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Please correct me on this but from what I can gather ransomware is a direct consequence of cryptocurrency. US Federal law enforcement has quite a lot of control

Please correct me on this but from what I can gather ransomware is a direct consequence of cryptocurrency. US Federal law enforcement has quite a lot of control over traditional banking and trying to extort the amount of money from a public agency would traditionally call for Federal Intervention. If so it seems like there is a good case to be made for a direct fine placed on the ledger used for payment in order to compensate for the damages.

tnzm 6y ago
Who are you going to fine? Distributed ledgers are not owned by a central entity.
- anothernewdude 6y ago
  Entities that are caught trading coins that have gone through wallets attached to ransomware. Target big exchanges.
  - tartoran 6y ago
    But those wallets will be a one time thing and next time a new walled would be used for this type of thing. How could exchanges know that?
    - tnzm 6y ago
      Bitcoin is not private. Wallets are ephemeral, however the coins themselves can be tracked. Monero, on the other hand...
      - asdfasgasdgasdg 6y ago
        Here's one possible recipe for fixing this issue: - Ban anonymous cryptocurrencies. - In pseudonymous cryptos, mark any address that has been the destination of a ransomware payment or demand as tainted. Any net positive transaction from a tainted source wallet marks the destination wallet as tainted. (I.e. you are obligated to return tainted monies to tainted wallets if they send money to you.) - Exchanges are forbidden to deal with tainted wallets, or with any exchange that deals with tainted wallets. While you're at it, I guess you could mark any wallet funded at an exchange that doesn't KYC as tainted as well, to limit the use of crypto for money laundering. I'm guessing we're going to figure a lot of this stuff out in the next 10-20 years, if the crypto craze doesn't die off naturally during that timeframe.
        tnzm 6y ago
        How would you ban an anonymous cryptocurrency?
        asdfasgasdgasdg 6y ago
        Basically, in order for a wallet to be "green" it needs to be associated with a real world identity and, if it serves as an exchange, it also needs to follow the policy not to exchange anonymous into pseudonymous. Any wallet that doesn't follow this policy is tainted. At fiat offramps, seize monies sourced from tainted wallets as it's presumptively illegal.
        tnzm 6y ago
        How do you intend on preventing people from just exchanging crypto for goods instead of having to go through offramps?
        asdfasgasdgasdg 6y ago
        The threat of being charged with money laundering? The enormous friction that such a transaction would encounter compared to the status quo?
        tnzm 6y ago
        Ah yes, threats and bureaucracy, the go-to tools of the statist. Reminds me, more than anything else, of all the joy sparked worldwide for the better part of the 20th century by the War on Drugs. In your ideal world, is any cash transaction also "presumed guilty" (hah!) of money laundering? The real fault lies with institutions rushing to half-assedly digitize so now they're wide open to script kiddies, and with enterprise IT providers doing a piss-poor job at doing correct software engineering. And now you're suggesting more savagery like it's some sort of solution to anything at all?
        asdfasgasdgasdg 6y ago
  - hanklazard 6y ago
    There are mechanisms to obfuscate using Bitcoin laundering services or with zksnarks-based transactions (https://zk.money https://zk.money). As much as it would be great to be able to track these funds, I think it will be increasingly impossible.
    - amluto 6y ago
      Ban the exchange of laundered bitcoins and other coins, too. If laundering you non-banned coins gets them banned, your incentive to do so goes way down.
      - vmception 6y ago
