7 ms·

You see. This is what bitcoin so fascinating... it is absolutely impossible to hide a transaction. So imagine the field day the irs would have with this if eve

by kjrose 6y ago

You see. This is what bitcoin so fascinating... it is absolutely impossible to hide a transaction. So imagine the field day the irs would have with this if everyone used it. They basically would be able to send bills to owners of wallets. And anyone ever caught working with an undesirable would be able to have their funds more or less locked up. So now, we all watch as billions of stolen money moves and we know the moment it gets converted to anything real, the owners will be caught. However in the future I could easily see a government watch money that some undesired element has move and no one will want it because the moment they get it they are connected to an undesirable and their wallet becomes tainted.

A4ET8a8uTh0 6y ago
I think this seems to be main reason crypto wasn't shut down by government when it was relatively easy to do ( now there are real players entering the fray ). There is already a small cottage industry based on selling insights from BTC nodes to FinCEN and banks ( but I do not know whether they are buying ).
barbazoo 6y ago
> the moment it gets converted to anything real, the owners will be caught Is that how it works? Won't there be, say banking institutions that simply won't keep a record of who converted the bitcoin to money similar to how VPN providers are claiming to not log user's IP addresses?
- enkid 6y ago
  I'm pretty sure there's no bank in the world that would be willing to make a transaction in the billions and not keep a record of it.
  - beached_whale 6y ago
    that's about 750,000 times what banks have to track. I think anything over $10k must be tracked or groups of transactions that are linked that are at/over that.
    - geoduck14 6y ago
      Anything over $10k must be reported. Or anything that "looks suspicious". Or anything that "looks like it is trying to subvert the $10k rule"
  - barbazoo 6y ago
    You're probably right. I was thinking of the usual suspects when it comes to offshore accounts but also Switzerland with historically very strong privacy laws. But I'm know nothing about the banking industry so I could be totally off here.
    - otterley 6y ago
      Even Switzerland eventually bent to pressure from the United States: https://www.wsj.com/articles/SB10000872396390443713704577601473375807822 https://www.wsj.com/articles/SB10000872396390443713704577601... https://www.wsj.com/articles/SB10001424127887324412604578512783477933910 https://www.wsj.com/articles/SB10001424127887324412604578512... https://www.wsj.com/articles/BL-MBB-23415 https://www.wsj.com/articles/BL-MBB-23415
  - rapind 6y ago
    Ye of little faith. Google: HSBC cartel money.
    - enkid 6y ago
      HSBC knew what they were doing.... Because of their records.
      - rapind 6y ago
        “The confidential records and interviews with former employees reveal that compliance officers often filed SARs lacking even basic information about who owned companies banking with HSBC, the nature of their businesses, and where the money came from. Sometimes, records show, they asked branches for the information and were ignored or rebuffed.” There’s records and then there’s “records”. https://www.icij.org/investigations/fincen-files/hsbc-moved-vast-sums-of-dirty-money-after-paying-record-laundering-fine/ https://www.icij.org/investigations/fincen-files/hsbc-moved-...
        edoceo 6y ago
        And the record of not having a proper record.
        rapind 6y ago
        So we’re good? A record of a record (of a record of a record of a...) that doesn’t tell you who the money went to, doesn’t fill in that blank. It’s useful to ascertain fault at the bank (which in HSBC’s case didn’t result in much of consequence ). So yes records (of sometimes dubious quality) are kept from a pedantic standpoint, but I understood GP to mean that this would prevent someone from laundering large sums through (large respectable) banks which is demonstrably not always the case. Not only may these logs be questionable, but apparently the penalties, using the HSBC example, don’t seem to be a deterrent. TLDR; banks having records doesn’t mean shit when you want to launder large sums of money.
- kelnos 6y ago
