60 ms·

CEO of a top Bitcoin exchange warns: crackdown on cryptocurrencies may be coming

232 points by alexrustic 6y ago

goonogle 6y ago
I really want someone to ask Janet "do you have plans to ban Cash transactions because they are used for illicit activity?" I would guess USD inflation is far worse than expected and they know Bitcoin's initial intended purpose (as an alternative to government money) has come to fruit. It just sounds better to use the illicit boogy man.
- toomuchtodo 6y ago
  Do you need to ban cash if you simply phase it out of existence? Turn up instant payments, and any notes turned in at banks and to the government get shredded. Look to China and Sweden [2] for foreshadowing of digital currencies and the eventual deprecation of physical notes. [1] https://www.google.com/search?q=china+cashless https://www.google.com/search?q=china+cashless [2] https://www.google.com/search?q=sweden+cashless https://www.google.com/search?q=sweden+cashless
- riskneutral 6y ago
  > I really want someone to ask Janet "do you have plans to ban Cash transactions because they are used for illicit activity?" There are already existing controls on cash transactions. If you deposit cash in a bank account, you need to prove your identity and you're subject to anti-money laundering surveillance. Securely transporting and storing large amounts of physical cash, outside of a bank, is very difficult. I imagine that making or receiving large payments with physical cash is often impossible or would attract a lot of attention from authorities and perhaps even criminals. > I would guess USD inflation is far worse than expected and they know Bitcoin's initial intended purpose (as an alternative to government money) has come to fruit. Gold can play the same role, and has been banned in the past, but is unlikely to be banned again. The more likely story is that there are serious money laundering and terrorist financing risks posed by Bitcoin's intended purposes, and governments are trying to figure out how to get a hold on the national security / law and order situation without being to heavy handed.
- gpapilion 6y ago
  To flip this a bit, how much of bitcoin usage is non-speculative, and for legal purposes? I actually think the speculative issue is a bigger concern for the fed, then the legality. It's an commodity w/ very little utility, but a high degree of poorly regulated investing. In addition its used to funnel payments for illegal activity.
NaturalPhallacy 6y ago
How? How do you 'crack down' on a currency that doesn't require any existing state or bank controlled apparatus to operate? Other than the exchange point, which private exchanges for cash can circumvent, how do you crack down on what is essentially math conducted via computers that everyone has access to? Neither the article, nor the linked one from December say.
- toomuchtodo 6y ago
  You (government currency regulators) make it illegal to convert fiat to crypto, and then monitor crypto ledgers for that last bit of folks who still attempt to use crypto. When exchanges break the law, you ship the folks who own the exchange to jail [1]. Crypto folks think they're the former cartoon panel, when it's really the latter how nation state enforcement works [2]. Governments crack down on money laundering with fiat all. the. time. Playing with fiat amounts more than $10k at a time? That's a currency transaction report (CTR) [3]. Try to avoid the CTR? That's structuring [4], also illegal, and a suspicious activity report (SAR) [5] is filed. So, when the question is asked, "how do you crack down on crypto?", the answer is "with the monopoly of force governments possess." [1] https://www.google.com/search?q=crypto+exchange+jail https://www.google.com/search?q=crypto+exchange+jail [2] https://xkcd.com/538/ https://xkcd.com/538/ [3] https://en.wikipedia.org/wiki/Currency_transaction_report https://en.wikipedia.org/wiki/Currency_transaction_report [4] https://en.wikipedia.org/wiki/Structuring https://en.wikipedia.org/wiki/Structuring [5] https://en.wikipedia.org/wiki/Suspicious_activity_report https://en.wikipedia.org/wiki/Suspicious_activity_report
  - tinus_hn 6y ago
    If only there were an international, barely regulated network that allows people in one country to interact with people in another.
    - deleted 6y ago
      [deleted]
    - kec 6y ago
liquidise 6y ago
> U.S. Treasury Secretary Janet Yellen and other officials have warned about the use of cryptocurrencies for illicit transactions. Wait until you hear about cash. More seriously (and hopefully less reductionist) i feel nations who embrace cryptocurrencies early will see mixed results as the landscape matures. I am more confident that nations which turn their back on it, or shut it out completely, will see a loss of otherwise valuable businesses and mindshare. Whatever your stance on cryptocurrencies are, what is of little dispute is the business opportunities they have created. Binance and Coinbase are large, successful companies. Poloniex was sold for ~400M. Knowing the US has soured on cryptocurrencies doesn't make me any less interested in them, it just makes me less interested in holding them/working in the space on US soil. I'd be surprised if i were alone in this sentiment, and in spite of its negative reception on HN, the tech space around cryptocurrencies is quite literally growing as we speak.
- Consultant32452 6y ago
  The people in power are balancing the business opportunities against their own loss of control over the issuance of currency and some financial market functionalities (with smart contracts, etc.). I think it's a given they will always choose their own power over the business opportunities of others.
- maerF0x0 6y ago
  > Wait until you hear about cash. anecdote time: I once travelled to Vietnam for a vacation, people in vietnam prefer $100 bills because they're easier to use for hiding wealth, transporting cross border, and other slightly less than legal reasons. Additionally it's the preferred currency of criminals in the country too (so I heard). They will even pay higher exchange rates for ones in better condition or with more anti-counterfeiting features So yeah, USD is used for a lot of crime globally. EDIT: changed "anti-moneylaundering" to "anti-counterfeiting" by suggestion
  - asah 6y ago
    "with more anti-laundering features" ? did you mean anti-counterfeiting? just checking...
pjc50 6y ago
People have been saying this for a decade, and several failed exchanges later plus a few attempts at banning US persons from using crypto, the crackdown has yet to really arrive.
- ballenf 6y ago
  Torrents or file sharing in general is maybe a good parallel. My impression of torrenting is that crackdowns have made file sharing a niche instead of mainstream activity. Of course it can't be 100% wiped out, but the general public is now wary of file sharing because the message is out there that it's risky.
  - Scoundreller 6y ago
    I think Netflix/Spotify/YouTube and the like “hurt” piracy more than any legal manoeuvre. My own piracy would go down another 50% if I had access to free/paid services like in USA. Then there’s the time I couldn’t play a movie I rented on my TV through Apple because I guess it didn’t like my old TV’s HDMI interface...
  - rawtxapp 6y ago
    I think it has more to do with the fact that for 10-20$/month you can subscribe to Netflix/Spotify and not bother with torrent. That said, torrenting is still alive and well.
    - asdff 6y ago
      That's true for spotify but not for video streaming. The libraries are too siloed so you could end up shelling out quite a lot buying up accounts for these parallel services.
    - randomopining 6y ago
      Yeah before it was like, you had to go to the store to spend $15-25 on a single new movie on DVD. Now there's a ton of stuff at your fingertips in 10 seconds for like 10-20 month. Makes it a lot less worth it for the average Joe.
kasperni 6y ago
With all of the effort spend worldwide on money laundering, terrorist financing, and transfer of funds regulations. I find it very hard to believe that someone won't come after cryptocurrencies at some point. None of these regulations make any sense if you can just wire the money through crypto instead.
- pmurt7 6y ago
  Do you really think that terror organizations like Isis use Bitcoin to buy weapons? No, they use goold old USD.
  - kasperni 6y ago
    Not only do I think they do, I know they do [1]. [1] https://www.justice.gov/opa/pr/global-disruption-three-terror-finance-cyber-enabled-campaigns https://www.justice.gov/opa/pr/global-disruption-three-terro...
  - deleted 6y ago
    [deleted]
- mam2 6y ago
  The market is too big now to come after it. Plus, if you use monero + vpn you are basically untraceable.
chadash 6y ago
You can argue that cash is also used for a lot of illegal activity and you would be correct, but that misses an important point, which is that cash has been with us since our country's founding and from a political point of view it would be nearly impossible to ban it, even if doing so would be a sensible policy. Cryptocurrency is still in the infant stages and banning it wouldn't entail nearly as much of a backlash.
- rawtxapp 6y ago
  I think you're underestimating how many people own/are into crypto. A quick look into Coinbase's S1 alone shows that tens of millions of people in US have accounts with them and they are custody-ing billions of $ of institutional coins. And that's just Coinbase, ignoring Robinhood, Cashapp, Gemini, GBTC and lots of other exchanges and custody which have very significant volumes as well.
