4 ms·

What you described is not illegal by itself. Obfuscating the origin of earnings is not illegal. Although "pooling" may be regulated in other ways. A federal "m

What you described is not illegal by itself. Obfuscating the origin of earnings is not illegal. Although "pooling" may be regulated in other ways. A federal "money laundering" charge requires an illicit origin, and so since successful money laundering will never have an illicit origin, the charge can only be tacked on to another indictment. After centuries of not having much surveillance tools of the money supply, the state has had a 50 year run of the privilege of deputizing financial intermediaries to surveil the electronic payment system. Now the electronic payment system will begin to inherit the same tenets of cash. This is just a reversion to the mean.

sleepybrett 5y ago
I'm not sure how to phrase this. But I'm reminded of the dark knight returns where because all the mobs pooled their money together with their launderer (their mixer) they could all be prosecuted together in a RICO case. Is use of a mixer de facto evidence of laundering...
dragontamer 5y ago
> A federal "money laundering" charge requires an illicit origin, and so since successful money laundering will never have an illicit origin, the charge can only be tacked on to another indictment. Fair. But think about it: a _singular_ person in your mixing pool can make the entire pool illegal. One, singular, person using that money for contraband (illegal porn, illegal drugs, illegal tax evasion) will turn the entire pool illegal. Do you trust everyone else in the pool to be using it for legitimate gains? If you went into court, would you be able to say with a straight face that "Everyone in my mixing pool was in fact, doing legal activities?" So in practice, I'd argue that most mixers are illegal (because surely, there's at least one person using the mixer for illegitimate purposes). Furthermore: the BTC transaction into the pool (and out of the pool) will forever be written into the blockchain. If you use your same wallet for both sides (or if the prosecutors can prove that one of your wallets was on the input-side, and another one of your wallets was on the output-side of the mixing process), you're now tied to all of the illegal activities that mixing pool is associated with. ---------- That's the thing. Mixing pools have never been tested in court. But imagine what a prosecutor would say to a jury, and imagine what the jury would rule.
- meowface 5y ago
  >But think about it: a _singular_ person in your mixing pool can make the entire pool illegal. One, singular, person using that money for contraband (illegal porn, illegal drugs, illegal tax evasion) will turn the entire pool illegal. It's very difficult to know, but I'm leaning towards this not holding up in court. At least not upon appeal. If a mixer has tens of millions of known participant addresses and the government tries to argue that merely owning a single address that received anything from the mixer means you aided and abetted some other crime from some other person who used the mixer, I think the defense could point out how that just isn't remotely statistically sufficient to imply any sort of involvement. >Do you trust everyone else in the pool to be using it for legitimate gains? If you went into court, would you be able to say with a straight face that "Everyone in my mixing pool was in fact, doing legal activities?" I'm not sure if proving a negative will work. Now, if they can prove you had knowledge at the time that at least one person used it illicitly, then I think it'd depend how the mixer works. If it works so that any "dirty money" is purged out within the next few transactions, then they might have to prove that you sent or received funds close to those distribution windows and had specific knowledge that some specific illegal act was likely occurring at that time. I see how they could potentially prosecute the owners of the mixers, if the owners are aware of at least one case of criminal use, but prosecuting the users sounds much more difficult.
  - dragontamer 5y ago
    At least given today's political environment, I can very well see a simple argument consisting of: * "The only reason to use a mixer is to hide money" * "You joined a pool of millions of individuals, all of whom had the explicit goal of hiding money from the traditional financial system". * "You (probably) knew that the money you get in your output wallet comes from a random individual in the pool". As such, the implicit assumption in a reasonable person's mind is: this money you got is absolutely from someone else who was trying to hide their money. The law also states that aiding and abetting them is illegal in of itself. ---------- > If it works so that any "dirty money" is purged out within the next few transactions, then they might have to prove that you sent or received funds close to those distribution windows and had specific knowledge that some specific illegal act was likely occurring at that time. Well, the issue with "faster moving" mixers is that it more closely connects the dirty money with the source. "Slow moving" mixers with larger pools are more entangled, harder to know where the money came from. -------- I dunno. The RAII has been mildly successful in court over IP addresses used in Bittorrent peers, right? That seems to be roughly the same level of involvement as we're seeing here. I'm not necessarily saying you're going to get jailtime, but you probably will be roped into the court case if someone in your pool was doing something sketchy.

