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The rise of crypto laundries: how criminals cash out of Bitcoin
- kasperni 5y agohttps://archive.is/4U02A https://archive.is/4U02A
- speedcoder 5y agoThank you for version not behind pay wall. I was worried I'd have to pay in BTC.
- pibechorro 5y agoProbably easier for any serious criminal to just deal in cash and make deposits at the big banks, they have a long history of taking cartel money.
- helsinkiandrew 5y agoBut cash isn't that useful if you're holding a company to ransom on the other side of the world. And normal bank transfers are very traceable. Banks need to report any transactions greater than $10K (or a series of smaller transactions that make up $10K). The consequences of a bank not reporting far exceed any profit they would make from it.
- pjc50 5y agoI think the GP was specifically referring to HSBC which has been known to evade its responsibilities in this regard.
- Taek 5y agoI believe Wells Fargo, JP Morgan, and plenty others have reputations for this as well. HSBC just happens to be in the news the most.
- danlugo92 5y agoIf you show up at the correct bank with a $1million briefcase you will be taken to a closed office and they will serve you.
- raesene9 5y agoDepends on the country. Definitely in the UK if you make a lot of large cash transactions without a good business reason, you'll get scrutiny. This is one of the reasons that common fronts for crime are companies that would be expected to handle a lot of cash :) Also the major advantage of cryptocurencies in crime is their international nature. It means I can sit in a country that has no extradition treaty with the places I'm doing crime, safe in the knowledge that I won't be touched, as long as I'm careful who I target.
- Cthulhu_ 5y ago> This is one of the reasons that common fronts for crime are companies that would be expected to handle a lot of cash :) Or a large amount of smaller companies for which 5K in revenue a month won't look suspicious (I'm thinking of stuff like these small phone (repair) shops, and there was a massage parlor down the road that was open frequently but never saw any customers. Still managed to stay open for years. Maybe that grey Mercedes that parked out in front of it once a month had something to do with it?)
- vmception 5y agoCustom pillows, by appointment only, was probably the most obvious and rational front I’ve ever seen. Create customer records of as many high dollar value appointments as you want!
- MikeDelta 5y agoDrug dealers and such probably yes. Sending 10 mio USD ransom across the world in cash would be much harder, but is so much easier in cryptocurrencies.
- tootie 5y agoTraditional laundering operations are typically very expensive and subject to heavy scrutiny. Banks or other washers take a big cut. And if you're here talking banks which have been caught doing this then it isn't very secret anymore. Crypto can be laundered quickly, cheaply and safely. And in unlimited quantities.
- gvv 5y agoyeah, this would NEVER happen with cash! /s
- user-the-name 5y agoYou can't demand people send you cash from around the world as ransom for the computers you took over.
- orbitingpluto 5y agoThe media is the message. Criminals don't launder bitcoin at non-profitable nail salons either.
- aunty_helen 5y agoI think I've read more stories on bitcoin laundries than actual laundries... suprising given how long it has been around.
- nuclearnice1 5y agoHere’s a little story to help balance the ratio https://www.google.com/amp/s/www.vogue.co.uk/fashion/article/wansho-laundry/amp https://www.google.com/amp/s/www.vogue.co.uk/fashion/article...
- meowster 5y agoHere is the exact same URL without Google's AMP: https://www.vogue.co.uk/fashion/article/wansho-laundry https://www.vogue.co.uk/fashion/article/wansho-laundry
- nuclearnice1 5y agoThanks for that Cute story, right?
- joshfraser 5y agoEvery dollar bill in your wallet has trace amounts of cocaine on it. They probably spent some time tucked in some dancers g-string too. All money is "dirty". It's just a question of how many times it needs to trade hands before we collectively agree to treat it as "clean" again.
- arbitrage 5y agouhhhhh ... that's not what they're talking about. nobody really cares about cocaine and pubes on dollar bills.
- helsinkiandrew 5y agoI care
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- dan-robertson 5y agoNeither of the things you’ve described make money dirty. Just because a dollar bill comes into contact with cocaine (often in cash sorting machines in banks), it doesn’t mean that it is the proceeds of crime.
- cheeseomlit 5y agoI think his point is that a sizable portion of physical cash is involved with crime, that's one of the benefits of using cash so it only stands to reason- Yet everybody still uses cash regardless. Though I'm sure this same argument will be used in the future to justify a transition to a cashless society where all transactions are traced
- m00dy 5y agoI can tell one of the ways that is missing in the article. Let's say, you have a lot of Bitcoins and your buddy is a bitcoin miner. You craft your transaction such a way that you put all your coins as transaction fee. You send your transaction only to your buddy. Your buddy picks it up and solves the puzzle afterwards. Fees will be converted to brand new coins.
