6 ms·

Bitcoin Is Traceable, Pipeline Investigation Shows

52 points by furcyd 5y ago

yosito 5y ago
I really don't understand the persistence of the myth that Bitcoin, which is a public ledger, is not traceable.
- toyg 5y ago
  Probably it's the mainstream confusion between anonymity and traceability, as well as between anonymity and pseudonymity. As soon as Joe Sixpack can't see something that resembles a name, they go "ah-ha, I'm anonymous! so nobody can see what I do!"... despite being wrong on both counts (wallets are pseudonyms, and as you say the ledger is public).
- acdha 5y ago
  It’s a common talking point for Bitcoin salespeople. If you search the archives here you can see a decade of random people making that claim and either going silent or confabulating wildly when asked to support it — and HN has a relatively high average technical skill level. It took years for reporters to start questioning it, and that means there are a LOT of people whose understanding is shaped by what they heard in 2015.
kderbyma 5y ago
I am certain this has been known since about 2016 at least....5 years of common knowledge .... that's just the mainstream coverage.... obviously this can be traced.....it's not zkp
- lamp987 5y ago
  This has been known since Bitcoins inception because its intentional part of its design. Its so you can see no free bitcoins appeared out of nowhere to cause fraud or inflation. Its no secret or discovery.
627467 5y ago
Bitcoin: it's the worst because criminals use it to evade authorities. Bitcoin: it's the worst because it's transactions are traceable.
- vlovich123 5y ago
  Both can be true. One public instance of the government putting in the effort doesn’t mean the enforcement application of this scales to all instances.
  - remarkEon 5y ago
    >One public instance of the government putting in the effort They looked at a Blockchain viewer. What was the "effort" they put in?
    - j_walter 5y ago
      Actually the hackers tried very hard to hide their tracks by going through a mixer at least once (from what I've read). With enough effort and tracing you can still determine with pretty good accuracy where those bitcoins ended up though. It's not quite like looking up the blockchain.
- acdha 5y ago
  Both can be true for a period of time: criminals can _believe_ something which is incorrect but that can go a long time before it’s challenged directly enough to break that belief (as we just saw with that secure messaging app). Someone who bought drugs on the small scale might think it’s true because that was their experience and the local police weren’t spending the time to go after people and the national agencies were going after sales volumes 3+ orders of magnitude larger, or simply that they weren’t spending time on the blockchain because they went after some other part of the system. That experience would be actively misleading if they got new policy directives — as we just saw with ransomware going from a nuisance for insurance companies to the President of the United States telling federal investigators to do something about it.
kim0 5y ago
Is this supposed to be news!! If you need fungible currencies, try Monero instead.
johnzim 5y ago
This has always been part of how Bitcoin works and it’s been the reason I’ve felt like I’ve been taking crazy pills for well over a decade trying to understand its popularity amongst criminals. Do people realize how HARD it is to trace regular currency!? It’s a nightmare! At law there’s an entire equitable principle devoted to the tracing of money. You can’t just prima facie say $A Dollars are $B Dollars, you have to convince a judge to invoke and principles of natural justice to imply such a connection! Meanwhile, Bitcoin literally stores _every transaction ever_.
- wahern 5y ago
  The moment a Federal court declares that Bitcoin addresses aren't fungible is the beginning of the end of Bitcoin as a laundering tool. If the government can seize derivative Bitcoin addresses (and/or other assets purchased in exchange), then as a payee I care very much about the provenance of payments I receive. Almost immediately the value of Bitcoins passing through mixers would plummet.
  - hajile 5y ago
    Monero and others exist. You can’t easily trade them because the government doesn’t like the anonymity, but they exist. If Bitcoin gets poisoned, you’ll just see it sold for monero, laundered, then passed back into Bitcoin.
    - wahern 5y ago
      Who is going to exchange their Monero for your Bitcoin when the Bitcoin you give them can be seized? At what discount?
      - lumost 5y ago
        Now that El Salvador has made BTC legal tender, they may take issue with their citizens having their BTC randomly seized by other governments. The ability to seize BTC is dependent on the jurisdiction of the seizing authority, and their ability to access the wallet. Money launderers will likely concentrate in locations where the local authorities look the other way. Exchanges will charge fees to payout potential seizures in jurisdictions where they can be seized.
thebluestfox 5y ago
Feels like this thread is a great summary of the real deal: https://twitter.com/matthew_d_green/status/1401979215503888385?s=19 https://twitter.com/matthew_d_green/status/14019792155038883...
andred14 5y ago
Yep Bitcoin was fun but now it's worse than cash for privacy and the same as cash for fungibility. Best to move into privacy coins: Current favorites: Wownero and Dero https://www.wownero.org https://www.wownero.org https://dero.io https://dero.io Enjoy :)
sinuhe69 5y ago
CNBC reported that the seizure was able due to the sloppy password storage. https://www.cnbc.com/2021/06/08/fbi-likely-exploited-sloppy-password-storage-to-seize-colonial-ransom.html https://www.cnbc.com/2021/06/08/fbi-likely-exploited-sloppy-...
nikolay 5y ago
Every promise of Bitcoin was false!
- lamp987 5y ago
  Bitcoin never promised to be untraceable. It has open ledger where you can simply read source address, destination address and amount for each transaction. Thats how the tech works, anyone can look at the ledger. Intentionally and by design.
  - nikolay 5y ago
    It promised anonymity. In 2021, I have no doubt it really was an NSA project - a financial honeypot.
hermitsings 5y ago
This is a double-edged sword. It'd mean that common people should be able to use crypto and the mythic threats of terrorist finance and laundering are not that serious since it can be traced. And normal people won't do that but use it in other simple ways.
kangaroozach 5y ago
What if the FBI is Not being truthful and they didn’t actually confiscate the bitcoin? Who would call them out? Would the cybercriminals tell the world, it’s not actually true!? Maybe this story was made up to weaken bitcoin and try to take it down by making people think it was vulnerable to tracing and manipulation. Is this possible? Did the wallet addresses ever get published publicly?
- Dma54rhs 5y ago
  But it's already known that bitcoin is traceable and by anyone as it's all public by design. Not sure about the point you're trying to make, maybe the real question is why criminals ask for bitcoin not something that at least on paper gives much better privacy.
kemonocode 5y ago
It's always been traceable, there's a public ledger and different data analysis techniques you can perform with varying degrees of usefulness, and Bitcoin's real value doesn't lay there. Anonymity is not the same as pseudonymity, and while you could probably trace a few transactions with a criminal source at a time, it wouldn't take that much to thwart taint analysis by a dedicated enough author. Besides, they were able to seize those Bitcoins due to badly stored passwords, not because any inherent weakness on Bitcoin itself. Some cybercriminals aren't that great at opsec.
tonfreed 5y ago
NYT again playing at Captain obvious.

