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> they found a file listing private keys, after gaining access to the suspect's cloud storage That's backwards. It's how they wrapped it all up. The real trail

> they found a file listing private keys, after gaining access to the suspect's cloud storage That's backwards. It's how they wrapped it all up. The real trail is pretty clearly AlphaBay 2016/2017 transactions (under gov control around that timeframe), to KYC-flagged accounts at an exchange, with a web of accounts with real info linked together past there.

cobookman 5y ago
If he instead started to draw NFTs, and sell it from his KYC account to his dirty wallet, could he still be convicted? What if only one out of every 100 NFTs his dirty wallet purchased was from his KYC account? Or what if he decided to create his own crypto-currency and it just so happened that his dirty wallet was an early investor of ETH to his fund. Seems like he could have done more to distance himself.
- saalweachter 5y ago
  Start a PAC for the decriminalization of money laundering, accept donations at a Bitcoin address, pay yourself a million a year to run it.
- twox2 5y ago
  There wasn't a big NFT market until very recently.
- toomuchtodo 5y ago
  > Seems like he could have done more to distance himself. On a value system with an inherently public ledger that eventually has to hit a fiat off ramp with KYC/AML requirements? Nah. Everyone has quality opsec until they don't, and the record of your criminal activity is immutable and highly durable.
  - EVa5I7bHFq9mnYK 5y ago
    Suppose he deposited it into AlphaBay and then withdrew from AlphaBay, and FBI didn't seize AlphaBay's logs. Where is the criminal immutable durable record now? There is no proof of connection between incoming and outgoing coins. Same principle with mixers.
  - voldacar 5y ago
    You can just sell the bitcoin for monero, then sell the monero for btc. also, as time goes on, the proportion of btc that are "dirty" approaches 1, so these chainalysis strategies become less effective, assuming you aren't stupid enough to do some criminal act then cash out at a kyc exchange the next day from the same wallet
    - judge2020 5y ago
      But are there any exchanges that swap btc for monero or eth that don’t have KYC requirements? Seems like it’d need to be off-chain somewhat, unlike uniswap.
      - Teelo 5y ago
        fixedfloat.com does exactly that.
      - easrng 5y ago
        There are atomic swaps between BTC and XMR at least (see https://unstoppableswap.net/ https://unstoppableswap.net/) but for centralized exchanges check kycnot.me
      - hkt 5y ago
        There are decentralised exchanges like bisq: https://bisq.wiki/Main_Page https://bisq.wiki/Main_Page Presumably, this would do the trick.
        josefx 5y ago
        As far as I understand buyer and seller still have exchange information for the transaction to happen. The moment the buyer tries to use the stolen bitcoin he will have the police knocking on his door to find out where he got them from. The seller basically ends up completely at the mercy of the buyers security, with the added bonus that bisq doesn't enforce a completed transaction, so the buyer might just disappear once the goods changed hands without ever paying.
      - CuriousCosmic 5y ago
- arcticbull 5y ago
  > Seems like he could have done more to distance himself. Bitcoin's public ledger makes transactions into prosecution futures. This is why it's such a poor choice for revolutionaries and funding the marginalized. You leave a permanent indelible public record in posterity that will in the course of time be de-anonymized, automatically, and traced back to you.
  - cobookman 5y ago
    Is it illegal to sell your artwork at an auction, and a criminal happens to be the one to buy it? I honestly don't know. is the onus on an artist or on an "auction house" to vet buyers. If post sale it turns out the money was fraudulent, does the artist need to pay it back? In crypto terms. You the artist simply put a NFT up for auction at OpenSea. You the scammer happened to purchase the artwork on OpenSea. However KYC is not well enforced, enabling for money laundering between the two wallets.
    - TrapLord_Rhodo 5y ago
      I get what you're doing here, but that's way too many steps. just because bitcoins ledger is open & transparent doesn't mean there aren't a million other privacy focused coins you could swap into leaving the trail cold. You can walk in the river instead of trying to cover your tracks.
    - eftychis 5y ago
      I mean art and other not easily evaluated assets are used for drug trafficking and money laundering. Auction houses are known to be on the trick -- that is passively mainly/ they don't care and work to "pump" the prices of artwork. But of course law enforcement agencies know about it too. It shouldn't be illegal: people should be free to buy what they want. But let's not hide behind our noses.
      - rmbyrro 5y ago
        This only work because they hire the right lawyers, who dinner with the right persons across all law enforcement branches.
- jacquesm 5y ago
  That will only add a charge of 'money laundering' to the list.
- classified 5y ago
  I'm not sure giving advice to strangers on the internet on how to commit a successful robbery is a good idea.
benreesman 5y ago
I mean, for a recent example of how this works in practice: Polygon got whacked for like 650MM last August, but all the fiat and even stablecoin exchanges blacklisted the addresses and the guy got like 5MM “bug bounty” or whatever. There might be prestige in some circles for taking down some dumbass Solidity coder, and some people seem to be getting some money out still (e.g. Wormhole). But overall I’m short Trail of Bits consulting rate.
- easrng 5y ago
  Yeah, if you hack a contract you need to get the funds into Tornado.Cash immediately.
- david12345 5y ago
  Or you can short Polygon, and make money from the price falling upon disclosure of bug

cobookman 5y ago

If he instead started to draw NFTs, and sell it from his KYC account to his dirty wallet, could he still be convicted? What if only one out of every 100 NFTs his dirty wallet purchased was from his KYC account? Or what if he decided to create his own crypto-currency and it just so happened that his dirty wallet was an early investor of ETH to his fund. Seems like he could have done more to distance himself.