        A) Use already clean money in one address to buy a token on uniswap (or any AMM) B) Use your laundered dirty money in other addresses to pump the token on uniswap (or any AMM) C) Sell the token from address in A) back into the Uniswap liquidity pool at a massive profit, enjoy the profits and reintegrated money. You look like any trader. D) Bag hold the token in the address from B) and never think about it again and never worry about trying to cash that out. In addition that address can add to the liquidity pool and provide a service to all other traders indefinitely. E) Laugh at people that are still imagining how difficult it is to launder money on public ledgers. Blockchain detectives on their wild goose chase looking at the wrong addresses. Do this all over time, and not immediately pumping a token with the laundered money. Sure, I’ll probably get more scrutiny after writing this but you won’t. I really hate chilled speech and people having dumb ideas because the should-be-obvious reality is never talked about. The point is that the trader behavior is indistinguishable from others, and there are no financial intermediaries on permissionless AMMs to flag anything.
        amluto 6y ago
        This isn’t that different from regular (non-blockchain) money laundering. You can pick your favorite illiquid penny stock, pump it up to 10 cents, and arrange to pick up the profit on the other end. You’ll be up against various people betting against you and, if you use Uniswap between reasonably liquid tokens, you’ll also be up against arbitrageurs. With Ethereum you can, in principle, arrange to atomically pump a liquidity pool and take the profit, but doing so makes it really obvious what’s going on. And, with Ethereum, all the creative sleuths can see what’s going on and can analyze the data and find you. (This style of intentionally introducing a pricing error and arbitraging it yourself happens for real and is not always particularly profitable. You can read about the foreign exchange fixing antitrust shenanigans. Some traders thought they were being very clever, and, according to Matt Levine, made relatively small amounts of money and ended up getting seriously smacked down. The feds and the courts may be slow, but they’re not dumb.) This all seems very abstract, but, when you try to spend what you think were carefully laundered ransomware gains on a nice beach in France or Florida and Interpol or the FBI arrests you, the resulting trial and prison time will be considerably less abstract. :)
  - mtgx 6y ago
    "Just target the big cartels". How has that worked out for the war on drugs so far? In the real world the solutions will never be this easy or perfect.
- PicassoCTs 6y ago
  Well, you just wait for public good will to turn into active hatred, and then voted in on that hatred, you put the hammer down on all crypto forever.
- 8note 6y ago
  Fine all of them? Sounds like a great benefit for the government
greggturkington 6y ago
Prepaid cash services enabled ransomware before they were asking for cryptocurrency
- ddtaylor 6y ago
  Any fungible good can be used this way, like regular cash, which is what's used for the vast majority of crime.
  - nautilus12 6y ago
    But there is a certain amount of law enforcement involvement with cash too. Fighting forged bills, tracing bills by serial number, etc.
    - NullPrefix 6y ago
      Tracing serial numbers on Bitcoin is way easier
- tkinom 6y ago
  https://darknetdiaries.com/episode/ https://darknetdiaries.com/episode/ podcast #70 is a very good story on how someone use the prepaid cash on the dark side. All other stories on that podcast list are very interesting.
- TheCoelacanth 6y ago
  Also things that can easily be sold off for close to face value, like iTunes gift-cards. I think the IRS scammers still usually ask for something like that instead of cryptocurrency, because cryptocurrency is a bit too hard for their marks to figure out.
rfd4sgmk8u 6y ago
"Blame the Money". No, money will always be used for crime as long as money and crime exists. People invent new crimes, People invent new money. Crime is the problem, not the money. I would argue that money that can be used in this context is extremely valuable, as it is beyond the state. This is a very awful situation, and I feel for the victims, but the existence of cryptocurrency is not the problem, any more than cryptography is the problem wrt ransomware. Tech can be used in many forms. Use it properly. Find and bring those to justice that do not. Don't blame the tools.
- vesinisa 6y ago
  Yet, very rarely do we hear about cryptocurrency being used for anything but speculation and crime. In fact, those are the only two proven usecases for cryptocurrency. Money you can at least use to buy stuff, so it has a marked positive impact on the society.