- mgerullis 5y agoIs it possible to send out transactions without sending them to the mempool?
- alcio 5y agoyes, you can email it to your miner buddy. it's possible to spot such transactions if they violate transaction forwarding rules (aka standardness rules) but not consensus rules. for example, a transaction greater than 100kB is not standard but still valid.
- b10c 5y agoI've build a tool to detect differences between _my local_ mempool and what miners include in their block (there will always be slight differences). This is primarily intended to detect censorship, but can also detect transactions that never entered _my_ mempool. See https://miningpool.observer https://miningpool.observer
- ccity88 5y agoI get that money laundering is always linked to criminal activity, but how have we always just accepted the lack of personal privacy when it comes to finance? Privacy is a feature, not a bug; and whilst crypto may not be the way forward, I hope one day we can reach a solution that has both privacy and also safety. The language used by law enforcement is quite alarming, it suggests that they should be privy to ALL transactions made, regardless of reasonable suspicion.
- auntienomen 5y agoIf you don't interfere with money laundering, the criminals eventually acquire enormous wealth, and with it power. They eventually acquire enough power to take over the government. At that point, you're at their mercy, and theorizing about privacy laws becomes a bit pointless.
- rusabd 5y agoSo you are saying that before money laundering laws those criminals took over the government. It is almost like said criminals just don't want any competition now
- auntienomen 5y agoMoney laundering laws emerged after criminals started getting organized about managing their wealth. Before Prohibition and Meyer Lansky, they were all small timers.
- crispyambulance 5y ago> eventually acquire enough power to take over the government I wonder, recalling the Panama Papers incident, if this has effectively happened already!
- jb775 5y agoThis has already happened. They typically launder money via "foundations" or "charities". They acquire power by purchasing media companies. They use the media companies to control public narratives to shift the Overton window of public policies. They also use it to manipulate the truth as it suits them[1]. Their target population for controlling thought narratives are yuppies and the lower classes. [1] https://mobile.twitter.com/DrewHolden360/status/1397335324414590978 https://mobile.twitter.com/DrewHolden360/status/139733532441...
- baybal2 5y agoVery strange to see that Fog managed to run for 10 years when the guy being almost a public figure in Russia, and flew Russia-US regularly.
- wesleywt 5y agoWhy go through all that trouble when regular banks already launder cash for you.
- Cthulhu_ 5y agoDo explain, because I don't believe you actually know how banks work. Banks will flag up dubious transactions - uncommon large ones, frequent smaller ones, a sudden stop or start in transactions, etc. They've got big fraud (and money laundering) prevention teams on there, currently using machine learning to detect suspicious activity. I mean there's bound to be laundering going on via banks, but it's risky. Heard about one guy that tried to get his Bitcoin winnings onto his regular account, his bank wouldn't accept it because they couldn't verify its source. Of course, he managed to open up an account at another bank who accepted it without question, and transferring it to his main account from that bank was also done without question, so it's not exactly consistent.
- tluyben2 5y agoIf he couldn't show the trace then no bank should've let him really: were I live, you have to show where fiat->crypto accused and how you got that fiat. Then you have to show how the crypto became worth more (that can just be a wallet address IN and wallet address OUT between the times it went from the fiat amount you started with until the time it became what you are trying to transfer to the bank). But that's all; few screenshots, even for large amounts. I guess if you are trying to send over more than a million, you might want to get some people to help you anyway. Also; always call your bank upfront to explain what will happen; that can prevent a freeze or reject if you got in ahead.
- libertine 5y ago>Heard about one guy that tried to get his Bitcoin winnings onto his regular account, his bank wouldn't accept it because they couldn't verify its source. Of course, he managed to open up an account at another bank who accepted it without question, and transferring it to his main account from that bank was also done without question, so it's not exactly consistent. You nailed it here without noticing it: you just use the right bank(s) in the right countries, and then just shuffle and move money around. I'm pretty sure there are organizations dedicated to set up these operations.
- lifeisstillgood 5y agoI am fascinated by the rise of 'chain analysis' companies - that started as 'aint it fun' and became 'hey we can help the cops track ransomware' quite quickly. The thing that fascinates me is ... we could do (very similar) analysis on "normal" bank accounts - on a much larger scale but still. I wonder how much criminal activity would be revealed?
