6 ms·

Okay but money laundering is https://www.law.cornell.edu/uscode/text/18/1956 https://www.law.cornell.edu/uscode/text/18/1956

johngladtj 3y ago
You misspelled "Human Right"
Ajedi32 3y ago
None of what Bitcoin Fog did appears to be money laundering according to the definition on that page, since it requires an "intent to promote the carrying on of specified unlawful activity". The people using Bitcoin Fog might be engaged in money laundering if they were using it for something otherwise illegal, but I don't see how you could argue the service itself was unless they somehow knew the purpose behind every transaction occurring on their platform.
- knorker 3y ago
  > I don't see how you could argue the service itself was Regular banking has piles and piles of AML/KYC regulation that they need to follow in order to not become guilty of money laundering, or aiding money laundering. Are you saying Bitcoin Fog followed all this regulation, or are you saying Bitcoin Fog can unilaterally can declare itself exempt from AML/KYC laws? Sorry if this sounds like a confrontational question. I don't mean it to be. Just intend for it to be a clear question.
  - Ajedi32 3y ago
    There's a separate U.S. code for that which is not related to money laundering. The affidavit[1] another user linked accused the defendant of violating 18 U.S. Code § 1960[2], and D.C. Code § 26-1023[3] in addition to the money laundering law previously linked. Those two laws make it illegal for businesses to transmit money without requesting all sorts of private information from their customers, and providing that information to the government under some circumstances. In other words, under current U.S. law, yes, privacy is indeed a crime. [1]: https://storage.courtlistener.com/recap/gov.uscourts.dcd.230456/gov.uscourts.dcd.230456.1.1_1.pdf https://storage.courtlistener.com/recap/gov.uscourts.dcd.230... [2]: https://www.law.cornell.edu/uscode/text/18/1960 https://www.law.cornell.edu/uscode/text/18/1960 [3]: https://code.dccouncil.gov/us/dc/council/code/titles/26/chapters/10 https://code.dccouncil.gov/us/dc/council/code/titles/26/chap...
    - internet101010 3y ago
      This might sound like a dumb question but wouldn't that require bitcoin to be classified as money rather than a commodity?
      - Ajedi32 3y ago
        I'm not a lawyer, but yeah it certainly does seem that way based on how the law is worded. I wonder if Sterlingov's lawyers tried that argument in court.
      - banannaise 3y ago
        No. You can launder money using anything that works as a transferable, divisible store of value. You just have to be able to break it down into smaller pieces and exchange the "dirty" pieces for "clean" ones. The bitcoin is just the vehicle for the laundering, and the mixer is basically just a money laundering machine. (You can use it to exchange clean assets for other clean assets, but if you start with dirty ones, you're money laundering.)
        Ajedi32 3y ago
        18 U.S. Code § 1960 isn't about money laundering though, it's about "unlicensed money transmitting businesses".
- SiempreViernes 3y ago
  When the transactions come from marketplaces specialised in selling illegal substances you need implausibly suspended disbelief to think your obfuscation service is only used for benign purposes. Then consider that most of the transactions processed by the fog came from places like silk road.
  - Ajedi32 3y ago
    How would Bitcoin Fog know the transactions were coming from those marketplaces? Bitcoin addresses are just strings of random numbers. Maybe if they were performing a careful inspection of the source and destination of each transaction they could have discovered something that would have obligated them to act to block those addresses, but the whole point of a privacy service is that you don't do that kind of careful analysis of your customer's private data. The law doesn't require you to know affirmatively that the service is only used for benign purposes. Just about every public service in existence probably gets used to support illegal activity at some point or another. You just can't be knowingly assisting with a crime.