  - smhenderson 6y ago
    I live in the US and saw a BitCoin ATM in a gas station just the other day. I asked the cashier about it and apparently they take BC payments too. So, at least where I live, you can "buy stuff" with BC.
    - scaladev 6y ago
      You'll be waiting on that gas station for hours for the payment to go through.
      - gruez 6y ago
        Not really. Your wait depends on the attached transaction fee and current network conditions. If you cheap out, then yes you have to wait, but it's also entirely avoidable.
        Datagenerator 6y ago
jordansmith 6y ago
Ransomware used moneypak and other prepaid cards for years before switching to crypto. And there is literally no one to fine because no one owns the “ledger”. That’s the joy of a decentralized blockchain
- Pfhreak 6y ago
  You could outlaw or regulate the mining and use of the coin in a country. It wouldn't be easy to enforce, but you could certainly but the law on the record. You could increase taxes on cryptocurrency capital gains. Big exchanges would absolutely report those gains to the IRS and you could be on the hook for a bigger bill. It's not impossible to regulate this stuff. Yes, some folks will figure out ways around the regulations, but you'd catch most tech-unsavvy people just fine.
  - dmos62 6y ago
    I think there are many problems with what you said, but if all that is just to catch the tech-unsavvy people, that excludes organized crime.
    - NullPrefix 6y ago
      Laws don't target organized crime. Well organized crime influences the law so it would target regular people and politicians could say they are tough on crime.
    - Pfhreak 6y ago
      I mean maybe, but tax evasion put Al Capone in Alcatraz.
      - dmos62 6y ago
        But you wouldn't introduce taxation to target organized crime.
- 8note 6y ago
  You could imprison anyone that posts a ledger that includes that transaction. You need some intergovernmental agreements, but it's possible
Hermel 6y ago
In practice, it is very hard to get away with the ransom due to the public nature of blockchain-based transaction. For example, the author of the wannacry failed at layering and exchanging his Bitcoins into fiat. Source: https://www.fatf-gafi.org/publications/virtualassets/documents/virtual-assets.html?hf=10&b=0&s=desc(fatf_releasedate) https://www.fatf-gafi.org/publications/virtualassets/documen...
- mimikatz 6y ago
  In reality it isn't or all these ransomware attacks wouldn't demand payment in bitcoin.
- strictnein 6y ago
  Wannacry was (very likely) created by Lazarus Group, which is one of DPRK's hacking groups.
bufferoverflow 6y ago
There are other ways of getting paid anonymously. The drone just landed on your lawn, place the diamonds in the pouch.
ceilingcorner 6y ago
Expand your definition of ransomware to include state actors and you’ll quickly see that the dollar itself, being a global reserve currency controlled by a single government, is used for all sorts of ransom demands.
dmos62 6y ago
Why stop there? Cryptocurrency is a direct consequence of cryptography.
csomar 6y ago
You can do the same with Western Union albeit it'll require several transactions. Crypto made it more practical.
t-writescode 6y ago
Most scammers use prepaid gift cards, not cryptocurrency.
seany 6y ago
"Just add more authoritarianism" I'll pass, thanks.
INTPenis 6y ago
Just look at the latest Mark Rober video on Youtube. Criminals can simply ask you to send the money cash in a box, hidden in books or other stuff. There will always be a way to get illegal cash, ransomware just became much simpler with cryptocurrency. Now that the trend is here to lock your systems for ransom I don't think they will go away with cryptocurrency.
- lupire 6y ago
  "Much simpler" enables massive scale.
snarf21 6y ago
The outputs are easy to track. The issue you have is someone running an exchange over seas that won't co-operate. Also, as others have said, it isn't as if there were no online scams before 2015.
- esyir 6y ago
  Sounds like those exchanges are going to have devalued bitcoins then. Due to the traceability of bitcoin, I wouldn't be surprised if receiving coin from blacklisted addresses and then not removing it becomes something that gets your wallet blacklisted from mainstream exchanges under money laundering regs.