plank_time 6y ago
I think this is pretty obvious and even mentioned this is a previous comment a few weeks ago. The US government has been saying that crypto is funding terrorism and money laundering. If you can’t read the writing on the wall then that’s your fault.
- Animats 6y ago
  What terrorism? Since 9/11, there have been only two major Islamic terrorism incidents on US soil. The Boston Marathon bombing was by two brothers, and the San Bernardino shooting was a husband and wife team. Both were low-budget operations. Even 9/11 is estimated to have cost the attackers only about $400K. What costs is setting up an full-sized army, like ISIS.
  - plank_time 6y ago
    People from the US and other countries are sending money abroad via crypto to fund terrorism outside the US
    - yunesj 6y ago
      People from the US are sending crypto abroad to feed their families.
      - plank_time 6y ago
        They are also funding terrorism.
    - slenk 6y ago
      People from the US and other countries are sending money abroad via cash to fund terrorism out the US
      - plank_time 6y ago
        Yes, but with crypto it’s much easier and undetectable. With cash it’s much easier to trace because of global regulations.
blondie9x 6y ago
Bitcoin will never be regulated.
- pcora 6y ago
  Would you bet on it?
  - RealityVoid 6y ago
    Not OP, but I am. Tell me the bet conditions and the winning criteria. Would take that any day. I'm serious. I am certain they will at some point try, but fail miserably.
- noxer 6y ago
  It already is. You cant buy one without KYC. Unless you go to "dark" places where you may or may not get scammed. Unless you already have cryoto then ofc you can exchange it but most people need a fiat on-ramp.
  - RealityVoid 6y ago
    Don't be silly, of course you can. It's inconvenient, but not impossible. ON/OFF ramps are the parts that they could regulate but the tighter they squeeze, the better the circumvention methods will be. I think HN really overestimates the ability of states to keep this under wraps and underestimate the ability of the ecosystem to adapt.
    - noxer 6y ago
      Name one place where you can buy BTC with fiat without KYC.
      - danlugo92 6y ago
        1) bisq 2) sign up to a kyc exchange. Exchange small amount. Contact someone who is willing to exchange outside of the platform, maybe someone with a high reputation.
pmurt7 6y ago
Don't shoot the messenger.
vmception 6y ago
Capture US regulatory agencies while you can. This has already had varying levels of success with the Chief Legal Officer of Coinbase being the acting chair of the OCC and telling banks it was okay to custody crypto and settle transactions on cryptocurrency networks instead of just SWIFT, ACH, FedWire There are some at the SEC, and the new SEC chair was pro-crypto when he was previously the chair of CFTC Cabinet level positions and the Federal Reserve and Treasury would be ideal If this is important to you, you don't have to be just a passive holder or entrepreneur. Use your platform to assume power. Make the world as comfortable for your generation as older generations did for themselves.
- PaywallBuster 6y ago
  Crypto exchange owner was 2nd biggest donor to Biden campaign https://nymag.com/intelligencer/2021/02/sam-bankman-fried-biden-donor.html https://nymag.com/intelligencer/2021/02/sam-bankman-fried-bi...
  - vmception 6y ago
    Great, yeah a lot of crypto builders thrive in power vacuums. So the Trump administration was convenient for the 2017 bubble, as a debilitated SEC was necessary for the token launches that made issuers millions (and billions). And a paralyzed Congress was necessary to get non-establishment people confirmed who will last many administrations. All of that lost its utility by 2020 as the outcomes were mostly solidified and favorable. I would say it is slightly more than moderately successful. The SEC still hasn't approved a digital commodity trust yet ("bitcoin ETF") but enough wealthy people are involved now that have created surrogates that it isn't as important. Maybe some college kid in the late 2020s will make some Netflix conspiracy documentary about the "revolving door in crypto", I would call that success.
    - medvezhenok 6y ago
      There is also an interesting argument about crypto being a convenient drain for excess liquidity in the system (injected by the stimulus), which is why it's not being regulated too heavily. If stocks & crypto were less appealing, perhaps we would all experience higher velocity of money & inflation since demand would turn to "real assets".
system16 6y ago
Is the timing of this statement a coincidence, or is it possibly a jab to take the wind out of the sails of another top exchange set to go public in two days?
- gruez 6y ago
  Judging by the market's non-reaction to this, I'm going with the latter.
  - ac29 6y ago
    Coinbase's IPO isn't until Wednesday.
    - gruez 6y ago
      I'm talking about bitcoin prices
winslett 6y ago
Instead of killing it by banning it, I suspect they could kill it by buying it. If the Fed wanted to "invest" in Bitcoin, it would kill it by soaking up liquidity and creating a liquidity-squeeze. Because the amount in circulation is fixed, it wouldn't have to buy all of the Bitcoin -- just enough to kill any utility. This is a downside of an asset with a fixed quantity. Once the community discovered the liquidity-squeeze spike, it would lead to a run-to-the-exit with a price crash. The short-squeeze spike and crash would spread across alt-coins as well due to rush-in-rush-out and leverage across alt-coins. Once liquidity is killed, liquidity-squeezed, and a crash happens, the FED / SEC could make it illegal citing volatility and losses of citizens. The Fed would need to do this discretely and never disclose their purchases. If it became public, the community would probably choose to fork.
- gruez 6y ago
  Can you elaborate on why a "liquidity-squeeze" is bad for bitcoin? It's subdivisible to 8 decimal places, so it's not like reducing the supply would make it harder to transact or anything.
- lambda_obrien 6y ago
  The USG could kill it by using a 51 percent attack; the NSA must have rows upon rows of servers that could be repurposed for a week or two to destroy the market. Split the blockchain every couple of hours into several different versions, eventually there would be little chance to reconcile things.
  - gruez 6y ago
    >the NSA must have rows upon rows of servers that could be repurposed for a week or two to destroy the market Their general purpose servers are nearly useless for mining bitcoin because their hashrates are orders of magnitude lower than the ASICs that professional miners use. If you want to 51% attack bitcoin you either need an absurd number of general purpose computers (possibly more than all CPUs/GPUs that exist on earth) or pour billions into making hardware that can only be used to mine.
drummer 6y ago
This is exactly why i love projects like MobileCoin and its integration in Signal. We are going to desperately need anonymous, secure and privacy focused payments very very soon. Signal needs to open up payments worldwide as soon as possible. The last problem to fix is making it all decentralized.
- noxer 6y ago
  Everything crypto has KYC now days. I highly doubt you can get that mobilecoin in any relevant quantities without disclosing who you are.
  - RealityVoid 6y ago
    Buy monero on some KYC, move it non-kyc and buy whatever.
    - noxer 6y ago
      Whats the point? As soon as you buy anything in the real world its connected to you, unless you want your lambo be gifted to someone else with no traceable connection to you. Fine you an buy anonymous gifts with crypto - awesome.
justapassenger 6y ago
Crackdown on current state of crypto can only help it in the long run, if you actually really believe it. Right now it’s market mostly dedicated to get rich quick schemes. While it works great if you’re on top of the pyramid, it’s only hurting crypto case for the future.
- puranjay 6y ago
  DeFi has a legitimate use case and NFTs have an astonishing number of use cases. Smart Contracts are an incredible, incredible innovation. We are at the tip of the iceberg and nothing has been more disappointing than seeing the traditional tech world's dismissal of crypto as "get rich schemes". The tech world is surprisingly as complacent now as the legacy dinosaurs it first helped destroy in the 1990s and 2000s.
  - rawtxapp 6y ago
    I think it's somewhat similar to innovator's dilemma, a lot of current tech leaders were once the underdog and now are at the top, so they end up becoming complacent and non-innovators or slow innovators like the companies they replaced. An example of really cool smart contract usage is borrowing against your crypto, for example, this person/group was able to borrow roughly 340M$ [1], the best part, they didn't even had to provide their name or deal with any other human, all enabled by a smart contract that they can inspect and verify. 1: https://defiexplore.com/cdp/8463 https://defiexplore.com/cdp/8463
    - puranjay 6y ago
