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Don't be pedantic. It's /exactly/ about KYC. The spirit of preventing unregistered futures and swaps being "merely" inaccessible by US residents is to /prevent/

Don't be pedantic. It's /exactly/ about KYC. The spirit of preventing unregistered futures and swaps being "merely" inaccessible by US residents is to /prevent/ money laundering. That's the whole point of registering. Binance has a history of lax KYC [1]. For a global exchange to not risk blowing up means to gain affirmative proof of a user's legal identity, jurisdiction, tax residence. If you try and use an IP ban to loophole around having to add a robust KYC flow into your product, don't be surprised when a major governmental authority (and the general public) remain generally unconvinced that you did your best to be above ground. [1] https://cointelegraph.com/news/binance-sued-for-allegedly-facilitating-money-laundering-with-lax-kyc https://cointelegraph.com/news/binance-sued-for-allegedly-fa...

cltby 6y ago
> For a global exchange to not risk blowing up means to gain affirmative proof of a user's legal identity, jurisdiction, tax residence Financial stability is totally orthogonal to KYC. Exchanges that allow leveraged trading protect themselves via margin requirements.
- yowlingcat 6y ago
  Sorry, I regret my word choice there. I did not mean "blowing up" in the colloquial definition (from financial instability), but rather from regulatory infractions.
thebean11 6y ago
How would this be a conduit for money laundering if you can't withdraw USD? Your still just stuck with crypto; I'm not sure how it gets you any closer to "clean" money.
- yowlingcat 6y ago
  Great question. So money laundering consists of several phases -- placement, layering and integration. In particular, even if you can't withdraw USD, there's an enormous amount of movement you can conduct on platform which contributes to the layering phase. Even if you don't place or (to your point) integrate it on platform, you can still get quite a bit closer in the process.
  - thebean11 6y ago
    So using it as a BTC mixer essentially?
    - yowlingcat 6y ago
      Yep. Ironically, BTC mixers seem like they'd be quite poor at the job of actually mixing because unlike more sophisticated looking layering activity, it doesn't actually mimic legitimate transaction activity which could otherwise slip under the radar. On the contrary, it sticks out like a sore thumb and because the blockchain is immutable, has been used by the authorities to trace less sophisticated actors.
- vmception 6y ago
  hi, I started this subthread. it is very easy to money launder with crypto and isn't the crux of my argument. my argument is simply that this case is about unregistered futures and swaps being traded in US jurisdiction, and that its not about aml/kyc. to your question, "if you can't withdraw USD?" is very limiting and seems based on heavy misconceptions about both money laundering and a limited idea of utility of crypto, not sure where to start there. the other person's response talks about reintegration which is a very accurate tip of the iceberg. layer and reintegration is much easier with crypto.
  - helloworld11 6y ago
    And how is it easy to convert crypto back into cash in the money laundering process. As far as I can tell, that's actually rather tricky.
    - vmception 6y ago
      Its not and for you to write that you didn't really visualize what I described At the bare minimum you should realize that any KYC’d individual can convert billions of dollars of crypto to US Dollars in a day without moving the markets more than a few percent and after that you should realize that classifying a transaction as clean is not difficult But if you don't want any transaction associated with anyone’s identity it is simply more time consuming, eventually you are still getting to a KYC’d individual that can receive a wire transfer in dollars at any meaningful amount in a day And finally, you can try to reread what I wrote earlier, jot the steps down on a napkin if you need to, its not that complicated you are just starting from a place that assumes an omniscient state and a culture of stigmatizing the movement of money, and thats just flawed
      - thebean11 6y ago
        based on your comments, this all seems pretty pointless. why mess with binance when you could just use a distributed service like coinjoin. Seems like money laundering is easy! > And finally, you can try to reread what I wrote earlier, jot the steps down on a napkin if you need to give me a break bud. talking down to people makes me assume you're clueless.
vmception 6y ago
US registered futures and swaps have a KYC/AML component and obligation. The CFTC's case is about Americans accessing unregistered futures and swaps, and with this case they have created no latitude for any company to exclude Americans so that they would never establish jurisdiction. The point is that this AML/KYC "debate" is a complete red herring. It is inherently a component eventually, but not really. Even if they did force AML/KYC before any kind of trading, then it's still Americans trading unregistered futures and swaps. So you see, unless the CFTC says "we're coming after you because of the lax AML/KYC" then its not about AML/KYC. Could they force AML/KYC and then say "ah you're American you can't trade", sure. Could an American use a fake ID and the CFTC uses that to establish jurisdiction, sure. So the productive thing here would be for the CFTC to be more collaborative and say exactly what the exact threshold a non-US organization can have to be in a safe-harbor with the CFTC.
- ketamine__ 6y ago
  So because someone might use a fake ID you think Binance shouldn't be responsible for doing it in the first place?
  - vmception 6y ago
    I don't have any opinion on that I have an opinion that the productive thing here would be for the CFTC to be more collaborative and say exactly what the exact threshold a non-US organization can have to be in a safe-harbor with the CFTC