  The US has regulations around banks knowing their customers and being responsible about things like this. For better or worse, those regulations have in many ways "leaked" into the regulations of other countries, because the US makes many of them mandatory in order to get access to the US financial system, which most countries see as essential. Sure, there might be places where you could convert that Bitcoin into a local fiat currency, but then what? You have US$7.5B denominated in some random fiat currency that is likely mostly cut off from the "main" transactable currencies of the world. You'd have to find ways to slowly launder it and convert it into something else. Doable, I guess, and maybe worth the time and effort considering you can't do anything with the money otherwise, at least not without getting caught. But doing all that is risky as well... make a mistake and you could get caught.
pier25 6y ago
> it is absolutely impossible to hide a transaction What about tumblers?
- not_kurt_godel 6y ago
  Tumblers don't hide transactions, they just obfuscate them. Afaik the coins can still be easily traced programmatically.
  - Salgat 6y ago
    That depends on how the tumbler is implemented. If the transaction from sender to receiver is instant and from a single address to another single address, well then yeah it's obvious. But if you batch the transactions of thousands of users over the course of a day for example, and make sure to split the amount to send to multiple addresses with random values, now the only thing that you can correlate is that one of the thousands of senders might also be one of the seemingly tens of thousands of receivers. If the tumbler is allowed to spread it out over multiple days or weeks or even months, well then good luck ever correlating the sender and receiver.
- matheusmoreira 6y ago
  They just shuffle coins around. Still possible to track. It's also obvious to everyone watching that the shuffling service was used. Exchanges have already started to refuse coins that passed through these services. They might as well be tainted. The real solution is to drop bitcoin and use better technology. Monero looks like the best option right now. Private transactions, concealed amounts, fungibility, low fees and fast transaction processing. It's everything bitcoin was meant to be.
  - deckard1 6y ago
    > The real solution is to drop bitcoin and use better technology. Walk into WalMart with cash and buy a prepaid gift card. Voilà. And the best part: it works literally everywhere. Both the buying and the using. Unlike flavor-of-the-week crypto. Though, let's be real for a second, the ways to screw up from this point are many and varied. Accidentally use your home IP address to make the purchase? Oops. Did the naughty thing at Starbucks and there just happened to be a CCTV cam on you? Oh noes. Probably best to stay offline, use cash everywhere, limit your banking, turn off your smartphone, and move from location to location constantly. Or just give up. > O cruel, needless misunderstanding! O stubborn, self-willed exile from the loving breast! Two gin-scented tears trickled down the sides of his nose. But it was all right, everything was all right, the struggle was finished. He had won the victory over himself. He loved Big Brother.
rapind 6y ago
I can think of a recent politician who’d take the money and spin it in such a way that half the country would believe it’s not a big deal. That every other politician would do it too if they had any balls... etc.
bob33212 6y ago
I wonder how many bitcoin people understand the history of banking regulations. Banks do not want to be accessory to crimes. They make plenty of money legally. So when the government says we know that you helped someone steal billions of dollars so we are going to shut you down, the banks will quickly offer to track and report and block people.
- glbrew 6y ago
  Banks are the most law breaking entities in the United States. They constantly have to make enormous settlements for the insane number of laws they break. These are just the settlements for Bank of America: https://www.fool.com/investing/general/2014/10/01/the-complete-list-bank-of-americas-legal-fines-and.aspx https://www.fool.com/investing/general/2014/10/01/the-comple... A better summary wouldn't be "they make plenty of money legally." It would be they make plenty of money illegally after paying the settlements.
  - geoduck14 6y ago
    None of these fines are about laundering money. Also, showing these fines is a long way from "the most law breaking entities". I do believe Wells Fargo got in trouble for helping launder money - and they spent a LOT of money to help fix it.
    - dcl 6y ago
