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Can crypto actually be non-traceable? I remember currencies like Monero or ZCash advertising privacy from the last crypto craze. I mean if you have 100M in som

• generalizations 5y ago
  I think it's still just pseudo-anonymity, even for monero. Which means, practically, that I don't think it would have done more for these guys than just delay the seizure.
  • tryptophan 5y ago
    Nope. Monero is actually private and untraceable.
    • jackson1442 5y ago
      Until someone cracks it, that is. If it becomes the crypto of choice for some of the bigger fish, you can bet the government will find a way to trace it.
      • ryanlol 5y ago
        >Until someone cracks it This is certainly not a given. The government isn’t going to be cracking signal messages within any reasonable timeframe either.
        • bluGill 5y ago
          There are ways to crack encryption that have nothing to do with math. It doesn't matter how good your crypto is. You could probably get by plain text as far as the FBI's effort to crack your crypto are concerned as they won't waste their time checking if you are that stupid.
          • 55555 5y ago
            This doesn't really make sense. In the case of a criminal laundering crypto, they don't know who the criminal is, so the rubber hose attack doesn't work.
        • briffle 5y ago
          Obligitory XKCD: https://xkcd.com/538/ https://xkcd.com/538/
          • ryanlol 5y ago
            Rubberhose cryptanalysis does not work with Monero because you don’t know who to whack.
      • dougk16 5y ago
        There is at least $625,000[1] on the table already. Not to mention how many blockchain analytics companies and other actors would pay millions to have such a capability. [1] https://www.forbes.com/sites/kellyphillipserb/2020/09/14/irs-will-pay-up-to-625000-if-you-can-crack-monero-other-privacy-coins/?sh=6d3a151085cc https://www.forbes.com/sites/kellyphillipserb/2020/09/14/irs...
        • jackson1442 5y ago
          The main reason I bring this up is this is the same promise Tor brought- “completely private” etc. And we all know how that went down: https://www.vice.com/en/article/4x3qnj/how-the-nsa-or-anyone-else-can-crack-tors-anonymity https://www.vice.com/en/article/4x3qnj/how-the-nsa-or-anyone...
          • dougk16 5y ago
            I'm with you, I don't trust it's private/secure at all, but until proven otherwise it's a very interesting technological feat.
      • meowkit 5y ago
        I did a deep dive with a friend of mine (we’re both OS engineers) and its going to be a hell of a cookie to crack. There is a literal virtual tumbler built into the transaction protocol called ring signatures. Stealth addresses (an additional crypto key pair) obfuscate senders and receivers. They also hide the amount transferred which blew my mind.
    • 2OEH8eoCRo0 5y ago
      How many times are we going to learn that that's just not true. There is no safe, only shades of safer. Is the mathematical underpinnings of Monero sound? That's a good starting point. There are still implementation bugs, compiler bugs, architecture bugs, supply chain vulnerabilities, and state actors with unlimited $.
    • gowld 5y ago
      Is getting in and out of Monero private and untraceable?
  • ur-whale 5y ago
    >I think it's still just pseudo-anonymity Nope. Monero, ZCash, and mimblewimble-based cryptos (grin, beam) are certainly not pseudo-anonymous, and tracking is darn near impossible if the users don't do anything stupid.
• hanklazard 5y ago
  yes, with zksnark-based tech (zcash, zk.money, etc)
• TwelveNights 5y ago
  One way I've seen discussed on HN is by sending varying amounts to N different accounts, where some are owned by you / affiliates and others are not. In a sense, paying for obfuscation of which accounts are actually owned by you.
  • briffle 5y ago
    Until one of those people buys a Tesla with bitcoin (yeah, I know they just stopped doing that) from a wallet that can be traced to that payment, and then its just the authorities following up the chain. People like to seem like all these crypto's are totally anonymous, but every transaction ends up in some sort of public blockchain. So unless you have air-tight OPSEC and people that will never talk, no matter what kind of jail time they are facing, its always going to be traceable with enough interest.
• paulpauper 5y ago
  it can be harder to trace, but the bigger problem is trying to turn it into cash, which is hard to do anonymously regardless of the currency used (BTc, XMR, etc). THe FBI,Secret Service, are mostly focused on the conversion of crypto to cash, not the intermediary steps.