sleepybrett 5y ago

I'm not sure how to phrase this. But I'm reminded of the dark knight returns where because all the mobs pooled their money together with their launderer (their mixer) they could all be prosecuted together in a RICO case. Is use of a mixer de facto evidence of laundering...

dragontamer 5y ago

> A federal "money laundering" charge requires an illicit origin, and so since successful money laundering will never have an illicit origin, the charge can only be tacked on to another indictment. Fair. But think about it: a _singular_ person in your mixing pool can make the entire pool illegal. One, singular, person using that money for contraband (illegal porn, illegal drugs, illegal tax evasion) will turn the entire pool illegal. Do you trust everyone else in the pool to be using it for legitimate gains? If you went into court, would you be able to say with a straight face that "Everyone in my mixing pool was in fact, doing legal activities?" So in practice, I'd argue that most mixers are illegal (because surely, there's at least one person using the mixer for illegitimate purposes). Furthermore: the BTC transaction into the pool (and out of the pool) will forever be written into the blockchain. If you use your same wallet for both sides (or if the prosecutors can prove that one of your wallets was on the input-side, and another one of your wallets was on the output-side of the mixing process), you're now tied to all of the illegal activities that mixing pool is associated with. ---------- That's the thing. Mixing pools have never been tested in court. But imagine what a prosecutor would say to a jury, and imagine what the jury would rule.

meowface 5y ago
>But think about it: a _singular_ person in your mixing pool can make the entire pool illegal. One, singular, person using that money for contraband (illegal porn, illegal drugs, illegal tax evasion) will turn the entire pool illegal. It's very difficult to know, but I'm leaning towards this not holding up in court. At least not upon appeal. If a mixer has tens of millions of known participant addresses and the government tries to argue that merely owning a single address that received anything from the mixer means you aided and abetted some other crime from some other person who used the mixer, I think the defense could point out how that just isn't remotely statistically sufficient to imply any sort of involvement. >Do you trust everyone else in the pool to be using it for legitimate gains? If you went into court, would you be able to say with a straight face that "Everyone in my mixing pool was in fact, doing legal activities?" I'm not sure if proving a negative will work. Now, if they can prove you had knowledge at the time that at least one person used it illicitly, then I think it'd depend how the mixer works. If it works so that any "dirty money" is purged out within the next few transactions, then they might have to prove that you sent or received funds close to those distribution windows and had specific knowledge that some specific illegal act was likely occurring at that time. I see how they could potentially prosecute the owners of the mixers, if the owners are aware of at least one case of criminal use, but prosecuting the users sounds much more difficult.
- dragontamer 5y ago
  At least given today's political environment, I can very well see a simple argument consisting of: * "The only reason to use a mixer is to hide money" * "You joined a pool of millions of individuals, all of whom had the explicit goal of hiding money from the traditional financial system". * "You (probably) knew that the money you get in your output wallet comes from a random individual in the pool". As such, the implicit assumption in a reasonable person's mind is: this money you got is absolutely from someone else who was trying to hide their money. The law also states that aiding and abetting them is illegal in of itself. ---------- > If it works so that any "dirty money" is purged out within the next few transactions, then they might have to prove that you sent or received funds close to those distribution windows and had specific knowledge that some specific illegal act was likely occurring at that time. Well, the issue with "faster moving" mixers is that it more closely connects the dirty money with the source. "Slow moving" mixers with larger pools are more entangled, harder to know where the money came from. -------- I dunno. The RAII has been mildly successful in court over IP addresses used in Bittorrent peers, right? That seems to be roughly the same level of involvement as we're seeing here. I'm not necessarily saying you're going to get jailtime, but you probably will be roped into the court case if someone in your pool was doing something sketchy.