- tudorizer 5y agoWell, on "normal" bank accounts you would be hit by international policies and cover-ups, while on public ledgers, the only barrier is the tech.
- tw04 5y agoYou think someone who is sophisticated enough to hide money in the international banking system isn't sophisticated enough to hide it in bitcoin? Congratulations, you tracked the transaction to a shell company and have no jurisdiction to unwind who the cash withdrawal went to? Ignoring the coin washing services referenced in the story.
- ozim 5y agoSomeone who is sophisticated enough to hide money in international banking system won't care about bitcoin. There is enough bad guys that are not sophisticated enough and are thinking that bitcoin will do all hard work of hiding it for them. Obviously they are wrong.
- tudorizer 5y agoPrecisely! This is the reason why "crypto is good for money laundering" falls apart, IMHO.
- cheeseomlit 5y agoI'd bet something similar is being done with traditional banking transactions by government agencies, if only to aid in parallel construction
- jason0597 5y agoI'm curious for the day when Monero overtakes Bitcoin as the primary cryptocurrency for illegal dealings. Then law enforcement will truly be hopeless. Some drug markets are already dealing in Monero only. It's just a matter of time before more people catch on.
- Taek 5y agoAnalytic techniques are getting better and the cutting edge research strongly suggests that to a sufficiently sophisticated attacker, Monero is fundamentally about as private as bitcoin. Zcash from a theoretical perspective is a lot stronger, but I believe from a practical perspective (due to things like weaknesses in the mempool privacy) is also not very private.
- cheeseomlit 5y ago>Monero is fundamentally about as private as bitcoin. That's contrary to what I've read, care to expand? As far as I know the IRS is still offering a bounty to crack Monero
- Taek 5y agohttps://gist.github.com/DavidVorick/0dbd4906bfa50b7d8dba23f7665598a2 https://gist.github.com/DavidVorick/0dbd4906bfa50b7d8dba23f7...
- jason0597 5y agoI read through this entire gist, and I was not able to find a single section categorically proving that Monero is unsafe. It makes big claims such as "Monero has been broken." and "Monero is substantially unsafe and incapable of providing anonymity [...]", but then at the end the very same paper says the following: "Monero is the best-in-class anonymous cryptocurrency in production today." What the hell is it trying to say then? From what I've been able to gather from this gist, its argument that Monero is "unsafe" hinges on the extra sentence: "under the formal threat model proposed and analyzed in this paper". Curiously, section 8, "Analysis Under Full Threat Model", is completely blank. And it also curiously never properly defines the "full threat model" From what I gather however, its main argument is that 10 decoys (in RingCT) is too few and there could be probabilistic attacks and the some of the decoys could be malicious actors. The Monero developers already know this however, and are working on Triptych and Arcturus [1] to fix this. Note that this doesn't mean that Monero is 0% safe (as the gist likes to pretend by writing stuff like "Monero has been broken"), but it rather means that Monero is 80-90% safe rather than 100% safe. And if you're that worried, the Monero wallet offers the option for churning [2] Lastly, the gist is more than 3 years old now, without a single update to it. Does the author not know that in 3 years there could be lots of upgrades and fixes to Monero? The fact that the largest Dark Net Market is now using Monero only surely should be an indication that Monero is doing something right? [1]: https://www.monerooutreach.org/stories/monero-triptych.html https://www.monerooutreach.org/stories/monero-triptych.html [2]: https://monero.stackexchange.com/questions/4565/what-is-churning https://monero.stackexchange.com/questions/4565/what-is-chur...
- ulzeraj 5y ago> “They’re basically a trustless version of a mixer and it’s all done within software,” said Robinson, noting that an open-source project called Wasabi Wallet was the dominant player in the space. Funny because Wasabi requires a lot of manual coin control to preserve anonymity. Samourai Wallet automates most of these and offers obfuscating tools.
- martinko 5y ago> Samourai Wallet automates most of these and offers obfuscating tools. And does not have a desktop client. Next to useless.
- bsedlm 5y agoI'm always left wondering about the invention (the encoding into laws) of "money laundering". I believe that this happened at some point during the 70s right around the time congress declared "war on drugs"? edit: aha, I refer to 91st USA congress: https://en.wikipedia.org/wiki/Bank_Secrecy_Act https://en.wikipedia.org/wiki/Bank_Secrecy_Act https://en.wikipedia.org/wiki/Comprehensive_Drug_Abuse_Prevention_and_Control_Act_of_1970 https://en.wikipedia.org/wiki/Comprehensive_Drug_Abuse_Preve...