52 points by furcyd 5y ago

yosito 5y ago

I really don't understand the persistence of the myth that Bitcoin, which is a public ledger, is not traceable.

toyg 5y ago
Probably it's the mainstream confusion between anonymity and traceability, as well as between anonymity and pseudonymity. As soon as Joe Sixpack can't see something that resembles a name, they go "ah-ha, I'm anonymous! so nobody can see what I do!"... despite being wrong on both counts (wallets are pseudonyms, and as you say the ledger is public).
acdha 5y ago
It’s a common talking point for Bitcoin salespeople. If you search the archives here you can see a decade of random people making that claim and either going silent or confabulating wildly when asked to support it — and HN has a relatively high average technical skill level. It took years for reporters to start questioning it, and that means there are a LOT of people whose understanding is shaped by what they heard in 2015.

kderbyma 5y ago

I am certain this has been known since about 2016 at least....5 years of common knowledge .... that's just the mainstream coverage.... obviously this can be traced.....it's not zkp

lamp987 5y ago
This has been known since Bitcoins inception because its intentional part of its design. Its so you can see no free bitcoins appeared out of nowhere to cause fraud or inflation. Its no secret or discovery.

627467 5y ago

Bitcoin: it's the worst because criminals use it to evade authorities. Bitcoin: it's the worst because it's transactions are traceable.

vlovich123 5y ago
Both can be true. One public instance of the government putting in the effort doesn’t mean the enforcement application of this scales to all instances.
- remarkEon 5y ago
  >One public instance of the government putting in the effort They looked at a Blockchain viewer. What was the "effort" they put in?
  - j_walter 5y ago
    Actually the hackers tried very hard to hide their tracks by going through a mixer at least once (from what I've read). With enough effort and tracing you can still determine with pretty good accuracy where those bitcoins ended up though. It's not quite like looking up the blockchain.
acdha 5y ago
Both can be true for a period of time: criminals can _believe_ something which is incorrect but that can go a long time before it’s challenged directly enough to break that belief (as we just saw with that secure messaging app). Someone who bought drugs on the small scale might think it’s true because that was their experience and the local police weren’t spending the time to go after people and the national agencies were going after sales volumes 3+ orders of magnitude larger, or simply that they weren’t spending time on the blockchain because they went after some other part of the system. That experience would be actively misleading if they got new policy directives — as we just saw with ransomware going from a nuisance for insurance companies to the President of the United States telling federal investigators to do something about it.