tnzm 6y ago

Who are you going to fine? Distributed ledgers are not owned by a central entity.

anothernewdude 6y ago
Entities that are caught trading coins that have gone through wallets attached to ransomware. Target big exchanges.
- tartoran 6y ago
  But those wallets will be a one time thing and next time a new walled would be used for this type of thing. How could exchanges know that?
  - tnzm 6y ago
    Bitcoin is not private. Wallets are ephemeral, however the coins themselves can be tracked. Monero, on the other hand...
    - asdfasgasdgasdg 6y ago
      Here's one possible recipe for fixing this issue: - Ban anonymous cryptocurrencies. - In pseudonymous cryptos, mark any address that has been the destination of a ransomware payment or demand as tainted. Any net positive transaction from a tainted source wallet marks the destination wallet as tainted. (I.e. you are obligated to return tainted monies to tainted wallets if they send money to you.) - Exchanges are forbidden to deal with tainted wallets, or with any exchange that deals with tainted wallets. While you're at it, I guess you could mark any wallet funded at an exchange that doesn't KYC as tainted as well, to limit the use of crypto for money laundering. I'm guessing we're going to figure a lot of this stuff out in the next 10-20 years, if the crypto craze doesn't die off naturally during that timeframe.
      - tnzm 6y ago
        How would you ban an anonymous cryptocurrency?
        asdfasgasdgasdg 6y ago
        Basically, in order for a wallet to be "green" it needs to be associated with a real world identity and, if it serves as an exchange, it also needs to follow the policy not to exchange anonymous into pseudonymous. Any wallet that doesn't follow this policy is tainted. At fiat offramps, seize monies sourced from tainted wallets as it's presumptively illegal.
        tnzm 6y ago
        How do you intend on preventing people from just exchanging crypto for goods instead of having to go through offramps?
        asdfasgasdgasdg 6y ago
        The threat of being charged with money laundering? The enormous friction that such a transaction would encounter compared to the status quo?
        tnzm 6y ago
        Ah yes, threats and bureaucracy, the go-to tools of the statist. Reminds me, more than anything else, of all the joy sparked worldwide for the better part of the 20th century by the War on Drugs. In your ideal world, is any cash transaction also "presumed guilty" (hah!) of money laundering? The real fault lies with institutions rushing to half-assedly digitize so now they're wide open to script kiddies, and with enterprise IT providers doing a piss-poor job at doing correct software engineering. And now you're suggesting more savagery like it's some sort of solution to anything at all?
        asdfasgasdgasdg 6y ago
- hanklazard 6y ago
  There are mechanisms to obfuscate using Bitcoin laundering services or with zksnarks-based transactions (https://zk.money https://zk.money). As much as it would be great to be able to track these funds, I think it will be increasingly impossible.
  - amluto 6y ago
    Ban the exchange of laundered bitcoins and other coins, too. If laundering you non-banned coins gets them banned, your incentive to do so goes way down.
    - vmception 6y ago
      A) Use already clean money in one address to buy a token on uniswap (or any AMM) B) Use your laundered dirty money in other addresses to pump the token on uniswap (or any AMM) C) Sell the token from address in A) back into the Uniswap liquidity pool at a massive profit, enjoy the profits and reintegrated money. You look like any trader. D) Bag hold the token in the address from B) and never think about it again and never worry about trying to cash that out. In addition that address can add to the liquidity pool and provide a service to all other traders indefinitely. E) Laugh at people that are still imagining how difficult it is to launder money on public ledgers. Blockchain detectives on their wild goose chase looking at the wrong addresses. Do this all over time, and not immediately pumping a token with the laundered money. Sure, I’ll probably get more scrutiny after writing this but you won’t. I really hate chilled speech and people having dumb ideas because the should-be-obvious reality is never talked about. The point is that the trader behavior is indistinguishable from others, and there are no financial intermediaries on permissionless AMMs to flag anything.
      - amluto 6y ago
        This isn’t that different from regular (non-blockchain) money laundering. You can pick your favorite illiquid penny stock, pump it up to 10 cents, and arrange to pick up the profit on the other end. You’ll be up against various people betting against you and, if you use Uniswap between reasonably liquid tokens, you’ll also be up against arbitrageurs. With Ethereum you can, in principle, arrange to atomically pump a liquidity pool and take the profit, but doing so makes it really obvious what’s going on. And, with Ethereum, all the creative sleuths can see what’s going on and can analyze the data and find you. (This style of intentionally introducing a pricing error and arbitraging it yourself happens for real and is not always particularly profitable. You can read about the foreign exchange fixing antitrust shenanigans. Some traders thought they were being very clever, and, according to Matt Levine, made relatively small amounts of money and ended up getting seriously smacked down. The feds and the courts may be slow, but they’re not dumb.) This all seems very abstract, but, when you try to spend what you think were carefully laundered ransomware gains on a nice beach in France or Florida and Interpol or the FBI arrests you, the resulting trial and prison time will be considerably less abstract. :)
- mtgx 6y ago
  "Just target the big cartels". How has that worked out for the war on drugs so far? In the real world the solutions will never be this easy or perfect.
PicassoCTs 6y ago
Well, you just wait for public good will to turn into active hatred, and then voted in on that hatred, you put the hammer down on all crypto forever.
8note 6y ago
Fine all of them? Sounds like a great benefit for the government

greggturkington 6y ago

Prepaid cash services enabled ransomware before they were asking for cryptocurrency

ddtaylor 6y ago
Any fungible good can be used this way, like regular cash, which is what's used for the vast majority of crime.
- nautilus12 6y ago
  But there is a certain amount of law enforcement involvement with cash too. Fighting forged bills, tracing bills by serial number, etc.
  - NullPrefix 6y ago
    Tracing serial numbers on Bitcoin is way easier
tkinom 6y ago
https://darknetdiaries.com/episode/ https://darknetdiaries.com/episode/ podcast #70 is a very good story on how someone use the prepaid cash on the dark side. All other stories on that podcast list are very interesting.
TheCoelacanth 6y ago
Also things that can easily be sold off for close to face value, like iTunes gift-cards. I think the IRS scammers still usually ask for something like that instead of cryptocurrency, because cryptocurrency is a bit too hard for their marks to figure out.