      I find it incredible that someone can code up a strategy for deploying an investment vault, the community, which operates as a Decentralized Autonomous Organization (DAO), can decide to vote on it, and two days later, people can start investing money into it and earning interest - no middleman or manager involved. The investment vault will deploy the capital in different protocols based on the strategy outlined (and voted on by the DAO) automatically. The automation smart contracts can bring about is scary.
    - 6y ago
puranjay 6y ago
HN is boomer central when it comes to crypto. Haven't had a single enlightening discussion about it here. I see a lot of misconceptions about scams and pump and dump schemes carried over from the 2017 run, and complete neglect of the innovations created since. If anyone wants a refresher, I'm always willing to chat. I will also write a primer to help get folks up to speed on what's the latest in crypto.
- arcturus17 6y ago
  Yea no I've seen plenty of you folks talking about recent innovations in crypto and I'm just not persuaded that any of it is remotely useful other than maybe store of value and certainly speculation. I'm not a boomer, and I even own a decent position in BTC / ETH.
  - puranjay 6y ago
    I'll give you an example. The most "mainstream" revolutionary idea in crypto right now is automated market makers (AMMs) like Uniswap. These essentially allow anyone to create a "pool" to trade between two assets and earn fees from it. You can tokenize any asset, pair it with a liquid token (such as ETH or USDT) and offer it to anyone to trade while you earn fees. Or you can join an existing, popular pool (such as between wBTC-ETH) and earn fees on any trades that happen on it. Essentially, anyone can: - Create a decentralized exchange economy - Participate in existing exchange economies with any amount of capital and earn fees from it The latter part is important because that's been the purview of banks. Countless trades happen between currency pairs daily. Banks earn all the fees because they supply all the liquidity. You can't participate in that market even if you wanted to (or unless you had tens of billions in capital). AMMs turn that around. You could have $1 worth of liquidity but you can still earn fees on it. This is the first time in the history of finance that creating and participating in exchange economies has been so cheap and accessible. I think that alone is revolutionary. It makes previously inaccessible financial avenues available to the little guy
    - randomopining 6y ago
      Yeah but what would the decentralized exchange be used for, other than other crypto? A bank can legally process a person who fails to come through on a loan. They can physically take stuff. A decentralized crypto network can't do anything to anybody. It can just take the marginal collateral and then the rest swallow the losses... I feel like defi crypto types discount the power of the physical world.
CynicusRex 6y ago
>I am more confident that nations which turn their back on it, or shut it out completely, will see a loss of otherwise valuable businesses and mindshare. Mindshare like cancerous greed? Nations turning their backs on crypto“currencies” turn their backs on multi-level marketing pyramid schemes. Good riddance. “Strong currencies are not the solution to poor governance. Good governance and democracy makes a country and its currency strong. Not vice versa.” —halukakin, HackerNews, 2021 —https://news.ycombinator.com/item?id=26105680 https://news.ycombinator.com/item?id=26105680, https://www.cynicusrex.com/file/cryptocultscience.html https://www.cynicusrex.com/file/cryptocultscience.html.
christiansakai 6y ago
Tangentially related. Cryptocurrency is just a side effect of blockchain. Once blockchain technology matures and if one day we see blockchain to store files and blockchain to run cloud services, then will the US government censor it as well? If they will, how? It is practically impossible. You can upload anything there, including child porn, instructions on making bombs, videos that contain brainwashing propaganda for terrorist groups. You can run your server there, including servers for recruiting terrorists, etc.
- coolspot 6y ago
  When they realize, they will kill on/off-ramps into cash and make any transactions not legal. The software itself they can treat is as malware - blackhole IPs and shutdown any hosts involved.
  - RealityVoid 6y ago
    The value of crypto would decrease but never be completely gone. A whole pandora's box was opened and they can't put the genie back in the bottle no matter how hard they try. If they were to kill the offramps, the ecosystem would move on websites on Tor or I2P that would work P2P, they can use high privacy coins such as Monero or zcash. Or people will trade it in person using escrow systems. It's not like the first BTC trasactions had the privilege of nice exchanges. The possibilities are there. Just the incentives are not yet present.
    - coolspot 6y ago
      The point is, they can make it so fringe, that no legitimate person/company would touch it. Local in-person exchanges for any significant amount are already under fire, it can be made even more so. https://www.atmmarketplace.com/news/six-arrested-in-connection-with-bitcoin-atm-money-laundering/ https://www.atmmarketplace.com/news/six-arrested-in-connecti... https://www.justice.gov/usao-ma/pr/fitchburg-man-charged-money-laundering-and-illegal-money-transmission-converting-cash https://www.justice.gov/usao-ma/pr/fitchburg-man-charged-mon... https://www.justice.gov/usao-cdca/pr/ontario-man-agrees-plead-guilty-federal-charges-illegally-operating-bitcoin-cash-0 https://www.justice.gov/usao-cdca/pr/ontario-man-agrees-plea... https://www.justice.gov/usao-cdca/pr/bitcoin-maven-sentenced-one-year-federal-prison-bitcoin-money-laundering-case https://www.justice.gov/usao-cdca/pr/bitcoin-maven-sentenced... https://www.forbes.com/sites/billybambrough/2020/05/28/new-york-hacker-charged-in-100-million-dollar-bitcoin-case/ https://www.forbes.com/sites/billybambrough/2020/05/28/new-y... https://duckduckgo.com/?q=bitcoin+arrested+money+laundering+site%3Ajustice.gov https://duckduckgo.com/?q=bitcoin+arrested+money+laundering+...
motohagiography 6y ago
Some discussion from knowledgeable people of what plausible "crackdown" rules would look like would be interesting. The article mentions an ID requirement for transactions above $3k. Personally, I think the idea of the physical nation state is converting to a global credit score, where instead of transacting across borders, you are transacting across classes of businesses and people, and tarriff and tax policy will be enforced on a risk basis instead of a national border one. Instead of black market electronic transactions, the transaction is just taxed at a higher rate because of the relative social credit score of your counterparty, so your transaction with a non-KYC enrolled wallet would incurr a 100%+ excise liability on your tax reporting. It's the sort of totalitarian idea that is appealing to the sort of people you really need a popular revolt against to unseat, but worth considering what they think about to remove their element of surprise.
- cinntaile 6y ago
  This is an interesting point of view, do you have any sources where I can read more about this?
  - walterbell 6y ago
    See this comment from a larger thread on CBDCs: https://news.ycombinator.com/item?id=26205741 https://news.ycombinator.com/item?id=26205741 May or may not be repurposed: https://www.goodhealthpass.org https://www.goodhealthpass.org & https://www.lfph.io/ https://www.lfph.io/ & https://trustoverip.org/ https://trustoverip.org/ There's been talk of a KYC requirement for all customers of US web hosting because cyber.
    - motohagiography 6y ago
      Having worked with more than one of those member companies in that foundation, the one thing I've learned about conspiracy theorists is that what they really lack is imagination and vision.
      - walterbell 6y ago
cblconfederate 6y ago
This was expected, crypto is essentially a weapon against the dollar. However i m not sure if the world's economies will go along with it. Maybe europe (which usually drags itself behind the US) but i m not sure the rest of the world would want to begin the post-covid era with even more dependence on US. In any case, good news for binance, bad news for coinbase
knorker 6y ago
Let's hope.
scandox 6y ago
To me it's always seemed like money grows from the barrel of a gun. Detaching money from military power sounds wonderful but it makes no sense to me. It seems to defy the very basis of what money is. Tokens handed out by warlords. Only stretched out over such a long time that it isn't obvious any more. Obviously I am neither an economist nor a political theorist.
- generalizations 6y ago
  I always figured that 'naturally arising' currencies, like gold and cigarettes, have two key properties: a) perceived inherent value (e.g., gold by long tradition and whose origins are lost to history, and cigarettes because people want their fix) and b) natural limitations on quantity (and counterfiting: gold has known density, and a fake cigarette is apparent as soon as you try and use it). The purpose of the gun, it has seemed to me, is to get around the fact that fiat currencies have neither of the above properties, but that both can be enforced to some degree.
- cblconfederate 6y ago
