3 ms·

Or selling NFTs to yourself to launder money.

renewiltord 4y ago
How does that particular thing work? You run the exchange, then have dirty untraceable money traded on the exchange to dirty participant and you take the exchange fees? You'd have to KYC both participants, right?
- officialchicken 4y ago
  Not everyone, the "participants" in the chain (typically 8-10 addresses) can arbitrarily inflate pricing by only paying fees which are trivially covered by the final trade. Once inflated, that final address can use a "mixer" to exit (for example) and essentially if KYC is performed in the conversion to fiat, it's after the mix and relatively untraceable.
- stouset 4y ago
  Buy a “rare” NFT with clean money. Sell it a few months later for some multiple of the original price, the “buyer” is still you but using dirty money. NB: I work in fintech but have no particular experience on the fraud / KYC / AML side of things. This is just how I imagine it would work at a high level.
  - renewiltord 4y ago
    But if you do that, I think you'd be first on the list of people investigated for the dirty money. It has to be cleaned in some way by obscuring it. The approach described here seems more plausible https://news.ycombinator.com/item?id=32857382 https://news.ycombinator.com/item?id=32857382
    - stouset 4y ago
      Thanks for this!
- polygamous_bat 4y ago
  Imagine you have $X million from a hack on wallet A, and you want to launder it. First, you run it through tornado cash (RIP) a few times and move them to wallets B1 to B1000. Then, you mint an "exciting NFT collection" on your public, KYC'd wallet C, list them on a "decentralized exchange", and have wallets B1 to B1000 buy those NFTs. Even better, seeing how fast your NFTs are selling out, a few suckers join in on the stampede and get mixed in alongside B1-B1000. Well, now on wallet C you have $(X - gas fees - minting fees) etc., that is totally legal and clean. You cash out on Coinbase, give the taxman his due, and you are good to go!
  - jaywalk 4y ago
    > Well, now on wallet C you have $(X - gas fees - minting fees) etc., that is totally legal and clean. It's not "legal" at all, because it's still proceeds of crime. Although it may "appear" legal and be very difficult to trace back to the source, it's still not actually legal.
    - ForHackernews 4y ago
      Yes, that's how money laundering works.
    - UncleEntity 4y ago
      It is legal until proven illegal -- just like you are innocent until proven guilty.
  - yieldcrv 4y ago
    Only need to do Tornado cash once, and you can still do that, it still works Nobody cares that you sold your nft to a virgin address funded solely by the tornado cash relay
  - renewiltord 4y ago
    The Tornado Cash tumbler allows you to create sort-of-Sybils so it looks organic. The no-KYC Dex allows you to push from a no-KYC account to a KYC'd account. The KYC'd account lets you withdraw fiat. I see. Okay, each of the pieces are necessary. Thanks for the explanation.

How does that particular thing work? You run the exchange, then have dirty untraceable money traded on the exchange to dirty participant and you take the exchange fees? You'd have to KYC both participants, right?

officialchicken 4y ago
Not everyone, the "participants" in the chain (typically 8-10 addresses) can arbitrarily inflate pricing by only paying fees which are trivially covered by the final trade. Once inflated, that final address can use a "mixer" to exit (for example) and essentially if KYC is performed in the conversion to fiat, it's after the mix and relatively untraceable.
stouset 4y ago
Buy a “rare” NFT with clean money. Sell it a few months later for some multiple of the original price, the “buyer” is still you but using dirty money. NB: I work in fintech but have no particular experience on the fraud / KYC / AML side of things. This is just how I imagine it would work at a high level.
- renewiltord 4y ago
  But if you do that, I think you'd be first on the list of people investigated for the dirty money. It has to be cleaned in some way by obscuring it. The approach described here seems more plausible https://news.ycombinator.com/item?id=32857382 https://news.ycombinator.com/item?id=32857382
  - stouset 4y ago
    Thanks for this!
polygamous_bat 4y ago
Imagine you have $X million from a hack on wallet A, and you want to launder it. First, you run it through tornado cash (RIP) a few times and move them to wallets B1 to B1000. Then, you mint an "exciting NFT collection" on your public, KYC'd wallet C, list them on a "decentralized exchange", and have wallets B1 to B1000 buy those NFTs. Even better, seeing how fast your NFTs are selling out, a few suckers join in on the stampede and get mixed in alongside B1-B1000. Well, now on wallet C you have $(X - gas fees - minting fees) etc., that is totally legal and clean. You cash out on Coinbase, give the taxman his due, and you are good to go!
- jaywalk 4y ago
  > Well, now on wallet C you have $(X - gas fees - minting fees) etc., that is totally legal and clean. It's not "legal" at all, because it's still proceeds of crime. Although it may "appear" legal and be very difficult to trace back to the source, it's still not actually legal.
  - ForHackernews 4y ago
    Yes, that's how money laundering works.
  - UncleEntity 4y ago
    It is legal until proven illegal -- just like you are innocent until proven guilty.
- yieldcrv 4y ago
  Only need to do Tornado cash once, and you can still do that, it still works Nobody cares that you sold your nft to a virgin address funded solely by the tornado cash relay
- renewiltord 4y ago
  The Tornado Cash tumbler allows you to create sort-of-Sybils so it looks organic. The no-KYC Dex allows you to push from a no-KYC account to a KYC'd account. The KYC'd account lets you withdraw fiat. I see. Okay, each of the pieces are necessary. Thanks for the explanation.