- DetroitThrow 5y agoIt happened earlier: in the USA many laws and agencies related to it were brought out during prohibition.
- Closi 5y agoThey date back until at least 1930's with the prohibition :)
- vmception 5y agoYes this is accurate in the sense that these are the basis for the modern enforcement tools in use The state has never had a right to understanding the financial flows or private property, it found a convenience with the electronic financial system and deputized all financial intermediaries to data mine and snitch for it. This has subsequently become conflated with a right of the state to have all of this information, as the people running it now are unfamiliar with not having these conveniences. The market, on the other hand, is simply reverting to a mean. It has developed and chosen an electronic financial system that doesnt require financial intermediaries. So the state is going to lose its power to criminalize transactions. If there are any actual criminal behaviors with distinctive victims, then it has to do an actual investigation and find the individual and prosecute them. It really isnt that absurd of a concept.
- A4ET8a8uTh0 5y agoI may be biased since I am holding and mining crypto, but I find recent slew of articles talking up the evils of crypto amusing. From eco evils to national security. Crypto is the culprit and banning it will bring salvation. Just today my superior shared WSJ opinion piece saying it should be banned altogether. I genuinely chuckled. It was ignored for so long, but only now when it may be genuinely hard to just put down, because real players joined the fray, did the offensive PR started.
- AzzieElbab 5y agoI am pretty sure all the crypto in the world would not be enough to maintain well documented laundering schemes that cartels use.
- entropic88 5y agoIt's not just a recent slew of articles - calls to ban and framing it as tools for criminals and terrorists has been repeated like a broken record for a decade now.
- brabel 5y agoThat might be your bubble , because in mine, I've seen cryptocoins being attacked for as long as I've known about them. It's not that banning it will bring salvation, it's just that it's one less evil to worry about, with no clear downsides as crypto really isn't used for anything good.
- _wldu 5y agoThe same argument could be made for banning Tor. I disagree, though, as these technologies can be and are used for good/normal things. Not everyone is running guns, evading taxes or selling drugs. In fact, most people aren't.
- A4ET8a8uTh0 5y agoThey were attacked, but about two years ago it was an attack along the lines of 'Pfft, how can random mathematical equation busy work determine value?', which was a lot more reasonable. Current articles go for the emotional stuff.
- mouzogu 5y agoWhy would you go through this elaborate process when you could just get HSBC to launder your money.
- tudorw 5y agoNo dufflebags?
- smitty1110 5y agoIf you have enough volume, HSBC will customize your experience by modifying teller windows to accept the hard briefcase of your choice. You won't have to worry about some random guy cutting your bag and stealing your illicit cash!
- rchaud 5y agoThe people that even HSBC won't do business with.
- djoldman 5y agohttps://outline.com/X6nWWs https://outline.com/X6nWWs
- vyrotek 5y agoAfter learning about how expensive stolen art is exchanged as a proxy for cash from "This is a robbery" on Netflix I started to wonder if laundering is really needed with crypto. There are probably clever ways to just exchange wallet ownership instead.
- vmception 5y agoYep. Anybody that is watching funds move across addresses has no idea what they are doing. They rely on assuming that the funds still have the same ultimate beneficial owner (UBO) who is trying to hide, when that couldn’t be further from the truth. Anybody that claims they know is just trying to scam a government for a lucrative blockchain analysis contract. Just another crypto entrepreneur aiming to leak fiat out of the system, even while pretending to act like an adversary to crypto users. The reality is that: A) the UBO either isn't trying to hide because they can acquire the goods and services they want without laundering (other tokens, governance control of a crypto network, passive income, digital art, using the dirty funds to pump other tokens that they already own with clean money allowing them to derive entrepreneurial or trading genius benefits) B) the UBO know they can launder whenever they feel like it or get around to it C) the funds have already changed UBOs to people that were not involved and shouldn't be tracked, because A) and B) already happened onchain or offchain
- takeda 5y agoThe thing is that wallet is digital. If I hand you an USB stick with the wallet, that doesn't mean I no longer have it. The USB could be a copy of it and I could still withdraw the money. To be sure that doesn't happen the new owner would need to transfer money to another wallet. Unless there's a high trust that this won't be done.
- vmception 5y agoYes, crypto can operate in a temporarily trusted environment. What I was describing here wasn't that, I am referring to onchain transfers in trade for goods and services. (Part C could also be hand to hand trusted transfer of a wallet/private key) Chain analysis still assumes that its the same owner or related guilty beneficiary all the way to a centralized exchange.