cltby 6y ago

> For a global exchange to not risk blowing up means to gain affirmative proof of a user's legal identity, jurisdiction, tax residence Financial stability is totally orthogonal to KYC. Exchanges that allow leveraged trading protect themselves via margin requirements.

yowlingcat 6y ago
Sorry, I regret my word choice there. I did not mean "blowing up" in the colloquial definition (from financial instability), but rather from regulatory infractions.

thebean11 6y ago

How would this be a conduit for money laundering if you can't withdraw USD? Your still just stuck with crypto; I'm not sure how it gets you any closer to "clean" money.

yowlingcat 6y ago
Great question. So money laundering consists of several phases -- placement, layering and integration. In particular, even if you can't withdraw USD, there's an enormous amount of movement you can conduct on platform which contributes to the layering phase. Even if you don't place or (to your point) integrate it on platform, you can still get quite a bit closer in the process.
- thebean11 6y ago
  So using it as a BTC mixer essentially?
  - yowlingcat 6y ago
    Yep. Ironically, BTC mixers seem like they'd be quite poor at the job of actually mixing because unlike more sophisticated looking layering activity, it doesn't actually mimic legitimate transaction activity which could otherwise slip under the radar. On the contrary, it sticks out like a sore thumb and because the blockchain is immutable, has been used by the authorities to trace less sophisticated actors.
vmception 6y ago
hi, I started this subthread. it is very easy to money launder with crypto and isn't the crux of my argument. my argument is simply that this case is about unregistered futures and swaps being traded in US jurisdiction, and that its not about aml/kyc. to your question, "if you can't withdraw USD?" is very limiting and seems based on heavy misconceptions about both money laundering and a limited idea of utility of crypto, not sure where to start there. the other person's response talks about reintegration which is a very accurate tip of the iceberg. layer and reintegration is much easier with crypto.
- helloworld11 6y ago
  And how is it easy to convert crypto back into cash in the money laundering process. As far as I can tell, that's actually rather tricky.
  - vmception 6y ago
    Its not and for you to write that you didn't really visualize what I described At the bare minimum you should realize that any KYC’d individual can convert billions of dollars of crypto to US Dollars in a day without moving the markets more than a few percent and after that you should realize that classifying a transaction as clean is not difficult But if you don't want any transaction associated with anyone’s identity it is simply more time consuming, eventually you are still getting to a KYC’d individual that can receive a wire transfer in dollars at any meaningful amount in a day And finally, you can try to reread what I wrote earlier, jot the steps down on a napkin if you need to, its not that complicated you are just starting from a place that assumes an omniscient state and a culture of stigmatizing the movement of money, and thats just flawed
    - thebean11 6y ago
      based on your comments, this all seems pretty pointless. why mess with binance when you could just use a distributed service like coinjoin. Seems like money laundering is easy! > And finally, you can try to reread what I wrote earlier, jot the steps down on a napkin if you need to give me a break bud. talking down to people makes me assume you're clueless.

vmception 6y ago

US registered futures and swaps have a KYC/AML component and obligation. The CFTC's case is about Americans accessing unregistered futures and swaps, and with this case they have created no latitude for any company to exclude Americans so that they would never establish jurisdiction. The point is that this AML/KYC "debate" is a complete red herring. It is inherently a component eventually, but not really. Even if they did force AML/KYC before any kind of trading, then it's still Americans trading unregistered futures and swaps. So you see, unless the CFTC says "we're coming after you because of the lax AML/KYC" then its not about AML/KYC. Could they force AML/KYC and then say "ah you're American you can't trade", sure. Could an American use a fake ID and the CFTC uses that to establish jurisdiction, sure. So the productive thing here would be for the CFTC to be more collaborative and say exactly what the exact threshold a non-US organization can have to be in a safe-harbor with the CFTC.

ketamine__ 6y ago
So because someone might use a fake ID you think Binance shouldn't be responsible for doing it in the first place?
- vmception 6y ago
  I don't have any opinion on that I have an opinion that the productive thing here would be for the CFTC to be more collaborative and say exactly what the exact threshold a non-US organization can have to be in a safe-harbor with the CFTC