rfd4sgmk8u 6y ago

"Blame the Money". No, money will always be used for crime as long as money and crime exists. People invent new crimes, People invent new money. Crime is the problem, not the money. I would argue that money that can be used in this context is extremely valuable, as it is beyond the state. This is a very awful situation, and I feel for the victims, but the existence of cryptocurrency is not the problem, any more than cryptography is the problem wrt ransomware. Tech can be used in many forms. Use it properly. Find and bring those to justice that do not. Don't blame the tools.

vesinisa 6y ago
Yet, very rarely do we hear about cryptocurrency being used for anything but speculation and crime. In fact, those are the only two proven usecases for cryptocurrency. Money you can at least use to buy stuff, so it has a marked positive impact on the society.
- smhenderson 6y ago
  I live in the US and saw a BitCoin ATM in a gas station just the other day. I asked the cashier about it and apparently they take BC payments too. So, at least where I live, you can "buy stuff" with BC.
  - scaladev 6y ago
    You'll be waiting on that gas station for hours for the payment to go through.
    - gruez 6y ago
      Not really. Your wait depends on the attached transaction fee and current network conditions. If you cheap out, then yes you have to wait, but it's also entirely avoidable.
      - Datagenerator 6y ago

jordansmith 6y ago

Ransomware used moneypak and other prepaid cards for years before switching to crypto. And there is literally no one to fine because no one owns the “ledger”. That’s the joy of a decentralized blockchain

Pfhreak 6y ago
You could outlaw or regulate the mining and use of the coin in a country. It wouldn't be easy to enforce, but you could certainly but the law on the record. You could increase taxes on cryptocurrency capital gains. Big exchanges would absolutely report those gains to the IRS and you could be on the hook for a bigger bill. It's not impossible to regulate this stuff. Yes, some folks will figure out ways around the regulations, but you'd catch most tech-unsavvy people just fine.
- dmos62 6y ago
  I think there are many problems with what you said, but if all that is just to catch the tech-unsavvy people, that excludes organized crime.
  - NullPrefix 6y ago
    Laws don't target organized crime. Well organized crime influences the law so it would target regular people and politicians could say they are tough on crime.
  - Pfhreak 6y ago
    I mean maybe, but tax evasion put Al Capone in Alcatraz.
    - dmos62 6y ago
      But you wouldn't introduce taxation to target organized crime.
8note 6y ago
You could imprison anyone that posts a ledger that includes that transaction. You need some intergovernmental agreements, but it's possible

Hermel 6y ago

In practice, it is very hard to get away with the ransom due to the public nature of blockchain-based transaction. For example, the author of the wannacry failed at layering and exchanging his Bitcoins into fiat. Source: https://www.fatf-gafi.org/publications/virtualassets/documents/virtual-assets.html?hf=10&b=0&s=desc(fatf_releasedate) https://www.fatf-gafi.org/publications/virtualassets/documen...

mimikatz 6y ago
In reality it isn't or all these ransomware attacks wouldn't demand payment in bitcoin.
strictnein 6y ago
Wannacry was (very likely) created by Lazarus Group, which is one of DPRK's hacking groups.

bufferoverflow 6y ago

There are other ways of getting paid anonymously. The drone just landed on your lawn, place the diamonds in the pouch.

ceilingcorner 6y ago

Expand your definition of ransomware to include state actors and you’ll quickly see that the dollar itself, being a global reserve currency controlled by a single government, is used for all sorts of ransom demands.

dmos62 6y ago

Why stop there? Cryptocurrency is a direct consequence of cryptography.

csomar 6y ago

You can do the same with Western Union albeit it'll require several transactions. Crypto made it more practical.

t-writescode 6y ago

Most scammers use prepaid gift cards, not cryptocurrency.

seany 6y ago

"Just add more authoritarianism" I'll pass, thanks.

INTPenis 6y ago

Just look at the latest Mark Rober video on Youtube. Criminals can simply ask you to send the money cash in a box, hidden in books or other stuff. There will always be a way to get illegal cash, ransomware just became much simpler with cryptocurrency. Now that the trend is here to lock your systems for ransom I don't think they will go away with cryptocurrency.

lupire 6y ago
"Much simpler" enables massive scale.

snarf21 6y ago

The outputs are easy to track. The issue you have is someone running an exchange over seas that won't co-operate. Also, as others have said, it isn't as if there were no online scams before 2015.

esyir 6y ago
Sounds like those exchanges are going to have devalued bitcoins then. Due to the traceability of bitcoin, I wouldn't be surprised if receiving coin from blacklisted addresses and then not removing it becomes something that gets your wallet blacklisted from mainstream exchanges under money laundering regs.