- vmception 5y agoThe XMR to sXMR bridge is live and applauded by both the Monero community and Secret Network community Secret Network also has an AMM called SecretSwap for exchange to any other asset All smart contract execution on the secret network is private, as in the variables and current state is not stored on chain for perusal, all assets are smart contracts
- digianarchist 5y agoIs the Monero community still working on atomic-swaps? If the can pull that off it would make it very difficult to trace money laundering activities.
- vmception 5y agoThis would be one rendition of one It is more so that the Secret Network is able to basically shard a Monero multi-signature address across the SGX chips that the validators are required to have, and from consensus mint or burn sXMR when XMR is deposited or withdrawn
- ChrisClark 5y agoThey actually just launched XMR/BTC atomic swaps today. So I'm sure a bunch of atomic swap tech on Monero is now possible.
- koreanguy 5y agoft.com paywall
- vmception 5y ago> Some criminals undertake what is known as “chain-hopping” — jumping between different cryptocurrencies, often in rapid succession — to lose trackers, or use particular “privacy coin” cryptocurrencies that have extra anonymity built into them, such as Monero. Its kind of hilarious that an article in mid-2021 treats this as novel, or that it is novel to many people reading it now. To me this is like reading about bearer bonds from a 1950s heist. Chain-hopping is as old as crypto exchanges. It has some folly, because even if a chain analysis firm or armchair blockchain sleuths aren't inspired enough to consider or look on another chain, the records are still permanent. Hopping over to XMR or privacy chains has been available since 2014. Even with older versions leaking some rings, the best practices from back then still mitigate that, and rotating anytime since 2017 ensures mitigation through now. The article lacks anything coherent, providing maybe a tiny spark of inspiration for investigators and people enamored by the crypto phenomenon, but wasting everybody's time because there are other techniques fairly unique to the crypto space that are more accessible and efficient and not secret at all.
- Ceezy 5y agoWell everybody is just not as in the loop as you are. Not sure what is hilarious about that...
- vmception 5y agoThe point is that this article conflates several things and is describing some fairly outdated or inefficient obfuscation techniques of which launderers would be some of the users of. It goes from Hydra market duffle-bags of cash hiders (lolwut), to chain-hopping and scant mention of privacy coins. It randomly talks about Wasabi wallet same-chain bitcoin mixers, and then talks about Bitcoin Fog's operator being arrested which is much much older technology. It doesn't acknowledge or provide awareness about people actually wanting the privacy coins to begin with or staying within the mixing system (or trading claims to assets in the mixing system), and just assumes people are trying to obfuscate briefly with the end goal of holding non-private coins or fiat. I don't get the impression that they were avoiding describing useful techniques for criminals, I get the impression that they have no idea.
- legulere 5y agoCould you wash bitcoin by colluding with miners? You create a big transaction with a high fee, but don't propagate it. You give the transaction only to the miner you colluded with. The miner gets the transaction fee which is seen as legit. They can now give you the good bitcoins and keep some of it for themselves.
- knuthsat 5y agoI think Bitstamp exchange offered a payout in gold bars for some time (there's no taxation on acquired gold in some countries). The exchanges are definitely in on it. From trading bots, to price volatility. Pretty sure there's inside trading being done on most successful exchanges. Nothing better than knowing the behavior of a bunch of traders and figuring out the best massive bot trading strategies.
- 5ersi 5y agoThe easiest way to totally anonymize crypto is to use hash marketplaces (i.e. Nicehash). Hash marketplaces let you anonymously buy hash power via BTC, which you can then direct to any crtpyo coin pool to get mint crypto coins.
- jtsiskin 5y agoAssuming you trust they aren’t saving any logs..
- jl2718 5y agoThe only people that would buy dirty crypto are people with dirty cash. Even then, it would be a profoundly stupid transaction from a cash flow or security perspective. Those cryptos have basically zero value, and you just made yourself traceable in an area of technology you probably know nothing about, except some blurb on the Internet about how secure it is. If you’re going into business in ransomware or money laundering, and you’re calculating profits by the exchange rate on Coinbase, you are a moron, and you’re about to get wrecked.
- z0rglub 5y agohttps://www.rand.org/pubs/research_reports/RR3026.html https://www.rand.org/pubs/research_reports/RR3026.html
- z0rglub 5y agoThe criminal use of the cryptocurrencies seems always conflated. https://www.rand.org/pubs/research_reports/RR3026.html https://www.rand.org/pubs/research_reports/RR3026.html