  It's true but , bitcoin is a weapon, like the dollar is. Because BTC can't be physically destroyed, nukes become useless if the purpose is to destroy an economy / state. Raising an army with bitcoin is also impossible , because it s international and inherently impossible to inflate. In fact any state that wants to wage war in a crypto world is essentially fighting mathematics. It is also inevitable, as any country that decides to ban it will eventually be forced to bring it back as soon as a rival starts using it.
  - defterGoose 6y ago
    While it would be nearly impossible to destroy all the servers maintaining the blockchain, it makes me wonder about the possibility of a sophisticated virus erasing it by means of an update cycle. Seems like some good fodder for a Mr. Robot-esque show or novel.
- meiraleal 6y ago
  Internet is a new thing, the old world might not satisfactorily explain the new one.
rspeele 6y ago
Just as a fun hypothetical to think about... an effective way to crack down on cryptocurrencies would be to do it under the table. Don't make any official policy about crypto other than recommending that US citizens don't invest in it. Attack the crypto ecosystem the way they attacked Iranian centrifuges. The damage is done by the CIA and NSA, not the SEC and FBI. The goal is not to make it impossible to use crypto but to make it so untrustworthy that nobody wants to touch it. Host mirrors of popular software wallets with hidden malware. Add backdoors to some hardware wallets at the factory. Create trojans that sit quietly and harmlessly until you try to deposit your coins at an exchange, at which point, unbeknownst to you, your compromised browser is displaying the CIA's bitcoin address instead of the exchange's as the place to send your coins. Make smart contracts with increasingly clever obfuscated time bomb backdoors. And it all comes with easy plausible deniability, since any of these tricks could just as well be regular old crypto thieves, highly motivated by the massive "bug bounty" on any exploit, including social engineering, that lets them steal coins. Of course, the backlash if this was ever found out would be immense. It would basically be the US government operating a cybercrime organization. Many of the victims would likely be US citizens speculating in crypto. It wouldn't be worth it unless the powers that be decided crypto is THAT dangerous to the status quo.
- ttul 6y ago
  What's to say CIA and others aren't already operating all sorts of crypto infrastructure? I absolutely guarantee they are. The people who run the financial system are a different group and would not necessarily be aware of what the three-letter agencies are doing.
- RealityVoid 6y ago
  So just... like... what scammers are currently doing?
  - rspeele 6y ago
    Yep, just with a stuxnet level of sophistication.
- postalrat 6y ago
exabrial 6y ago
> use of bitcoin for money laundering, terrorist financing and other illegal activities. Bullshit. It's being used to get around the fucking enormous 33% taxes levied on the middle class to support Democrat and Republican donor's lifestyles.
- machinecontrol 6y ago
  For anyone thinking to do this, it’s a terrible idea. Bitcoin has a public ledger that is around forever. It is much easier to trace than cash or offshore bank accounts.
- acdha 6y ago
  Are you saying that the U.S. middle class starts at $163/326k of taxable income?
deleted 6y ago
[deleted]
devops000 6y ago
Yeah, they say it every week.
christiansakai 6y ago
Maybe don’t bail out bad actors like in 2008 and we gonna behave, promise.
GoodJokes 6y ago
Does this mean I buy or sell?
iorrus 6y ago
I think many underplay the real advantages of crypto assuming it’s all used for nefarious reasons, I use crypto quite frequently now, especially BCH (Bitcoin Cash), I can send this internationally for less than the cost PayPal changes for international payments. So why not use it, if the other person accepts it. In addition here is a real business (gpu.land) going only crypto as it provides better options: “I’m reaching out to let you know that as of today we'll no longer be taking cards for top up, and instead we'll be taking crypto payments. The problem is fraud. A lot of people try to use stolen cards to mine on GPU.LAND, despite all the defenses and pledges not to do it. When chargebacks come through, we're on the hook, and to date that meant losing 30% of our revenue.” In some cases Some might prefer to keep their bank from knowing exactly what theyre spending money on even tho it’s perfectly legal e.g. paying for porn, supporting a political dissident etc.
- mywittyname 6y ago
  > In some cases Some might prefer to keep their bank from knowing exactly what theyre spending money on even tho it’s perfectly legal e.g. paying for porn, supporting a political dissident etc. Wait, wouldn't everyone who has your wallet id know what you spend your money on if you use crypto? It is a public ledger. I mean, you could go through the effort of trying to hide it by using various wallets, but that only adds plausible deniability. If someone at your work or bank decide to track the BTC they give you, I'm pretty sure they will start picking up on spending patterns.
  - ibeckermayer 6y ago
    I’m not a crypto expert, but I’ve researched this some myself and believe that’s all true. There are “privacy-coins” like Monero which obfuscate this, however afaict KYC laws make it impossible to use legally for commercial purposes.
  - iorrus 6y ago
    I was more thinking along the lines of what’s this PayPal deposit to “furry art 4 u” (not my thing btw) or “Free Ross Ulbrict” with the mortgage advisor rather than anything requiring block chain analysis. How would anyone at work know your block chain wallet hash? It’s a cryptographically generated hash not linked to any personal ID. People can see that money is moving around to different address and if law enforcement or mortgage advisor requested the exchange account details they could see you deposited this money in this address and then it moved to this address etc, but it’s not trivial to identify who owns any of those address once it’s left the exchange wallet. If I was dealing with work people and trying to isolate them from other transactions, I’d just generate a separate wallet address for them which is trivial.
kelvin0 6y ago
There seems to be 2 types of discussion about Bitcoin I've read so far: A) 95% of the discussions and focus on the strict monetary value of the Bitcoin as an investment and financial gains. B) 5% are related to ideological concepts of a decentralized monetary system and how that's a very good thing. I fail to see the real value for humanity in general for this, not to mention the environmental impacts of the energy consumption of the bitcoin mining operations. I am open to reading other points of view.
- 627467 6y ago
  You forgot: C) failing to see value for humanity due privilege of having access to modern and stable finance (pick your own percentage)
  - kelvin0 6y ago
    Aside from my original comment, can't say I've seen or read anything else about C)
ulisesrmzroche 6y ago
So what happens if the fed cracks down and you have a ton of bitcoin? That goes to zero, right? is there going to be a withdrawal stampede? I dunno if a crackdown is even going to happen, but in case it does, what's the plan?
revel 6y ago
Almost certainly the heavily privacy themed cryptos will the first to go. Monero, dash, I'm looking at you. Bitcoin and ethereum are almost certainly safe, but I there are a few on the periphery that are harder to gauge. Decentralized exchange tokens like 0x and rep / augur seem like they could fall on the wrong side of the law too. Lastly, I'm not sure how much I would want to hold stable coins like maker / dai.
intricatedetail 6y ago
The US banned plants and spend billions and billions to enforce it. Not sure why crypto would be any different? It can even be checked same way. "Sir, show me your phone." "What is this app? You are arrested for suspicion of crypto possession"
afrcnc 6y ago
Should have been done a long time ago. Literally every law enforcement investigation into organized crime requires blockchain analysis these days. I never met people who use crypto to buy actual day-to-day goods. Only hear about it from cybercrime and crypto-bro price gaugers.
zoshi 6y ago
Leviathan awakens evil eyes look everywhere blind to my Monero
beiller 6y ago
It's already starting. I've heard that Nvidia developed a cutting edge computing audit system, that was developed to detect, in real time, that GPUs are being used for calculating simple hashing algorithms and sniffs out all computation. The next step is just government mandated cpu firmware, installed in all Intel and AMD CPUs that can detect when a computer tries to calculate a SHA hash, and immediately reports it to the fed. This leading edge tech is already being shared by Nvidia with the FBI. I've heard it's unhakable.
diragon 6y ago
CEO of a top Bitcoin exchange wants prices to go down so they can pump some more.
jaggs 6y ago
What a fantastic discussion this is. Someone needs to archive this for future reference once the whole thing has played out one way or another. I have a feeling we're at a massive inflection point, with two possible futures facing us. One, featuring incredible innovation focused on enhancing the human condition through collective endeavour, the other one in which climate change forces us back into a kind of pseudo primitive social state. It feels like crypto has the potential to do trigger the former, if we still have enough cheap energy of course. :)