      HSBC then. > HSBC Holdings Plc agreed to pay a record $1.92 billion in fines to U.S. authorities for allowing itself to be used to launder a river of drug money flowing out of Mexico and other banking lapses. https://www.reuters.com/article/us-hsbc-probe-idUSBRE8BA05M20121211 https://www.reuters.com/article/us-hsbc-probe-idUSBRE8BA05M2...
    - glbrew 6y ago
      https://www.bloomberg.com/news/articles/2021-03-05/ubs-may-use-money-launderer-case-to-appeal-5-4-billion-penalty https://www.bloomberg.com/news/articles/2021-03-05/ubs-may-u... https://www.theguardian.com/world/2011/apr/03/us-bank-mexico-drug-gangs https://www.theguardian.com/world/2011/apr/03/us-bank-mexico... https://www.bbc.com/news/business-54597256 https://www.bbc.com/news/business-54597256 I could keep Googling but that should cover your complaints about laundering money.
sgpl 6y ago
This fails to account for the fact that IRS currently (and maybe this changes in the future) has a hard time doing serious audits on any significant amount of wealthy people; and that the agency has pretty much been gutted over the years. [0] https://www.propublica.org/article/how-the-irs-was-gutted https://www.propublica.org/article/how-the-irs-was-gutted [1] https://www.propublica.org/series/gutting-the-irs https://www.propublica.org/series/gutting-the-irs [2] https://www.gq.com/story/no-irs-audits-for-the-rich https://www.gq.com/story/no-irs-audits-for-the-rich
- abledon 6y ago
  all it takes is for one president in 2030s to create a new branch of gov that pays Google style salaries. would attract the best and brightest to write some powerful tools for all that, no?
  - birdyrooster 6y ago
    you and I both know that could never happen, it would get contracted out to Oracle or something
  - mike_d 6y ago
    Obama was that forward thinking, charismatic, enlightened leader that people wanted to work for. The White House Digital Service was by any metric a resounding success. But the pay did suck. The problem with the government paying "Google salaries" is who gets them? Is an IRS auditor really worthy of half a million a year in comp? What about the DEA agent deep under cover and risking his life, much more deserving... right? So you create a new branch of the government where keyboard warriors bang out solutions to government problems. Why is one of these hot-shots making what an entire department of inspectors is paid at the USDA? The resentment from other agencies will be a hard barrier to overcome. They also have no incentive to help your new Rockstar Agency to get access to all the data they need so they can put government employees out of work. Not to mention, is it really beneficial to the tax payer to try and compete with tech companies? If FAANG companies start to suffer a talent drain, they will just re-up and double whatever the government offers.
TrackerFF 6y ago
Not sure how the scammers and thieves operate, but wouldn't they (likely) be laundering the money the same way they've always been doing it? I.e, exploiting things like identity theft, countries and exchanges with little oversight, mules, gambling, etc.
- HNfriend234 6y ago
  If they want to launder the funds all they have to do is used a decentralized exchange to convert the bitcoin into something like monero. Monero has an encrypted blockchain and a bunch of other anonymization features. So once you convert it to monero, poof, the funds simply disappear into the ether just like that without a trace. They can then convert it back into bitcoin if they want as well.
  - Gaelan 6y ago
    But what exchange (in its right mind) would take those bitcoins? They're permanently tainted, and are likely very hard to convert into fiat currency, and therefore have, I expect, near zero value.
    - spurdoman77 6y ago
      The exchange taking it wont be knowingly taking it, it is likely just a exchange that doesnt have system for detecting it. There are thousands of btc exchanges all around the world. For sure there are some where they dont even know about bitfinex.
    - Salgat 6y ago
      All it takes is one country like Switzerland legalizing cryptocoin tumbling. You send your bitcoin to a single address along with millions of others, and it sends out to millions of addresses different values, with no traceability between the sender and receiver (if done correctly, such as batching all transactions over a month into a single event). It would be used by many legal entities also in order to hide their activity (rich people don't want their financial activity known to the public even if it's completely legal).

