are nameless. All you see is times and amounts. And cryptocurrency mixers make those not very easy to trace. Also, "solving" it by doing anything that would only cause criminals to switch to something else that already exists doesn't really solve anything, does it?
    - ajkdhcb2 6y ago
      Bitcoin transactions are not nameless in practice because people will nearly always interact with exchanges and merchants. There is so much information from that. Mixers and CoinJoins don't work well enough when used by a small percentage of people, and they will cause redflags in AML analysis systems. Privacy is already being priced out as the transactions fees rise, too. With strong regulations it will enable surveillance on scale greater than anything we have seen before. Terrorists and such will just use something else, sure. However, lack of liquidity and network effect will be problematic. I would be comfortable saying that stopping them is an excuse rather than the real goal - mass surveillance on citizens. Same with how the government is intent on complaining about end-to-end encryption apps like Signal when the real terrorists will just use PGP. AML has never been very effective.
- 3np 6y ago
  Well, not quite. You seem to be conflating "money laundering" with all "undesired"/illegal transactions. Laundering implies transition from "dirty" to "clean". This is the kind of scenario that these kinds of regulatory requirements impede: "Dirty BTC" transferred to Binance, traded for ETH, sent to Coinbase, traded for USD, and sent outward to a fiat bank account. Like you say, strictly peer-to-peer value transfer is game over. If every point of contact between cryptocurrency and a regulated entity requires full KYC, those illicit funds can be prevented from entering the regulated economy. What's happening here is effectively a battle over the fungibility of cryptocurrency. If the transactional history of each UTXO comes under scrutiny for a business to touch a BTC transaction, the practical value of each satoshi differs. This was actually brought up many years ago as an argument for why bitcoin in its current form (sans untraceable transaction) may lose the "fungibility" property and thus will lose its utility as money. This was early on a main selling point for Monero; "truly fungible cryptocurrency".
dogwater 6y ago
What exactly is this scary crime that is supposively happening with money? They didn't need much money to do 9/11 besides some airline tickets and box cutters, I'm sure it wouldn't trip any bank report flag that would have allowed them to stop it from happening. Organized crime, is that even a thing? If no one is even going after obvious ico scams that have defrauded investors out of hundreds of millions of dollars and other similar things operating out in the open then what exactly are they so scared of that they want to track every transaction? It's just money, what's wrong with someone buying something?
- vmception 6y ago
  To put it more succinctly, no part of the Patriot Act would have flagged the 9/11 terrorists. The Bank Secrecy Act and every expansion of it (like the Patriot Act) is just some data broker's pet project to fill some lucrative government contract.
  - AnthonyMouse 6y ago
    So much of this feels like someone invented a teleporter and now reactionaries are condemning teleporters because they can be used by smugglers to evade customs enforcement. But the cat is out of the bag. The smugglers are going to keep using it regardless of what rules you impose on law biding citizens.
    - vmception 6y ago
      and otherwise law abiding citizens are the only ones ensnared by this. most of the time its because they are paranoid about triggering government reporting requirements that they don't understand, and avoiding that is a crime too! its always the people without money trying to act sketchy about $10,000 so they can avoid being seen as sketchy they really do get thrown in prison for this
- x87678r 6y ago
  Terrorist acts are only part of it though. Sure 9/11 was cheap but implementing punitive sanctions across countries hundreds officials requires an awful lot of tracking and monitoring. As regulators catch up you can expect same forms and reporting for any crypto account as a regular account. If you ignore the rules expect big penalties until you comply- just like how banks have been paying billions in fines and are now tarpits of paperwork.
ajkdhcb2 6y ago
Throughout all of human history people used private forms of money like cash. Why is it that suddenly only now it is a disaster to have financial privacy because of "crime"?
- vmception 6y ago
  they have to clamp down on financial privacy because they invented financial crimes the federal crime of "money laundering" requires the state to use public resources in whitelisting every transaction, and having the entire population stigmatize the concept of ever having money themselves let alone actually moving it and that 50 year old absurdity is pretty much what they are doubling down on
  - avianlyric 6y ago
    If you’ve seen the real harm that caused in the world by money laundering, you would be less inclined to condemn its prevention. I’ve personally seen cases of money laundering where the money comes from sexual exploitation, human trafficking, modern day slavery, organ trafficking, high value thefts (petrol, or digits bank robberies), standard social engineering scams etc These aren’t special one of events, this happens in small bank on every day ending in y. Most fincrime teams don’t have the energy to deal with normal people moving their cash, or even high net wealth people moving their cash. They’re too busy tracking down and cleaning up after some really nasty people.
    - nmlnn 6y ago
      > sexual exploitation, human trafficking, modern day slavery, organ trafficking, high value thefts (petrol, or digits bank robberies), standard social engineering scams etc That kind of logic can be used to justify putting government cameras and microphones inside everyone's homes too.
      - dralley 6y ago
        Yes, but that doesn't mean that going to the very opposite extreme is the right response. Nobody is itching to emigrate to Somalia.
ashneo76 6y ago
No it is not. You are conflating the two. Next thing you know, cash is "bad".
dkdk8283 6y ago
Capitalism will sort it out. There are perverse incentives for violations of privacy in almost all consumer verticals. When the surveillance stops being profitable we will be free.
csomar 6y ago
> The problem now is that a lot of cryptocurrencies are prime targets for money laundering, financing organized crime and terrorism networks. I'd argue otherwise. A good (or successful) cryptocurrency should allow such transactions and be safe from the government. A good cryptocurrency should be ready for adversity and if it is censorship-resistant and really private, the government shouldn't have much power over any transaction.
baybal2 6y ago
> The problem now is that a lot of cryptocurrencies are prime targets for money laundering, financing organized crime and terrorism networks. You cannot fight money laundering by demanding something that does not impede launderers as such. I believe prime majority of laundering happens in 100% legally compliant businesses, and banks.
x87678r 6y ago
> Cryptocurrencies is the future No they aren't. especially when: > Our old-fashioned bank system is far from perfect but it is harder to do illegal things unnoticed, banks report thousands of cases to authorities every year.