232 points by alexrustic 6y ago

I really want someone to ask Janet "do you have plans to ban Cash transactions because they are used for illicit activity?" I would guess USD inflation is far worse than expected and they know Bitcoin's initial intended purpose (as an alternative to government money) has come to fruit. It just sounds better to use the illicit boogy man.

toomuchtodo 6y ago
Do you need to ban cash if you simply phase it out of existence? Turn up instant payments, and any notes turned in at banks and to the government get shredded. Look to China and Sweden [2] for foreshadowing of digital currencies and the eventual deprecation of physical notes. [1] https://www.google.com/search?q=china+cashless https://www.google.com/search?q=china+cashless [2] https://www.google.com/search?q=sweden+cashless https://www.google.com/search?q=sweden+cashless
riskneutral 6y ago
> I really want someone to ask Janet "do you have plans to ban Cash transactions because they are used for illicit activity?" There are already existing controls on cash transactions. If you deposit cash in a bank account, you need to prove your identity and you're subject to anti-money laundering surveillance. Securely transporting and storing large amounts of physical cash, outside of a bank, is very difficult. I imagine that making or receiving large payments with physical cash is often impossible or would attract a lot of attention from authorities and perhaps even criminals. > I would guess USD inflation is far worse than expected and they know Bitcoin's initial intended purpose (as an alternative to government money) has come to fruit. Gold can play the same role, and has been banned in the past, but is unlikely to be banned again. The more likely story is that there are serious money laundering and terrorist financing risks posed by Bitcoin's intended purposes, and governments are trying to figure out how to get a hold on the national security / law and order situation without being to heavy handed.
gpapilion 6y ago
To flip this a bit, how much of bitcoin usage is non-speculative, and for legal purposes? I actually think the speculative issue is a bigger concern for the fed, then the legality. It's an commodity w/ very little utility, but a high degree of poorly regulated investing. In addition its used to funnel payments for illegal activity.

NaturalPhallacy 6y ago

How? How do you 'crack down' on a currency that doesn't require any existing state or bank controlled apparatus to operate? Other than the exchange point, which private exchanges for cash can circumvent, how do you crack down on what is essentially math conducted via computers that everyone has access to? Neither the article, nor the linked one from December say.

toomuchtodo 6y ago
You (government currency regulators) make it illegal to convert fiat to crypto, and then monitor crypto ledgers for that last bit of folks who still attempt to use crypto. When exchanges break the law, you ship the folks who own the exchange to jail [1]. Crypto folks think they're the former cartoon panel, when it's really the latter how nation state enforcement works [2]. Governments crack down on money laundering with fiat all. the. time. Playing with fiat amounts more than $10k at a time? That's a currency transaction report (CTR) [3]. Try to avoid the CTR? That's structuring [4], also illegal, and a suspicious activity report (SAR) [5] is filed. So, when the question is asked, "how do you crack down on crypto?", the answer is "with the monopoly of force governments possess." [1] https://www.google.com/search?q=crypto+exchange+jail https://www.google.com/search?q=crypto+exchange+jail [2] https://xkcd.com/538/ https://xkcd.com/538/ [3] https://en.wikipedia.org/wiki/Currency_transaction_report https://en.wikipedia.org/wiki/Currency_transaction_report [4] https://en.wikipedia.org/wiki/Structuring https://en.wikipedia.org/wiki/Structuring [5] https://en.wikipedia.org/wiki/Suspicious_activity_report https://en.wikipedia.org/wiki/Suspicious_activity_report
- tinus_hn 6y ago
  If only there were an international, barely regulated network that allows people in one country to interact with people in another.
  - deleted 6y ago
    [deleted]
  - kec 6y ago

liquidise 6y ago

> U.S. Treasury Secretary Janet Yellen and other officials have warned about the use of cryptocurrencies for illicit transactions. Wait until you hear about cash. More seriously (and hopefully less reductionist) i feel nations who embrace cryptocurrencies early will see mixed results as the landscape matures. I am more confident that nations which turn their back on it, or shut it out completely, will see a loss of otherwise valuable businesses and mindshare. Whatever your stance on cryptocurrencies are, what is of little dispute is the business opportunities they have created. Binance and Coinbase are large, successful companies. Poloniex was sold for ~400M. Knowing the US has soured on cryptocurrencies doesn't make me any less interested in them, it just makes me less interested in holding them/working in the space on US soil. I'd be surprised if i were alone in this sentiment, and in spite of its negative reception on HN, the tech space around cryptocurrencies is quite literally growing as we speak.

Consultant32452 6y ago
The people in power are balancing the business opportunities against their own loss of control over the issuance of currency and some financial market functionalities (with smart contracts, etc.). I think it's a given they will always choose their own power over the business opportunities of others.
maerF0x0 6y ago
> Wait until you hear about cash. anecdote time: I once travelled to Vietnam for a vacation, people in vietnam prefer $100 bills because they're easier to use for hiding wealth, transporting cross border, and other slightly less than legal reasons. Additionally it's the preferred currency of criminals in the country too (so I heard). They will even pay higher exchange rates for ones in better condition or with more anti-counterfeiting features So yeah, USD is used for a lot of crime globally. EDIT: changed "anti-moneylaundering" to "anti-counterfeiting" by suggestion
- asah 6y ago
  "with more anti-laundering features" ? did you mean anti-counterfeiting? just checking...

pjc50 6y ago

People have been saying this for a decade, and several failed exchanges later plus a few attempts at banning US persons from using crypto, the crackdown has yet to really arrive.

ballenf 6y ago
Torrents or file sharing in general is maybe a good parallel. My impression of torrenting is that crackdowns have made file sharing a niche instead of mainstream activity. Of course it can't be 100% wiped out, but the general public is now wary of file sharing because the message is out there that it's risky.
- Scoundreller 6y ago
  I think Netflix/Spotify/YouTube and the like “hurt” piracy more than any legal manoeuvre. My own piracy would go down another 50% if I had access to free/paid services like in USA. Then there’s the time I couldn’t play a movie I rented on my TV through Apple because I guess it didn’t like my old TV’s HDMI interface...
- rawtxapp 6y ago
  I think it has more to do with the fact that for 10-20$/month you can subscribe to Netflix/Spotify and not bother with torrent. That said, torrenting is still alive and well.
  - asdff 6y ago
    That's true for spotify but not for video streaming. The libraries are too siloed so you could end up shelling out quite a lot buying up accounts for these parallel services.
  - randomopining 6y ago
    Yeah before it was like, you had to go to the store to spend $15-25 on a single new movie on DVD. Now there's a ton of stuff at your fingertips in 10 seconds for like 10-20 month. Makes it a lot less worth it for the average Joe.

kasperni 6y ago

With all of the effort spend worldwide on money laundering, terrorist financing, and transfer of funds regulations. I find it very hard to believe that someone won't come after cryptocurrencies at some point. None of these regulations make any sense if you can just wire the money through crypto instead.

pmurt7 6y ago
Do you really think that terror organizations like Isis use Bitcoin to buy weapons? No, they use goold old USD.
- kasperni 6y ago
  Not only do I think they do, I know they do [1]. [1] https://www.justice.gov/opa/pr/global-disruption-three-terror-finance-cyber-enabled-campaigns https://www.justice.gov/opa/pr/global-disruption-three-terro...
- deleted 6y ago
  [deleted]
mam2 6y ago
The market is too big now to come after it. Plus, if you use monero + vpn you are basically untraceable.

chadash 6y ago

You can argue that cash is also used for a lot of illegal activity and you would be correct, but that misses an important point, which is that cash has been with us since our country's founding and from a political point of view it would be nearly impossible to ban it, even if doing so would be a sensible policy. Cryptocurrency is still in the infant stages and banning it wouldn't entail nearly as much of a backlash.

rawtxapp 6y ago
I think you're underestimating how many people own/are into crypto. A quick look into Coinbase's S1 alone shows that tens of millions of people in US have accounts with them and they are custody-ing billions of $ of institutional coins. And that's just Coinbase, ignoring Robinhood, Cashapp, Gemini, GBTC and lots of other exchanges and custody which have very significant volumes as well.

plank_time 6y ago

I think this is pretty obvious and even mentioned this is a previous comment a few weeks ago. The US government has been saying that crypto is funding terrorism and money laundering. If you can’t read the writing on the wall then that’s your fault.