  • mwvr 5y ago
    doesn't work if the fiat converted to is in another jurisdiction
    • adventured 5y ago
      There are few jurisdictions where the US Government can't easily get at you, either physically or financially. China, Venezuela, North Korea, Russia the list is super thin and almost exclusively places you either don't want to be or where you better be a protected local (otherwise they'll just hang you out to dry for their own benefit or amusement). Most authorities around the world will want to nail you - and or your money - in cooperation with the US authorities (or otherwise for their own benefit). Once they know the US wants you, you become a toy to be used to some end, you're toast, your life is over.
      • sudosysgen 5y ago
        Don't forget Iran and Vietnam. You don't need to live there for very long. Just for long enough to cash out into fiat, launder the money, etc...
        • bluGill 5y ago
          Maybe. This isn't a political target though, this is criminals wanting money. At most the governments gets a bit of tax money: it just isn't worth it even before you consider that the gangs who can pull this off may turn against the governments. Governments may want the types of people on staff who can pull off these attacks, but they are careful on who gets targeted, and money isn't the goal. Vietnam doesn't like the US for historical reasons, but overall they want to play on the world stage. Also US relations have been thawing over the years. I'm inclined to think they see it as to their advantage to help out. Similar with China - they want the ability to get at the US, but they are more likely to reserve it for something that matters to them. Money doesn't really matter as much as they get plenty sending the US cheap plastic toys. Though if China declares war next week this could be their first attack (highly unlikely, it is possible though)
• Taek 5y ago
  Yeah Zcash provides good privacy for the most part, as long as you use it correctly. Once you cash out, it's a typical money laundering problem. How do you get money into circulation without raising suspicions of where it came from? Plenty of solutions. Mules using exchanges, buying NFTs from yourself, "lucky" investment picks in low liquidity alts, etc
• chowda 5y ago
  These groups will often use bitcoin tumblers/mixers to anonymize their btc. This is a solid explanation https://www.deepwebsiteslinks.com/wp-content/uploads/2017/10/Bitcoin-Tumbler-Services-1.jpg https://www.deepwebsiteslinks.com/wp-content/uploads/2017/10...
  • chrisBob 5y ago
    Is there a technical reason that makes use of a tumbler legally safe? My concern would be that putting in a clean bitcoin would result in me getting a fraction of a stolen bitcoin and I would be receiving stolen property. The fact that they are fully traceable means that it would be easy for someone innocent to be caught up in something like that.
    • jandrese 5y ago
      That and you don't know if the tumbler you are using is operated by the FBI.
    • deleted 5y ago
      [deleted]
• andrepd 5y ago
  As far as I understand it, Monero (XMR) is private and untraceable.
• danlugo92 5y ago
  One (of many) ways: Monero -> bitcoin -> localbitcoins with stolen identity. Each localbitcoins account can trade up to $200k a year without any kind of in-person verification. Also a lot of exchanges let you cash out via western union so... you could theorically send yourself say 10k or 20k a a month with that, there's no need to just withdraw it all at once.
  • Kranar 5y ago
    There is no way to exchange Monero for Bitcoin or vice-versa without the risk of being tracked. LocalBitcoins has been doing KYC/AML since 2018.
    • TheAdamAndChe 5y ago
      Transactions between monero accounts can't be tracked, or at least there's no evidence that they can be tracked.
    • stiltzkin 5y ago
      Atomic Swaps on Monero will be decentralized, no KYC.
  • intricatedetail 5y ago
    But if you get BTC through a mixer chances are they are tainted and you get yourself in trouble when withdrawing.
• ikeboy 5y ago
  Yes, up to a limit. It's super trivial to withdraw, say, 1M. You can use https://tornado.cash/ https://tornado.cash/ to mix 100 ETH, there's currently around 10k such deposits, so you could do that 2-3 times to move 1M in ETH to an address that can't be tied to your previous addresses. It's possible but no longer trivial to withdraw 10M. You could use the above method over a period of time, and some other methods. It becomes much more difficult at much higher values. You could probably get 100M out disguised as trading profits or something. If I spent a few days thinking about it I could probably figure out ways to mix that much money on ETH, filter through DeFi apps, etc. Seems doable. You could also just work with large exchanges that don't care. I don't know which ones are like that now, probably fewer than years ago.
  • intotheabyss 5y ago
    You don't need to. You can send the ETH to tornado.cash. Their anonymity set is such that 100 million would take a long time, but on the order of months to withdraw. Tornado.cash has millions in total locked value in different ETH denominated pools.