ve55 6y ago

We are happily open to suggestions on ways to stop crime that don't involve collecting any additional data, but I think you'll find it very difficult to come up with systems that satisfy both stakeholders here, as the way I see it they are at a constant impasse.

AnthonyMouse 6y ago

> The problem now is that a lot of cryptocurrencies are prime targets for money laundering The issue is that you can't actually solve this. It's already over. The premise of money laundering rules is that you have two conspiring parties transferring illicit gains between one another and the regulations have the bank as an intermediary informing on them to the government. The existence of cryptocurrency makes it possible to do this without an intermediary party. It has already happened and you can't put the genie back in the bottle. It doesn't matter how you regulate above-board exchanges and transactions in the US because the illicit transaction can occur digitally outside of the sphere of influence of a given country without using any of the intermediaries being subjected to the regulations. What it means is that all the costs of AML and KYC regulations are no longer buying you anything because actual criminals now have an end-run around them, but they're still costing you something, as the law abiding people trying to comply with the rules, for as long as they remain on the books.

ajkdhcb2 6y ago
Bitcoin is traceable, so it is quite solvable until more people use Monero
- AnthonyMouse 6y ago
  Bitcoin has a public transaction record but the parties are nameless. All you see is times and amounts. And cryptocurrency mixers make those not very easy to trace. Also, "solving" it by doing anything that would only cause criminals to switch to something else that already exists doesn't really solve anything, does it?
  - ajkdhcb2 6y ago
    Bitcoin transactions are not nameless in practice because people will nearly always interact with exchanges and merchants. There is so much information from that. Mixers and CoinJoins don't work well enough when used by a small percentage of people, and they will cause redflags in AML analysis systems. Privacy is already being priced out as the transactions fees rise, too. With strong regulations it will enable surveillance on scale greater than anything we have seen before. Terrorists and such will just use something else, sure. However, lack of liquidity and network effect will be problematic. I would be comfortable saying that stopping them is an excuse rather than the real goal - mass surveillance on citizens. Same with how the government is intent on complaining about end-to-end encryption apps like Signal when the real terrorists will just use PGP. AML has never been very effective.
3np 6y ago
Well, not quite. You seem to be conflating "money laundering" with all "undesired"/illegal transactions. Laundering implies transition from "dirty" to "clean". This is the kind of scenario that these kinds of regulatory requirements impede: "Dirty BTC" transferred to Binance, traded for ETH, sent to Coinbase, traded for USD, and sent outward to a fiat bank account. Like you say, strictly peer-to-peer value transfer is game over. If every point of contact between cryptocurrency and a regulated entity requires full KYC, those illicit funds can be prevented from entering the regulated economy. What's happening here is effectively a battle over the fungibility of cryptocurrency. If the transactional history of each UTXO comes under scrutiny for a business to touch a BTC transaction, the practical value of each satoshi differs. This was actually brought up many years ago as an argument for why bitcoin in its current form (sans untraceable transaction) may lose the "fungibility" property and thus will lose its utility as money. This was early on a main selling point for Monero; "truly fungible cryptocurrency".