kim0 5y ago

Is this supposed to be news!! If you need fungible currencies, try Monero instead.

johnzim 5y ago

This has always been part of how Bitcoin works and it’s been the reason I’ve felt like I’ve been taking crazy pills for well over a decade trying to understand its popularity amongst criminals. Do people realize how HARD it is to trace regular currency!? It’s a nightmare! At law there’s an entire equitable principle devoted to the tracing of money. You can’t just prima facie say $A Dollars are $B Dollars, you have to convince a judge to invoke and principles of natural justice to imply such a connection! Meanwhile, Bitcoin literally stores _every transaction ever_.

wahern 5y ago
The moment a Federal court declares that Bitcoin addresses aren't fungible is the beginning of the end of Bitcoin as a laundering tool. If the government can seize derivative Bitcoin addresses (and/or other assets purchased in exchange), then as a payee I care very much about the provenance of payments I receive. Almost immediately the value of Bitcoins passing through mixers would plummet.
- hajile 5y ago
  Monero and others exist. You can’t easily trade them because the government doesn’t like the anonymity, but they exist. If Bitcoin gets poisoned, you’ll just see it sold for monero, laundered, then passed back into Bitcoin.
  - wahern 5y ago
    Who is going to exchange their Monero for your Bitcoin when the Bitcoin you give them can be seized? At what discount?
    - lumost 5y ago
      Now that El Salvador has made BTC legal tender, they may take issue with their citizens having their BTC randomly seized by other governments. The ability to seize BTC is dependent on the jurisdiction of the seizing authority, and their ability to access the wallet. Money launderers will likely concentrate in locations where the local authorities look the other way. Exchanges will charge fees to payout potential seizures in jurisdictions where they can be seized.

thebluestfox 5y ago

Feels like this thread is a great summary of the real deal: https://twitter.com/matthew_d_green/status/1401979215503888385?s=19 https://twitter.com/matthew_d_green/status/14019792155038883...

andred14 5y ago

Yep Bitcoin was fun but now it's worse than cash for privacy and the same as cash for fungibility. Best to move into privacy coins: Current favorites: Wownero and Dero https://www.wownero.org https://www.wownero.org https://dero.io https://dero.io Enjoy :)

sinuhe69 5y ago

CNBC reported that the seizure was able due to the sloppy password storage. https://www.cnbc.com/2021/06/08/fbi-likely-exploited-sloppy-password-storage-to-seize-colonial-ransom.html https://www.cnbc.com/2021/06/08/fbi-likely-exploited-sloppy-...

nikolay 5y ago

Every promise of Bitcoin was false!

lamp987 5y ago
Bitcoin never promised to be untraceable. It has open ledger where you can simply read source address, destination address and amount for each transaction. Thats how the tech works, anyone can look at the ledger. Intentionally and by design.
- nikolay 5y ago
  It promised anonymity. In 2021, I have no doubt it really was an NSA project - a financial honeypot.

hermitsings 5y ago

This is a double-edged sword. It'd mean that common people should be able to use crypto and the mythic threats of terrorist finance and laundering are not that serious since it can be traced. And normal people won't do that but use it in other simple ways.

kangaroozach 5y ago

What if the FBI is Not being truthful and they didn’t actually confiscate the bitcoin? Who would call them out? Would the cybercriminals tell the world, it’s not actually true!? Maybe this story was made up to weaken bitcoin and try to take it down by making people think it was vulnerable to tracing and manipulation. Is this possible? Did the wallet addresses ever get published publicly?

Dma54rhs 5y ago
But it's already known that bitcoin is traceable and by anyone as it's all public by design. Not sure about the point you're trying to make, maybe the real question is why criminals ask for bitcoin not something that at least on paper gives much better privacy.

kemonocode 5y ago

It's always been traceable, there's a public ledger and different data analysis techniques you can perform with varying degrees of usefulness, and Bitcoin's real value doesn't lay there. Anonymity is not the same as pseudonymity, and while you could probably trace a few transactions with a criminal source at a time, it wouldn't take that much to thwart taint analysis by a dedicated enough author. Besides, they were able to seize those Bitcoins due to badly stored passwords, not because any inherent weakness on Bitcoin itself. Some cybercriminals aren't that great at opsec.

tonfreed 5y ago

NYT again playing at Captain obvious.