    • ikeboy 5y ago
      Yeah I guess, as long as ETH stays around the current level. But if you do hundreds of withdrawals from tornado, it's less anonymous, because the set of people that have deposited that range to tornado is much smaller than the set of people who did a handful of deposits. Instead of 10k, you might be one of a few dozen or less. You could always send a million to a friend (through tornado) and have them cash out for a cut, and repeat that 100 times, if you have 100 friends. That would kill on-chain analysis.
      • skeeter2020 5y ago
        The fact that everyone's first answer when prompted "how do we wind down this huge pile of cryptocurrency?" is convert it to fiat makes me skeptical on all the long-term ambitions from promoters.
• intotheabyss 5y ago
  ETH can be sent through tornado.cash or through zkDAI. Both of these use zero knowledge proofs to break the link in the chain.
• bruiseralmighty 5y ago
  Crypto currency itself can be completely anonymous, but the difficulty is in the on-ramp and off-ramps to and from state fiat money. For example, I want to buy ZCash that is untraceable to me. I need to exchange ownership of a hardware wallet (like a physical USB device) for a pre-determined amount of state fiat, lets say USD in this case. In order to facilitate this I need to find a trusted seller, arrange a meeting, verify the actual value of the physical wallet, and make the exchange. There are non-physical means of making it harder to trace state fiat back to you, but not impossible. The state has simply had too much influence over these places of transaction for too long for anybody to be truly un-findable given a long enough period of time. Assuming I can find someone willing to on-ramp me like this I will need to take steps to ensure that our communications are encrypted and untraceable. This means not only do I need a decentralized encrypted messaging service, I also need to conduct this communication in a way that does not give away my geographical location and is not vulnerable to security logs (say by checking the cafe's video feed from the time I was messaging my seller). Then I need to go to the meet, exchange the physical wallet for cash, and verify the amount in it is accurate (and also preferably not stolen). I need to do this without revealing my identity to my seller and avoiding security logs once again. This is all now possible whereas before Satoshi it was impossible, but it is still difficult. Alternatively, I could just sell some kind of digital asset in exchange for ZCash to begin with. Now I do not have to worry about an on-ramp. If I control my distribution server then I can erase or encrypt my sales logs in order to prevent any estimation of my total sales for the year. Off-ramping is much harder. I either need to become a seller of a physical wallet which has all the same problems that plagued me before, or I need to live in an economy where off-ramping is not required. This would be a physical location where all transactions are conducted in secure, anonymize, cyrpto-currency transactions. Similar to my earlier problem, this is now possible but extremely difficult. An individual or a group of individuals is going to have to bootstrap an entire local economy. Being localized is also an issue since there is nothing preventing the USG from simply rolling in the tanks to break up this localized tax haven.
• vmception 5y ago
  You dont do it that way. Just drop it in Tornado.cash and a few days later withdraw to a virgin crypto address. The virgin crypto address just pumps a token that you bought in another clean address with clean money prior. You sell the token in the clean address at a massive profit and cash out under your real name and ID and even pay taxes. Go look at any highly pumped token on Uniswap/Sushiswap/Pancakeswap and you’ll find plenty of addresses that either bought or added to the liquidity pool using funds that begin with Tornado.cash, there is no way to distinguish the nature of the transaction from simple observation. All blockchain technology is heading to parity with the privacy afforded by traditional banking, without the financial intermediary to question anything for the state.
  • intotheabyss 5y ago
    You could even send ETH to the Secret Network and perform token swaps and then send it back to a clean address.
    • vmception 5y ago
      Yes, even better because the smart contract execution is private and all the variables (receiver, quantity) are only temporarily stored with the validator’s SGX chips and not onchain. Less liquidity there, for now. Meaning the exits would more likely be the same beneficial owner, but definitely an additional route for liquidity. Similarly, I think there should be a version of Tornado.cash that stores notes in SGX and Secure Enclaves, as enough devices have this now. (Although that forces only one device to have the note. Instead of a transferable IOU) How well does Keplr or Cosmos wallets work over Tor? Are their any onion nodes that can resolve broadcasted transactions?
      • vmception 5y ago
        Also note: I would still say having a record of trading gains would still be better whether using an EVM+Tornado or Secret Network, as this is much easier to account for than never accounting for the obfuscated funds or trying to further obfuscate and reintegrate with front businesses