    - nwienert 3y ago
      I wonder if the same people would argue like this if it was about VPNs - should they be liable and forced to keep logs? Or is this another example of HN's strong anti-crypto bias?
      - acdha 3y ago
        VPN providers aren’t financial institutions so they don’t have to worry about these laws. This will be very interesting legally as more states add things like age verification laws if those are worded to prevent VPNs from being used to circumvent them.
      - chx 3y ago
        Apparently, the ability to properly add and subtract numbers these days count as a bias. Every crypto"currency" utilizing a transaction fee is a negative sum game and those are scams. That's all there is.
- qwerty456127 3y ago
  Running a railway is not a crime even if a criminal may take a train.
  - livrem 3y ago
    No, but build a railway in a tunnel across the border from Mexico to the US and that defense will not necessarily help you in court. https://www.bbc.com/news/world-us-canada-51304861 https://www.bbc.com/news/world-us-canada-51304861
- EthanHeilman 3y ago
  The indictment claims that Bitcoin Fog engaged in money laundering because they knowingly processed transactions that: "knowingly conduct ... financial transactions ... involving property represented to be the proceeds of specified unlawful activity, ..., knowing and intending the the transaction was disguised in whole and in part to conceal and disguise the nature, location, source, ownership, and control of property believed to be the proceeds of specified unlawful activity, and intended to promote the carrying on of the specified unlawful activity." > I don't see how you could argue the service itself was unless they somehow knew the purpose behind every transaction occurring on their platform. The indictment states that the US government did an undercover operation in 2019 in which Bitcoin Fog was told that a transaction was from illegal activities and Bitcoin Fog accepted it anyways. If the person sending you Bitcoin says "I did a crime to get this", it is hard to claim you didn't know it was from criminal activity.
  - codedokode 3y ago
    Please note that in that case with undercover transactions, there is no evidence that the message sent by an agent was read by the administrator, because the agent didn't receive any reply. It is possible that the mixer was fully automated and performed the exchange before the administrator had a chance to read the message and stop the transaction.
    - EthanHeilman 3y ago
      Knowingly is the case the Federal government must make. If it was just a message sent by an agent, I hope we will not see a conviction.
    - Ferret7446 3y ago
      This was the first thing I thought of. Why the heck would the admins read random notes sent by users? Obviously there is the potential for abuse for this kind of service, so from a liability perspective you'd be better of deliberately ignoring all messages. Or rather, even if the admins were knowingly facilitating crime, from a liability perspective they would be better off reporting/rejecting any users that say they're committing a crime and only do business with criminals smart enough to wink wink nudge nudge. I can only think of two scenarios where someone would tell a mixer the money is dirty: 1. They are law enforcement 2. They have already been caught by law enforcement and are being used as bait, either knowingly or not
Jleagle 3y ago
Similar argument to bittorrent. Using it is perfectly legal, using it to download movies is illegal.
crotchfire 3y ago
"Laundering money" is not, in fact, illegal. From the very same link you posted: only laundering "the proceeds of specified unlawful activity" is illegal. It is totally 100% legal to launder clean money.