by kjrose 6y ago

A4ET8a8uTh0 6y ago

I think this seems to be main reason crypto wasn't shut down by government when it was relatively easy to do ( now there are real players entering the fray ). There is already a small cottage industry based on selling insights from BTC nodes to FinCEN and banks ( but I do not know whether they are buying ).

barbazoo 6y ago

> the moment it gets converted to anything real, the owners will be caught Is that how it works? Won't there be, say banking institutions that simply won't keep a record of who converted the bitcoin to money similar to how VPN providers are claiming to not log user's IP addresses?

enkid 6y ago
I'm pretty sure there's no bank in the world that would be willing to make a transaction in the billions and not keep a record of it.
- beached_whale 6y ago
  that's about 750,000 times what banks have to track. I think anything over $10k must be tracked or groups of transactions that are linked that are at/over that.
  - geoduck14 6y ago
    Anything over $10k must be reported. Or anything that "looks suspicious". Or anything that "looks like it is trying to subvert the $10k rule"
- barbazoo 6y ago
  You're probably right. I was thinking of the usual suspects when it comes to offshore accounts but also Switzerland with historically very strong privacy laws. But I'm know nothing about the banking industry so I could be totally off here.
  - otterley 6y ago
    Even Switzerland eventually bent to pressure from the United States: https://www.wsj.com/articles/SB10000872396390443713704577601473375807822 https://www.wsj.com/articles/SB10000872396390443713704577601... https://www.wsj.com/articles/SB10001424127887324412604578512783477933910 https://www.wsj.com/articles/SB10001424127887324412604578512... https://www.wsj.com/articles/BL-MBB-23415 https://www.wsj.com/articles/BL-MBB-23415
- rapind 6y ago
  Ye of little faith. Google: HSBC cartel money.
  - enkid 6y ago
    HSBC knew what they were doing.... Because of their records.
    - rapind 6y ago
      “The confidential records and interviews with former employees reveal that compliance officers often filed SARs lacking even basic information about who owned companies banking with HSBC, the nature of their businesses, and where the money came from. Sometimes, records show, they asked branches for the information and were ignored or rebuffed.” There’s records and then there’s “records”. https://www.icij.org/investigations/fincen-files/hsbc-moved-vast-sums-of-dirty-money-after-paying-record-laundering-fine/ https://www.icij.org/investigations/fincen-files/hsbc-moved-...
      - edoceo 6y ago
        And the record of not having a proper record.
        rapind 6y ago
        So we’re good? A record of a record (of a record of a record of a...) that doesn’t tell you who the money went to, doesn’t fill in that blank. It’s useful to ascertain fault at the bank (which in HSBC’s case didn’t result in much of consequence ). So yes records (of sometimes dubious quality) are kept from a pedantic standpoint, but I understood GP to mean that this would prevent someone from laundering large sums through (large respectable) banks which is demonstrably not always the case. Not only may these logs be questionable, but apparently the penalties, using the HSBC example, don’t seem to be a deterrent. TLDR; banks having records doesn’t mean shit when you want to launder large sums of money.
kelnos 6y ago
The US has regulations around banks knowing their customers and being responsible about things like this. For better or worse, those regulations have in many ways "leaked" into the regulations of other countries, because the US makes many of them mandatory in order to get access to the US financial system, which most countries see as essential. Sure, there might be places where you could convert that Bitcoin into a local fiat currency, but then what? You have US$7.5B denominated in some random fiat currency that is likely mostly cut off from the "main" transactable currencies of the world. You'd have to find ways to slowly launder it and convert it into something else. Doable, I guess, and maybe worth the time and effort considering you can't do anything with the money otherwise, at least not without getting caught. But doing all that is risky as well... make a mistake and you could get caught.

pier25 6y ago

> it is absolutely impossible to hide a transaction What about tumblers?

not_kurt_godel 6y ago
Tumblers don't hide transactions, they just obfuscate them. Afaik the coins can still be easily traced programmatically.
- Salgat 6y ago
  That depends on how the tumbler is implemented. If the transaction from sender to receiver is instant and from a single address to another single address, well then yeah it's obvious. But if you batch the transactions of thousands of users over the course of a day for example, and make sure to split the amount to send to multiple addresses with random values, now the only thing that you can correlate is that one of the thousands of senders might also be one of the seemingly tens of thousands of receivers. If the tumbler is allowed to spread it out over multiple days or weeks or even months, well then good luck ever correlating the sender and receiver.
matheusmoreira 6y ago
They just shuffle coins around. Still possible to track. It's also obvious to everyone watching that the shuffling service was used. Exchanges have already started to refuse coins that passed through these services. They might as well be tainted. The real solution is to drop bitcoin and use better technology. Monero looks like the best option right now. Private transactions, concealed amounts, fungibility, low fees and fast transaction processing. It's everything bitcoin was meant to be.
- deckard1 6y ago
  > The real solution is to drop bitcoin and use better technology. Walk into WalMart with cash and buy a prepaid gift card. Voilà. And the best part: it works literally everywhere. Both the buying and the using. Unlike flavor-of-the-week crypto. Though, let's be real for a second, the ways to screw up from this point are many and varied. Accidentally use your home IP address to make the purchase? Oops. Did the naughty thing at Starbucks and there just happened to be a CCTV cam on you? Oh noes. Probably best to stay offline, use cash everywhere, limit your banking, turn off your smartphone, and move from location to location constantly. Or just give up. > O cruel, needless misunderstanding! O stubborn, self-willed exile from the loving breast! Two gin-scented tears trickled down the sides of his nose. But it was all right, everything was all right, the struggle was finished. He had won the victory over himself. He loved Big Brother.

rapind 6y ago

I can think of a recent politician who’d take the money and spin it in such a way that half the country would believe it’s not a big deal. That every other politician would do it too if they had any balls... etc.

bob33212 6y ago

I wonder how many bitcoin people understand the history of banking regulations. Banks do not want to be accessory to crimes. They make plenty of money legally. So when the government says we know that you helped someone steal billions of dollars so we are going to shut you down, the banks will quickly offer to track and report and block people.