Animats 6y ago
What terrorism? Since 9/11, there have been only two major Islamic terrorism incidents on US soil. The Boston Marathon bombing was by two brothers, and the San Bernardino shooting was a husband and wife team. Both were low-budget operations. Even 9/11 is estimated to have cost the attackers only about $400K. What costs is setting up an full-sized army, like ISIS.
- plank_time 6y ago
  People from the US and other countries are sending money abroad via crypto to fund terrorism outside the US
  - yunesj 6y ago
    People from the US are sending crypto abroad to feed their families.
    - plank_time 6y ago
      They are also funding terrorism.
  - slenk 6y ago
    People from the US and other countries are sending money abroad via cash to fund terrorism out the US
    - plank_time 6y ago
      Yes, but with crypto it’s much easier and undetectable. With cash it’s much easier to trace because of global regulations.

blondie9x 6y ago

Bitcoin will never be regulated.

pcora 6y ago
Would you bet on it?
- RealityVoid 6y ago
  Not OP, but I am. Tell me the bet conditions and the winning criteria. Would take that any day. I'm serious. I am certain they will at some point try, but fail miserably.
noxer 6y ago
It already is. You cant buy one without KYC. Unless you go to "dark" places where you may or may not get scammed. Unless you already have cryoto then ofc you can exchange it but most people need a fiat on-ramp.
- RealityVoid 6y ago
  Don't be silly, of course you can. It's inconvenient, but not impossible. ON/OFF ramps are the parts that they could regulate but the tighter they squeeze, the better the circumvention methods will be. I think HN really overestimates the ability of states to keep this under wraps and underestimate the ability of the ecosystem to adapt.
  - noxer 6y ago
    Name one place where you can buy BTC with fiat without KYC.
    - danlugo92 6y ago
      1) bisq 2) sign up to a kyc exchange. Exchange small amount. Contact someone who is willing to exchange outside of the platform, maybe someone with a high reputation.

pmurt7 6y ago

Don't shoot the messenger.

vmception 6y ago

Capture US regulatory agencies while you can. This has already had varying levels of success with the Chief Legal Officer of Coinbase being the acting chair of the OCC and telling banks it was okay to custody crypto and settle transactions on cryptocurrency networks instead of just SWIFT, ACH, FedWire There are some at the SEC, and the new SEC chair was pro-crypto when he was previously the chair of CFTC Cabinet level positions and the Federal Reserve and Treasury would be ideal If this is important to you, you don't have to be just a passive holder or entrepreneur. Use your platform to assume power. Make the world as comfortable for your generation as older generations did for themselves.

PaywallBuster 6y ago
Crypto exchange owner was 2nd biggest donor to Biden campaign https://nymag.com/intelligencer/2021/02/sam-bankman-fried-biden-donor.html https://nymag.com/intelligencer/2021/02/sam-bankman-fried-bi...
- vmception 6y ago
  Great, yeah a lot of crypto builders thrive in power vacuums. So the Trump administration was convenient for the 2017 bubble, as a debilitated SEC was necessary for the token launches that made issuers millions (and billions). And a paralyzed Congress was necessary to get non-establishment people confirmed who will last many administrations. All of that lost its utility by 2020 as the outcomes were mostly solidified and favorable. I would say it is slightly more than moderately successful. The SEC still hasn't approved a digital commodity trust yet ("bitcoin ETF") but enough wealthy people are involved now that have created surrogates that it isn't as important. Maybe some college kid in the late 2020s will make some Netflix conspiracy documentary about the "revolving door in crypto", I would call that success.
  - medvezhenok 6y ago
    There is also an interesting argument about crypto being a convenient drain for excess liquidity in the system (injected by the stimulus), which is why it's not being regulated too heavily. If stocks & crypto were less appealing, perhaps we would all experience higher velocity of money & inflation since demand would turn to "real assets".

system16 6y ago

Is the timing of this statement a coincidence, or is it possibly a jab to take the wind out of the sails of another top exchange set to go public in two days?

gruez 6y ago
Judging by the market's non-reaction to this, I'm going with the latter.
- ac29 6y ago
  Coinbase's IPO isn't until Wednesday.
  - gruez 6y ago
    I'm talking about bitcoin prices

winslett 6y ago

Instead of killing it by banning it, I suspect they could kill it by buying it. If the Fed wanted to "invest" in Bitcoin, it would kill it by soaking up liquidity and creating a liquidity-squeeze. Because the amount in circulation is fixed, it wouldn't have to buy all of the Bitcoin -- just enough to kill any utility. This is a downside of an asset with a fixed quantity. Once the community discovered the liquidity-squeeze spike, it would lead to a run-to-the-exit with a price crash. The short-squeeze spike and crash would spread across alt-coins as well due to rush-in-rush-out and leverage across alt-coins. Once liquidity is killed, liquidity-squeezed, and a crash happens, the FED / SEC could make it illegal citing volatility and losses of citizens. The Fed would need to do this discretely and never disclose their purchases. If it became public, the community would probably choose to fork.

gruez 6y ago
Can you elaborate on why a "liquidity-squeeze" is bad for bitcoin? It's subdivisible to 8 decimal places, so it's not like reducing the supply would make it harder to transact or anything.
lambda_obrien 6y ago
The USG could kill it by using a 51 percent attack; the NSA must have rows upon rows of servers that could be repurposed for a week or two to destroy the market. Split the blockchain every couple of hours into several different versions, eventually there would be little chance to reconcile things.
- gruez 6y ago
  >the NSA must have rows upon rows of servers that could be repurposed for a week or two to destroy the market Their general purpose servers are nearly useless for mining bitcoin because their hashrates are orders of magnitude lower than the ASICs that professional miners use. If you want to 51% attack bitcoin you either need an absurd number of general purpose computers (possibly more than all CPUs/GPUs that exist on earth) or pour billions into making hardware that can only be used to mine.

drummer 6y ago

This is exactly why i love projects like MobileCoin and its integration in Signal. We are going to desperately need anonymous, secure and privacy focused payments very very soon. Signal needs to open up payments worldwide as soon as possible. The last problem to fix is making it all decentralized.

noxer 6y ago
Everything crypto has KYC now days. I highly doubt you can get that mobilecoin in any relevant quantities without disclosing who you are.
- RealityVoid 6y ago
  Buy monero on some KYC, move it non-kyc and buy whatever.
  - noxer 6y ago
    Whats the point? As soon as you buy anything in the real world its connected to you, unless you want your lambo be gifted to someone else with no traceable connection to you. Fine you an buy anonymous gifts with crypto - awesome.

justapassenger 6y ago

Crackdown on current state of crypto can only help it in the long run, if you actually really believe it. Right now it’s market mostly dedicated to get rich quick schemes. While it works great if you’re on top of the pyramid, it’s only hurting crypto case for the future.

puranjay 6y ago
DeFi has a legitimate use case and NFTs have an astonishing number of use cases. Smart Contracts are an incredible, incredible innovation. We are at the tip of the iceberg and nothing has been more disappointing than seeing the traditional tech world's dismissal of crypto as "get rich schemes". The tech world is surprisingly as complacent now as the legacy dinosaurs it first helped destroy in the 1990s and 2000s.
- rawtxapp 6y ago
  I think it's somewhat similar to innovator's dilemma, a lot of current tech leaders were once the underdog and now are at the top, so they end up becoming complacent and non-innovators or slow innovators like the companies they replaced. An example of really cool smart contract usage is borrowing against your crypto, for example, this person/group was able to borrow roughly 340M$ [1], the best part, they didn't even had to provide their name or deal with any other human, all enabled by a smart contract that they can inspect and verify. 1: https://defiexplore.com/cdp/8463 https://defiexplore.com/cdp/8463
  - puranjay 6y ago
    I find it incredible that someone can code up a strategy for deploying an investment vault, the community, which operates as a Decentralized Autonomous Organization (DAO), can decide to vote on it, and two days later, people can start investing money into it and earning interest - no middleman or manager involved. The investment vault will deploy the capital in different protocols based on the strategy outlined (and voted on by the DAO) automatically. The automation smart contracts can bring about is scary.
  - 6y ago

puranjay 6y ago

HN is boomer central when it comes to crypto. Haven't had a single enlightening discussion about it here. I see a lot of misconceptions about scams and pump and dump schemes carried over from the 2017 run, and complete neglect of the innovations created since. If anyone wants a refresher, I'm always willing to chat. I will also write a primer to help get folks up to speed on what's the latest in crypto.