dogwater 6y ago

What exactly is this scary crime that is supposively happening with money? They didn't need much money to do 9/11 besides some airline tickets and box cutters, I'm sure it wouldn't trip any bank report flag that would have allowed them to stop it from happening. Organized crime, is that even a thing? If no one is even going after obvious ico scams that have defrauded investors out of hundreds of millions of dollars and other similar things operating out in the open then what exactly are they so scared of that they want to track every transaction? It's just money, what's wrong with someone buying something?

vmception 6y ago
To put it more succinctly, no part of the Patriot Act would have flagged the 9/11 terrorists. The Bank Secrecy Act and every expansion of it (like the Patriot Act) is just some data broker's pet project to fill some lucrative government contract.
- AnthonyMouse 6y ago
  So much of this feels like someone invented a teleporter and now reactionaries are condemning teleporters because they can be used by smugglers to evade customs enforcement. But the cat is out of the bag. The smugglers are going to keep using it regardless of what rules you impose on law biding citizens.
  - vmception 6y ago
    and otherwise law abiding citizens are the only ones ensnared by this. most of the time its because they are paranoid about triggering government reporting requirements that they don't understand, and avoiding that is a crime too! its always the people without money trying to act sketchy about $10,000 so they can avoid being seen as sketchy they really do get thrown in prison for this
x87678r 6y ago
Terrorist acts are only part of it though. Sure 9/11 was cheap but implementing punitive sanctions across countries hundreds officials requires an awful lot of tracking and monitoring. As regulators catch up you can expect same forms and reporting for any crypto account as a regular account. If you ignore the rules expect big penalties until you comply- just like how banks have been paying billions in fines and are now tarpits of paperwork.

ajkdhcb2 6y ago

Throughout all of human history people used private forms of money like cash. Why is it that suddenly only now it is a disaster to have financial privacy because of "crime"?

vmception 6y ago
they have to clamp down on financial privacy because they invented financial crimes the federal crime of "money laundering" requires the state to use public resources in whitelisting every transaction, and having the entire population stigmatize the concept of ever having money themselves let alone actually moving it and that 50 year old absurdity is pretty much what they are doubling down on
- avianlyric 6y ago
  If you’ve seen the real harm that caused in the world by money laundering, you would be less inclined to condemn its prevention. I’ve personally seen cases of money laundering where the money comes from sexual exploitation, human trafficking, modern day slavery, organ trafficking, high value thefts (petrol, or digits bank robberies), standard social engineering scams etc These aren’t special one of events, this happens in small bank on every day ending in y. Most fincrime teams don’t have the energy to deal with normal people moving their cash, or even high net wealth people moving their cash. They’re too busy tracking down and cleaning up after some really nasty people.
  - nmlnn 6y ago
    > sexual exploitation, human trafficking, modern day slavery, organ trafficking, high value thefts (petrol, or digits bank robberies), standard social engineering scams etc That kind of logic can be used to justify putting government cameras and microphones inside everyone's homes too.
    - dralley 6y ago
      Yes, but that doesn't mean that going to the very opposite extreme is the right response. Nobody is itching to emigrate to Somalia.

ashneo76 6y ago

No it is not. You are conflating the two. Next thing you know, cash is "bad".

dkdk8283 6y ago

Capitalism will sort it out. There are perverse incentives for violations of privacy in almost all consumer verticals. When the surveillance stops being profitable we will be free.

csomar 6y ago

> The problem now is that a lot of cryptocurrencies are prime targets for money laundering, financing organized crime and terrorism networks. I'd argue otherwise. A good (or successful) cryptocurrency should allow such transactions and be safe from the government. A good cryptocurrency should be ready for adversity and if it is censorship-resistant and really private, the government shouldn't have much power over any transaction.

baybal2 6y ago

> The problem now is that a lot of cryptocurrencies are prime targets for money laundering, financing organized crime and terrorism networks. You cannot fight money laundering by demanding something that does not impede launderers as such. I believe prime majority of laundering happens in 100% legally compliant businesses, and banks.

x87678r 6y ago

> Cryptocurrencies is the future No they aren't. especially when: > Our old-fashioned bank system is far from perfect but it is harder to do illegal things unnoticed, banks report thousands of cases to authorities every year.