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This is likely money laundering via inclusion of an offline transaction.

by zionic 5y ago

elliekelly 5y ago
I keep seeing people blaming money laundering but I’ve yet to come across anyone even attempting to explain how the money laundering would theoretically work? Is there a way to manipulate or influence which miners get with transactions?
- deleted 5y ago
  [deleted]
- deleted 5y ago
  [deleted]
- chucknthem 5y ago
  Yeah seems like a luck of the draw for the miner to happen to find the right hash to mine the block when this transaction happened. Very risky way to launder 23M.
  - SXX 5y ago
    How much GPU capacity can you rent on GCloud / AWS / Azure / Oracle Cloud / IBM at once? You only gonna need it for a few minutes since blocks for ETH mined every 15 seconds. Someone should be able to do the math of how much $ it's gonna cost.
- michaelt 5y ago
  Miners get to choose what transactions make it into their block. Instead of broadcasting the transaction to the mempool, the sender could send it directly to the miner who could hold onto it and included it only once they'd mined a block successfully. Not sure I think it's likely, though - could have just been a user miskeying something.
  - klntsky 5y ago
    They could have spitted the number between several TXs to avoid attention.
  - repomies69 5y ago
    Laundering is the process of making dirty looking money legit. This isn't particularly good way to do that. When the miner sells the $23 million, it isn't hidden to the normal income because the amount is so large. They have explain it to their financial service providers who will request explanations. Their investigative team will easily do blockchain analysis and find the transaction. If the sending address is in any way connected to the miner, the "scheme" will be bust. I don't think there is any money laundering going here. The point of money laundering is to raise as little attention as you can, and that is not happening here. Weird transactions and income makes you just more suspicious.
    - eurasiantiger 5y ago
      The big move covers the small move.
    - leppr 5y ago
      It's possible to set this up in a way that gives them plausible deniability (by broadcasting the transaction publicly after the colluding miner confirmed it has a block), so this could have been a way to repay debts with funds that aren't legally/technically allowed to be used in this way. I do doubt that explanation though, as $23 millions is nothing for Bitfinex and any of their execs could get this amount from personal funds if it was really needed.
  - Imnimo 5y ago
    I don't know exactly how ETH works, but it seems like with bitcoin there could be a risk like this: You send your huge-fee transaction secretly to your co-conspirator miner. They start trying to include it in their blocks, and eventually get one (call this block X). But now your transaction is not a secret anymore, and so another large miner can decide to keep trying to mine off of block X-1, but including your transaction. If they can outpace your miner (maybe by spinning up extra compute), they will produce a longer chain in which the $23M goes to them instead of your intended recipient. It seems like a very large mining fee would change the incentives that are supposed to keep miners all working on the same chain.
- csomar 5y ago
  Sure. You make the transaction but only send it to your friend the miner. When he gets a block, he includes your transaction.
  - SXX 5y ago
    This is not how it work though. When mining is on the way your transaction should already be included. What miner can do though is to never publish your transaction unless he got a block and fairly certain that he'll be the first. Also if miner has target to get so high fee he can easily spend few millions to increase their mining capacity for a short burst, etc.
- SXX 5y ago
  > Is there a way to manipulate or influence which miners get with transactions? Some cryptocurrency nerds can correct me if I wrong, but AFAIK yeah. If miner is your friend you can sent privately to him in advance signed transaction that need to be secretely included in a block. Then you can only distribute the transaction itself over network after that miner already started to mine block with said transaction. TBH I have no idea if it's possible to get block included on chain if it's had "secret" transactions in it, but for certain it's possible for one miner to start work on block with said transaction few seconds earlier than others. There is still risk that someone else will mine it though.
  - shawabawa3 5y ago
    Yes you can send private transactions directly to miners, they never have to be broadcast at all except in the mined block
- bidirectional 5y ago
  I feel like we need some common name to refer to the persistent phenomenon of basically everything being called money laundering in online comment sections.
  - eurasiantiger 5y ago
    Or maybe we need to do something about the rampant money laundering.
    - leppr 5y ago
      Putting transactions on a verifiable public ledger might be a start.
humaniania 5y ago
Is embezzlement a form of money laundering?
neoromantique 5y ago
But what's the point of making it through Tx fees -> Hitting all news outlets versus just sending the money normally, as nobody would really bat an eye.