arcturus17 6y ago
Yea no I've seen plenty of you folks talking about recent innovations in crypto and I'm just not persuaded that any of it is remotely useful other than maybe store of value and certainly speculation. I'm not a boomer, and I even own a decent position in BTC / ETH.
- puranjay 6y ago
  I'll give you an example. The most "mainstream" revolutionary idea in crypto right now is automated market makers (AMMs) like Uniswap. These essentially allow anyone to create a "pool" to trade between two assets and earn fees from it. You can tokenize any asset, pair it with a liquid token (such as ETH or USDT) and offer it to anyone to trade while you earn fees. Or you can join an existing, popular pool (such as between wBTC-ETH) and earn fees on any trades that happen on it. Essentially, anyone can: - Create a decentralized exchange economy - Participate in existing exchange economies with any amount of capital and earn fees from it The latter part is important because that's been the purview of banks. Countless trades happen between currency pairs daily. Banks earn all the fees because they supply all the liquidity. You can't participate in that market even if you wanted to (or unless you had tens of billions in capital). AMMs turn that around. You could have $1 worth of liquidity but you can still earn fees on it. This is the first time in the history of finance that creating and participating in exchange economies has been so cheap and accessible. I think that alone is revolutionary. It makes previously inaccessible financial avenues available to the little guy
  - randomopining 6y ago
    Yeah but what would the decentralized exchange be used for, other than other crypto? A bank can legally process a person who fails to come through on a loan. They can physically take stuff. A decentralized crypto network can't do anything to anybody. It can just take the marginal collateral and then the rest swallow the losses... I feel like defi crypto types discount the power of the physical world.

CynicusRex 6y ago

>I am more confident that nations which turn their back on it, or shut it out completely, will see a loss of otherwise valuable businesses and mindshare. Mindshare like cancerous greed? Nations turning their backs on crypto“currencies” turn their backs on multi-level marketing pyramid schemes. Good riddance. “Strong currencies are not the solution to poor governance. Good governance and democracy makes a country and its currency strong. Not vice versa.” —halukakin, HackerNews, 2021 —https://news.ycombinator.com/item?id=26105680 https://news.ycombinator.com/item?id=26105680, https://www.cynicusrex.com/file/cryptocultscience.html https://www.cynicusrex.com/file/cryptocultscience.html.

christiansakai 6y ago

Tangentially related. Cryptocurrency is just a side effect of blockchain. Once blockchain technology matures and if one day we see blockchain to store files and blockchain to run cloud services, then will the US government censor it as well? If they will, how? It is practically impossible. You can upload anything there, including child porn, instructions on making bombs, videos that contain brainwashing propaganda for terrorist groups. You can run your server there, including servers for recruiting terrorists, etc.

coolspot 6y ago
When they realize, they will kill on/off-ramps into cash and make any transactions not legal. The software itself they can treat is as malware - blackhole IPs and shutdown any hosts involved.
- RealityVoid 6y ago
  The value of crypto would decrease but never be completely gone. A whole pandora's box was opened and they can't put the genie back in the bottle no matter how hard they try. If they were to kill the offramps, the ecosystem would move on websites on Tor or I2P that would work P2P, they can use high privacy coins such as Monero or zcash. Or people will trade it in person using escrow systems. It's not like the first BTC trasactions had the privilege of nice exchanges. The possibilities are there. Just the incentives are not yet present.
  - coolspot 6y ago
    The point is, they can make it so fringe, that no legitimate person/company would touch it. Local in-person exchanges for any significant amount are already under fire, it can be made even more so. https://www.atmmarketplace.com/news/six-arrested-in-connection-with-bitcoin-atm-money-laundering/ https://www.atmmarketplace.com/news/six-arrested-in-connecti... https://www.justice.gov/usao-ma/pr/fitchburg-man-charged-money-laundering-and-illegal-money-transmission-converting-cash https://www.justice.gov/usao-ma/pr/fitchburg-man-charged-mon... https://www.justice.gov/usao-cdca/pr/ontario-man-agrees-plead-guilty-federal-charges-illegally-operating-bitcoin-cash-0 https://www.justice.gov/usao-cdca/pr/ontario-man-agrees-plea... https://www.justice.gov/usao-cdca/pr/bitcoin-maven-sentenced-one-year-federal-prison-bitcoin-money-laundering-case https://www.justice.gov/usao-cdca/pr/bitcoin-maven-sentenced... https://www.forbes.com/sites/billybambrough/2020/05/28/new-york-hacker-charged-in-100-million-dollar-bitcoin-case/ https://www.forbes.com/sites/billybambrough/2020/05/28/new-y... https://duckduckgo.com/?q=bitcoin+arrested+money+laundering+site%3Ajustice.gov https://duckduckgo.com/?q=bitcoin+arrested+money+laundering+...

motohagiography 6y ago

Some discussion from knowledgeable people of what plausible "crackdown" rules would look like would be interesting. The article mentions an ID requirement for transactions above $3k. Personally, I think the idea of the physical nation state is converting to a global credit score, where instead of transacting across borders, you are transacting across classes of businesses and people, and tarriff and tax policy will be enforced on a risk basis instead of a national border one. Instead of black market electronic transactions, the transaction is just taxed at a higher rate because of the relative social credit score of your counterparty, so your transaction with a non-KYC enrolled wallet would incurr a 100%+ excise liability on your tax reporting. It's the sort of totalitarian idea that is appealing to the sort of people you really need a popular revolt against to unseat, but worth considering what they think about to remove their element of surprise.

cinntaile 6y ago
This is an interesting point of view, do you have any sources where I can read more about this?
- walterbell 6y ago
  See this comment from a larger thread on CBDCs: https://news.ycombinator.com/item?id=26205741 https://news.ycombinator.com/item?id=26205741 May or may not be repurposed: https://www.goodhealthpass.org https://www.goodhealthpass.org & https://www.lfph.io/ https://www.lfph.io/ & https://trustoverip.org/ https://trustoverip.org/ There's been talk of a KYC requirement for all customers of US web hosting because cyber.
  - motohagiography 6y ago
    Having worked with more than one of those member companies in that foundation, the one thing I've learned about conspiracy theorists is that what they really lack is imagination and vision.
    - walterbell 6y ago

cblconfederate 6y ago

This was expected, crypto is essentially a weapon against the dollar. However i m not sure if the world's economies will go along with it. Maybe europe (which usually drags itself behind the US) but i m not sure the rest of the world would want to begin the post-covid era with even more dependence on US. In any case, good news for binance, bad news for coinbase

knorker 6y ago

Let's hope.

scandox 6y ago

To me it's always seemed like money grows from the barrel of a gun. Detaching money from military power sounds wonderful but it makes no sense to me. It seems to defy the very basis of what money is. Tokens handed out by warlords. Only stretched out over such a long time that it isn't obvious any more. Obviously I am neither an economist nor a political theorist.