glbrew 6y ago
Banks are the most law breaking entities in the United States. They constantly have to make enormous settlements for the insane number of laws they break. These are just the settlements for Bank of America: https://www.fool.com/investing/general/2014/10/01/the-complete-list-bank-of-americas-legal-fines-and.aspx https://www.fool.com/investing/general/2014/10/01/the-comple... A better summary wouldn't be "they make plenty of money legally." It would be they make plenty of money illegally after paying the settlements.
- geoduck14 6y ago
  None of these fines are about laundering money. Also, showing these fines is a long way from "the most law breaking entities". I do believe Wells Fargo got in trouble for helping launder money - and they spent a LOT of money to help fix it.
  - dcl 6y ago
    HSBC then. > HSBC Holdings Plc agreed to pay a record $1.92 billion in fines to U.S. authorities for allowing itself to be used to launder a river of drug money flowing out of Mexico and other banking lapses. https://www.reuters.com/article/us-hsbc-probe-idUSBRE8BA05M20121211 https://www.reuters.com/article/us-hsbc-probe-idUSBRE8BA05M2...
  - glbrew 6y ago
    https://www.bloomberg.com/news/articles/2021-03-05/ubs-may-use-money-launderer-case-to-appeal-5-4-billion-penalty https://www.bloomberg.com/news/articles/2021-03-05/ubs-may-u... https://www.theguardian.com/world/2011/apr/03/us-bank-mexico-drug-gangs https://www.theguardian.com/world/2011/apr/03/us-bank-mexico... https://www.bbc.com/news/business-54597256 https://www.bbc.com/news/business-54597256 I could keep Googling but that should cover your complaints about laundering money.

sgpl 6y ago

This fails to account for the fact that IRS currently (and maybe this changes in the future) has a hard time doing serious audits on any significant amount of wealthy people; and that the agency has pretty much been gutted over the years. [0] https://www.propublica.org/article/how-the-irs-was-gutted https://www.propublica.org/article/how-the-irs-was-gutted [1] https://www.propublica.org/series/gutting-the-irs https://www.propublica.org/series/gutting-the-irs [2] https://www.gq.com/story/no-irs-audits-for-the-rich https://www.gq.com/story/no-irs-audits-for-the-rich

abledon 6y ago
all it takes is for one president in 2030s to create a new branch of gov that pays Google style salaries. would attract the best and brightest to write some powerful tools for all that, no?
- birdyrooster 6y ago
  you and I both know that could never happen, it would get contracted out to Oracle or something
- mike_d 6y ago
  Obama was that forward thinking, charismatic, enlightened leader that people wanted to work for. The White House Digital Service was by any metric a resounding success. But the pay did suck. The problem with the government paying "Google salaries" is who gets them? Is an IRS auditor really worthy of half a million a year in comp? What about the DEA agent deep under cover and risking his life, much more deserving... right? So you create a new branch of the government where keyboard warriors bang out solutions to government problems. Why is one of these hot-shots making what an entire department of inspectors is paid at the USDA? The resentment from other agencies will be a hard barrier to overcome. They also have no incentive to help your new Rockstar Agency to get access to all the data they need so they can put government employees out of work. Not to mention, is it really beneficial to the tax payer to try and compete with tech companies? If FAANG companies start to suffer a talent drain, they will just re-up and double whatever the government offers.

TrackerFF 6y ago

Not sure how the scammers and thieves operate, but wouldn't they (likely) be laundering the money the same way they've always been doing it? I.e, exploiting things like identity theft, countries and exchanges with little oversight, mules, gambling, etc.

HNfriend234 6y ago
If they want to launder the funds all they have to do is used a decentralized exchange to convert the bitcoin into something like monero. Monero has an encrypted blockchain and a bunch of other anonymization features. So once you convert it to monero, poof, the funds simply disappear into the ether just like that without a trace. They can then convert it back into bitcoin if they want as well.
- Gaelan 6y ago
  But what exchange (in its right mind) would take those bitcoins? They're permanently tainted, and are likely very hard to convert into fiat currency, and therefore have, I expect, near zero value.
  - spurdoman77 6y ago
    The exchange taking it wont be knowingly taking it, it is likely just a exchange that doesnt have system for detecting it. There are thousands of btc exchanges all around the world. For sure there are some where they dont even know about bitfinex.
  - Salgat 6y ago
    All it takes is one country like Switzerland legalizing cryptocoin tumbling. You send your bitcoin to a single address along with millions of others, and it sends out to millions of addresses different values, with no traceability between the sender and receiver (if done correctly, such as batching all transactions over a month into a single event). It would be used by many legal entities also in order to hide their activity (rich people don't want their financial activity known to the public even if it's completely legal).