saalweachter 5y ago
Start a PAC for the decriminalization of money laundering, accept donations at a Bitcoin address, pay yourself a million a year to run it.
twox2 5y ago
There wasn't a big NFT market until very recently.
toomuchtodo 5y ago
> Seems like he could have done more to distance himself. On a value system with an inherently public ledger that eventually has to hit a fiat off ramp with KYC/AML requirements? Nah. Everyone has quality opsec until they don't, and the record of your criminal activity is immutable and highly durable.
- EVa5I7bHFq9mnYK 5y ago
  Suppose he deposited it into AlphaBay and then withdrew from AlphaBay, and FBI didn't seize AlphaBay's logs. Where is the criminal immutable durable record now? There is no proof of connection between incoming and outgoing coins. Same principle with mixers.
- voldacar 5y ago
  You can just sell the bitcoin for monero, then sell the monero for btc. also, as time goes on, the proportion of btc that are "dirty" approaches 1, so these chainalysis strategies become less effective, assuming you aren't stupid enough to do some criminal act then cash out at a kyc exchange the next day from the same wallet
  - judge2020 5y ago
    But are there any exchanges that swap btc for monero or eth that don’t have KYC requirements? Seems like it’d need to be off-chain somewhat, unlike uniswap.
    - Teelo 5y ago
      fixedfloat.com does exactly that.
    - easrng 5y ago
      There are atomic swaps between BTC and XMR at least (see https://unstoppableswap.net/ https://unstoppableswap.net/) but for centralized exchanges check kycnot.me
    - hkt 5y ago
      There are decentralised exchanges like bisq: https://bisq.wiki/Main_Page https://bisq.wiki/Main_Page Presumably, this would do the trick.
      - josefx 5y ago
        As far as I understand buyer and seller still have exchange information for the transaction to happen. The moment the buyer tries to use the stolen bitcoin he will have the police knocking on his door to find out where he got them from. The seller basically ends up completely at the mercy of the buyers security, with the added bonus that bisq doesn't enforce a completed transaction, so the buyer might just disappear once the goods changed hands without ever paying.
    - CuriousCosmic 5y ago
arcticbull 5y ago
> Seems like he could have done more to distance himself. Bitcoin's public ledger makes transactions into prosecution futures. This is why it's such a poor choice for revolutionaries and funding the marginalized. You leave a permanent indelible public record in posterity that will in the course of time be de-anonymized, automatically, and traced back to you.
- cobookman 5y ago
  Is it illegal to sell your artwork at an auction, and a criminal happens to be the one to buy it? I honestly don't know. is the onus on an artist or on an "auction house" to vet buyers. If post sale it turns out the money was fraudulent, does the artist need to pay it back? In crypto terms. You the artist simply put a NFT up for auction at OpenSea. You the scammer happened to purchase the artwork on OpenSea. However KYC is not well enforced, enabling for money laundering between the two wallets.
  - TrapLord_Rhodo 5y ago
    I get what you're doing here, but that's way too many steps. just because bitcoins ledger is open & transparent doesn't mean there aren't a million other privacy focused coins you could swap into leaving the trail cold. You can walk in the river instead of trying to cover your tracks.
  - eftychis 5y ago
    I mean art and other not easily evaluated assets are used for drug trafficking and money laundering. Auction houses are known to be on the trick -- that is passively mainly/ they don't care and work to "pump" the prices of artwork. But of course law enforcement agencies know about it too. It shouldn't be illegal: people should be free to buy what they want. But let's not hide behind our noses.
    - rmbyrro 5y ago
      This only work because they hire the right lawyers, who dinner with the right persons across all law enforcement branches.
jacquesm 5y ago
That will only add a charge of 'money laundering' to the list.
classified 5y ago
I'm not sure giving advice to strangers on the internet on how to commit a successful robbery is a good idea.

benreesman 5y ago

I mean, for a recent example of how this works in practice: Polygon got whacked for like 650MM last August, but all the fiat and even stablecoin exchanges blacklisted the addresses and the guy got like 5MM “bug bounty” or whatever. There might be prestige in some circles for taking down some dumbass Solidity coder, and some people seem to be getting some money out still (e.g. Wormhole). But overall I’m short Trail of Bits consulting rate.

easrng 5y ago
Yeah, if you hack a contract you need to get the funds into Tornado.Cash immediately.
david12345 5y ago
Or you can short Polygon, and make money from the price falling upon disclosure of bug