generalizations 6y ago
I always figured that 'naturally arising' currencies, like gold and cigarettes, have two key properties: a) perceived inherent value (e.g., gold by long tradition and whose origins are lost to history, and cigarettes because people want their fix) and b) natural limitations on quantity (and counterfiting: gold has known density, and a fake cigarette is apparent as soon as you try and use it). The purpose of the gun, it has seemed to me, is to get around the fact that fiat currencies have neither of the above properties, but that both can be enforced to some degree.
cblconfederate 6y ago
It's true but , bitcoin is a weapon, like the dollar is. Because BTC can't be physically destroyed, nukes become useless if the purpose is to destroy an economy / state. Raising an army with bitcoin is also impossible , because it s international and inherently impossible to inflate. In fact any state that wants to wage war in a crypto world is essentially fighting mathematics. It is also inevitable, as any country that decides to ban it will eventually be forced to bring it back as soon as a rival starts using it.
- defterGoose 6y ago
  While it would be nearly impossible to destroy all the servers maintaining the blockchain, it makes me wonder about the possibility of a sophisticated virus erasing it by means of an update cycle. Seems like some good fodder for a Mr. Robot-esque show or novel.
meiraleal 6y ago
Internet is a new thing, the old world might not satisfactorily explain the new one.

rspeele 6y ago

Just as a fun hypothetical to think about... an effective way to crack down on cryptocurrencies would be to do it under the table. Don't make any official policy about crypto other than recommending that US citizens don't invest in it. Attack the crypto ecosystem the way they attacked Iranian centrifuges. The damage is done by the CIA and NSA, not the SEC and FBI. The goal is not to make it impossible to use crypto but to make it so untrustworthy that nobody wants to touch it. Host mirrors of popular software wallets with hidden malware. Add backdoors to some hardware wallets at the factory. Create trojans that sit quietly and harmlessly until you try to deposit your coins at an exchange, at which point, unbeknownst to you, your compromised browser is displaying the CIA's bitcoin address instead of the exchange's as the place to send your coins. Make smart contracts with increasingly clever obfuscated time bomb backdoors. And it all comes with easy plausible deniability, since any of these tricks could just as well be regular old crypto thieves, highly motivated by the massive "bug bounty" on any exploit, including social engineering, that lets them steal coins. Of course, the backlash if this was ever found out would be immense. It would basically be the US government operating a cybercrime organization. Many of the victims would likely be US citizens speculating in crypto. It wouldn't be worth it unless the powers that be decided crypto is THAT dangerous to the status quo.

ttul 6y ago
What's to say CIA and others aren't already operating all sorts of crypto infrastructure? I absolutely guarantee they are. The people who run the financial system are a different group and would not necessarily be aware of what the three-letter agencies are doing.
RealityVoid 6y ago
So just... like... what scammers are currently doing?
- rspeele 6y ago
  Yep, just with a stuxnet level of sophistication.
postalrat 6y ago

exabrial 6y ago

> use of bitcoin for money laundering, terrorist financing and other illegal activities. Bullshit. It's being used to get around the fucking enormous 33% taxes levied on the middle class to support Democrat and Republican donor's lifestyles.

machinecontrol 6y ago
For anyone thinking to do this, it’s a terrible idea. Bitcoin has a public ledger that is around forever. It is much easier to trace than cash or offshore bank accounts.
acdha 6y ago
Are you saying that the U.S. middle class starts at $163/326k of taxable income?

deleted 6y ago

[deleted]

devops000 6y ago

Yeah, they say it every week.

christiansakai 6y ago

Maybe don’t bail out bad actors like in 2008 and we gonna behave, promise.

GoodJokes 6y ago

Does this mean I buy or sell?

iorrus 6y ago

I think many underplay the real advantages of crypto assuming it’s all used for nefarious reasons, I use crypto quite frequently now, especially BCH (Bitcoin Cash), I can send this internationally for less than the cost PayPal changes for international payments. So why not use it, if the other person accepts it. In addition here is a real business (gpu.land) going only crypto as it provides better options: “I’m reaching out to let you know that as of today we'll no longer be taking cards for top up, and instead we'll be taking crypto payments. The problem is fraud. A lot of people try to use stolen cards to mine on GPU.LAND, despite all the defenses and pledges not to do it. When chargebacks come through, we're on the hook, and to date that meant losing 30% of our revenue.” In some cases Some might prefer to keep their bank from knowing exactly what theyre spending money on even tho it’s perfectly legal e.g. paying for porn, supporting a political dissident etc.

mywittyname 6y ago
> In some cases Some might prefer to keep their bank from knowing exactly what theyre spending money on even tho it’s perfectly legal e.g. paying for porn, supporting a political dissident etc. Wait, wouldn't everyone who has your wallet id know what you spend your money on if you use crypto? It is a public ledger. I mean, you could go through the effort of trying to hide it by using various wallets, but that only adds plausible deniability. If someone at your work or bank decide to track the BTC they give you, I'm pretty sure they will start picking up on spending patterns.
- ibeckermayer 6y ago
  I’m not a crypto expert, but I’ve researched this some myself and believe that’s all true. There are “privacy-coins” like Monero which obfuscate this, however afaict KYC laws make it impossible to use legally for commercial purposes.
- iorrus 6y ago
  I was more thinking along the lines of what’s this PayPal deposit to “furry art 4 u” (not my thing btw) or “Free Ross Ulbrict” with the mortgage advisor rather than anything requiring block chain analysis. How would anyone at work know your block chain wallet hash? It’s a cryptographically generated hash not linked to any personal ID. People can see that money is moving around to different address and if law enforcement or mortgage advisor requested the exchange account details they could see you deposited this money in this address and then it moved to this address etc, but it’s not trivial to identify who owns any of those address once it’s left the exchange wallet. If I was dealing with work people and trying to isolate them from other transactions, I’d just generate a separate wallet address for them which is trivial.

kelvin0 6y ago

There seems to be 2 types of discussion about Bitcoin I've read so far: A) 95% of the discussions and focus on the strict monetary value of the Bitcoin as an investment and financial gains. B) 5% are related to ideological concepts of a decentralized monetary system and how that's a very good thing. I fail to see the real value for humanity in general for this, not to mention the environmental impacts of the energy consumption of the bitcoin mining operations. I am open to reading other points of view.

627467 6y ago
You forgot: C) failing to see value for humanity due privilege of having access to modern and stable finance (pick your own percentage)
- kelvin0 6y ago
  Aside from my original comment, can't say I've seen or read anything else about C)

ulisesrmzroche 6y ago

So what happens if the fed cracks down and you have a ton of bitcoin? That goes to zero, right? is there going to be a withdrawal stampede? I dunno if a crackdown is even going to happen, but in case it does, what's the plan?

revel 6y ago

Almost certainly the heavily privacy themed cryptos will the first to go. Monero, dash, I'm looking at you. Bitcoin and ethereum are almost certainly safe, but I there are a few on the periphery that are harder to gauge. Decentralized exchange tokens like 0x and rep / augur seem like they could fall on the wrong side of the law too. Lastly, I'm not sure how much I would want to hold stable coins like maker / dai.

intricatedetail 6y ago

The US banned plants and spend billions and billions to enforce it. Not sure why crypto would be any different? It can even be checked same way. "Sir, show me your phone." "What is this app? You are arrested for suspicion of crypto possession"

afrcnc 6y ago

Should have been done a long time ago. Literally every law enforcement investigation into organized crime requires blockchain analysis these days. I never met people who use crypto to buy actual day-to-day goods. Only hear about it from cybercrime and crypto-bro price gaugers.

zoshi 6y ago

Leviathan awakens evil eyes look everywhere blind to my Monero

beiller 6y ago

It's already starting. I've heard that Nvidia developed a cutting edge computing audit system, that was developed to detect, in real time, that GPUs are being used for calculating simple hashing algorithms and sniffs out all computation. The next step is just government mandated cpu firmware, installed in all Intel and AMD CPUs that can detect when a computer tries to calculate a SHA hash, and immediately reports it to the fed. This leading edge tech is already being shared by Nvidia with the FBI. I've heard it's unhakable.

diragon 6y ago

CEO of a top Bitcoin exchange wants prices to go down so they can pump some more.

jaggs 6y ago

What a fantastic discussion this is. Someone needs to archive this for future reference once the whole thing has played out one way or another. I have a feeling we're at a massive inflection point, with two possible futures facing us. One, featuring incredible innovation focused on enhancing the human condition through collective endeavour, the other one in which climate change forces us back into a kind of pseudo primitive social state. It feels like crypto has the potential to do trigger the former, if we still have enough cheap energy of course. :)