This is likely money laundering via inclusion of an offline transaction.

by zionic 5y ago

This is likely money laundering via inclusion of an offline transaction.

I keep seeing people blaming money laundering but I’ve yet to come across anyone even attempting to explain how the money laundering would theoretically work? Is there a way to manipulate or influence which miners get with transactions?

deleted 5y ago
[deleted]
deleted 5y ago
[deleted]
chucknthem 5y ago
Yeah seems like a luck of the draw for the miner to happen to find the right hash to mine the block when this transaction happened. Very risky way to launder 23M.
- SXX 5y ago
  How much GPU capacity can you rent on GCloud / AWS / Azure / Oracle Cloud / IBM at once? You only gonna need it for a few minutes since blocks for ETH mined every 15 seconds. Someone should be able to do the math of how much $ it's gonna cost.
michaelt 5y ago
Miners get to choose what transactions make it into their block. Instead of broadcasting the transaction to the mempool, the sender could send it directly to the miner who could hold onto it and included it only once they'd mined a block successfully. Not sure I think it's likely, though - could have just been a user miskeying something.
- klntsky 5y ago
  They could have spitted the number between several TXs to avoid attention.
- repomies69 5y ago
  Laundering is the process of making dirty looking money legit. This isn't particularly good way to do that. When the miner sells the $23 million, it isn't hidden to the normal income because the amount is so large. They have explain it to their financial service providers who will request explanations. Their investigative team will easily do blockchain analysis and find the transaction. If the sending address is in any way connected to the miner, the "scheme" will be bust. I don't think there is any money laundering going here. The point of money laundering is to raise as little attention as you can, and that is not happening here. Weird transactions and income makes you just more suspicious.
  - eurasiantiger 5y ago
    The big move covers the small move.
  - leppr 5y ago
    It's possible to set this up in a way that gives them plausible deniability (by broadcasting the transaction publicly after the colluding miner confirmed it has a block), so this could have been a way to repay debts with funds that aren't legally/technically allowed to be used in this way. I do doubt that explanation though, as $23 millions is nothing for Bitfinex and any of their execs could get this amount from personal funds if it was really needed.
- Imnimo 5y ago
  I don't know exactly how ETH works, but it seems like with bitcoin there could be a risk like this: You send your huge-fee transaction secretly to your co-conspirator miner. They start trying to include it in their blocks, and eventually get one (call this block X). But now your transaction is not a secret anymore, and so another large miner can decide to keep trying to mine off of block X-1, but including your transaction. If they can outpace your miner (maybe by spinning up extra compute), they will produce a longer chain in which the $23M goes to them instead of your intended recipient. It seems like a very large mining fee would change the incentives that are supposed to keep miners all working on the same chain.
csomar 5y ago
Sure. You make the transaction but only send it to your friend the miner. When he gets a block, he includes your transaction.
- SXX 5y ago
  This is not how it work though. When mining is on the way your transaction should already be included. What miner can do though is to never publish your transaction unless he got a block and fairly certain that he'll be the first. Also if miner has target to get so high fee he can easily spend few millions to increase their mining capacity for a short burst, etc.
SXX 5y ago
> Is there a way to manipulate or influence which miners get with transactions? Some cryptocurrency nerds can correct me if I wrong, but AFAIK yeah. If miner is your friend you can sent privately to him in advance signed transaction that need to be secretely included in a block. Then you can only distribute the transaction itself over network after that miner already started to mine block with said transaction. TBH I have no idea if it's possible to get block included on chain if it's had "secret" transactions in it, but for certain it's possible for one miner to start work on block with said transaction few seconds earlier than others. There is still risk that someone else will mine it though.
- shawabawa3 5y ago
  Yes you can send private transactions directly to miners, they never have to be broadcast at all except in the mined block
bidirectional 5y ago
I feel like we need some common name to refer to the persistent phenomenon of basically everything being called money laundering in online comment sections.
- eurasiantiger 5y ago
  Or maybe we need to do something about the rampant money laundering.
  - leppr 5y ago
    Putting transactions on a verifiable public ledger might be a start.

humaniania 5y ago

Is embezzlement a form of money laundering?

neoromantique 5y ago

But what's the point of making it through Tx fees -> Hitting all news outlets versus just sending the money normally, as nobody would really bat an eye.