johngladtj 3y ago

You misspelled "Human Right"

Ajedi32 3y ago

None of what Bitcoin Fog did appears to be money laundering according to the definition on that page, since it requires an "intent to promote the carrying on of specified unlawful activity". The people using Bitcoin Fog might be engaged in money laundering if they were using it for something otherwise illegal, but I don't see how you could argue the service itself was unless they somehow knew the purpose behind every transaction occurring on their platform.

knorker 3y ago
> I don't see how you could argue the service itself was Regular banking has piles and piles of AML/KYC regulation that they need to follow in order to not become guilty of money laundering, or aiding money laundering. Are you saying Bitcoin Fog followed all this regulation, or are you saying Bitcoin Fog can unilaterally can declare itself exempt from AML/KYC laws? Sorry if this sounds like a confrontational question. I don't mean it to be. Just intend for it to be a clear question.
- Ajedi32 3y ago
  There's a separate U.S. code for that which is not related to money laundering. The affidavit[1] another user linked accused the defendant of violating 18 U.S. Code § 1960[2], and D.C. Code § 26-1023[3] in addition to the money laundering law previously linked. Those two laws make it illegal for businesses to transmit money without requesting all sorts of private information from their customers, and providing that information to the government under some circumstances. In other words, under current U.S. law, yes, privacy is indeed a crime. [1]: https://storage.courtlistener.com/recap/gov.uscourts.dcd.230456/gov.uscourts.dcd.230456.1.1_1.pdf https://storage.courtlistener.com/recap/gov.uscourts.dcd.230... [2]: https://www.law.cornell.edu/uscode/text/18/1960 https://www.law.cornell.edu/uscode/text/18/1960 [3]: https://code.dccouncil.gov/us/dc/council/code/titles/26/chapters/10 https://code.dccouncil.gov/us/dc/council/code/titles/26/chap...
  - internet101010 3y ago
    This might sound like a dumb question but wouldn't that require bitcoin to be classified as money rather than a commodity?
    - Ajedi32 3y ago
      I'm not a lawyer, but yeah it certainly does seem that way based on how the law is worded. I wonder if Sterlingov's lawyers tried that argument in court.
    - banannaise 3y ago
      No. You can launder money using anything that works as a transferable, divisible store of value. You just have to be able to break it down into smaller pieces and exchange the "dirty" pieces for "clean" ones. The bitcoin is just the vehicle for the laundering, and the mixer is basically just a money laundering machine. (You can use it to exchange clean assets for other clean assets, but if you start with dirty ones, you're money laundering.)
      - Ajedi32 3y ago
        18 U.S. Code § 1960 isn't about money laundering though, it's about "unlicensed money transmitting businesses".
SiempreViernes 3y ago
When the transactions come from marketplaces specialised in selling illegal substances you need implausibly suspended disbelief to think your obfuscation service is only used for benign purposes. Then consider that most of the transactions processed by the fog came from places like silk road.
- Ajedi32 3y ago
  How would Bitcoin Fog know the transactions were coming from those marketplaces? Bitcoin addresses are just strings of random numbers. Maybe if they were performing a careful inspection of the source and destination of each transaction they could have discovered something that would have obligated them to act to block those addresses, but the whole point of a privacy service is that you don't do that kind of careful analysis of your customer's private data. The law doesn't require you to know affirmatively that the service is only used for benign purposes. Just about every public service in existence probably gets used to support illegal activity at some point or another. You just can't be knowingly assisting with a crime.
  - nwienert 3y ago
    I wonder if the same people would argue like this if it was about VPNs - should they be liable and forced to keep logs? Or is this another example of HN's strong anti-crypto bias?
    - acdha 3y ago
      VPN providers aren’t financial institutions so they don’t have to worry about these laws. This will be very interesting legally as more states add things like age verification laws if those are worded to prevent VPNs from being used to circumvent them.
    - chx 3y ago
      Apparently, the ability to properly add and subtract numbers these days count as a bias. Every crypto"currency" utilizing a transaction fee is a negative sum game and those are scams. That's all there is.
qwerty456127 3y ago
Running a railway is not a crime even if a criminal may take a train.
- livrem 3y ago
  No, but build a railway in a tunnel across the border from Mexico to the US and that defense will not necessarily help you in court. https://www.bbc.com/news/world-us-canada-51304861 https://www.bbc.com/news/world-us-canada-51304861
EthanHeilman 3y ago
The indictment claims that Bitcoin Fog engaged in money laundering because they knowingly processed transactions that: "knowingly conduct ... financial transactions ... involving property represented to be the proceeds of specified unlawful activity, ..., knowing and intending the the transaction was disguised in whole and in part to conceal and disguise the nature, location, source, ownership, and control of property believed to be the proceeds of specified unlawful activity, and intended to promote the carrying on of the specified unlawful activity." > I don't see how you could argue the service itself was unless they somehow knew the purpose behind every transaction occurring on their platform. The indictment states that the US government did an undercover operation in 2019 in which Bitcoin Fog was told that a transaction was from illegal activities and Bitcoin Fog accepted it anyways. If the person sending you Bitcoin says "I did a crime to get this", it is hard to claim you didn't know it was from criminal activity.
- codedokode 3y ago
  Please note that in that case with undercover transactions, there is no evidence that the message sent by an agent was read by the administrator, because the agent didn't receive any reply. It is possible that the mixer was fully automated and performed the exchange before the administrator had a chance to read the message and stop the transaction.
  - EthanHeilman 3y ago
    Knowingly is the case the Federal government must make. If it was just a message sent by an agent, I hope we will not see a conviction.
  - Ferret7446 3y ago
    This was the first thing I thought of. Why the heck would the admins read random notes sent by users? Obviously there is the potential for abuse for this kind of service, so from a liability perspective you'd be better of deliberately ignoring all messages. Or rather, even if the admins were knowingly facilitating crime, from a liability perspective they would be better off reporting/rejecting any users that say they're committing a crime and only do business with criminals smart enough to wink wink nudge nudge. I can only think of two scenarios where someone would tell a mixer the money is dirty: 1. They are law enforcement 2. They have already been caught by law enforcement and are being used as bait, either knowingly or not

Jleagle 3y ago

Similar argument to bittorrent. Using it is perfectly legal, using it to download movies is illegal.

crotchfire 3y ago

"Laundering money" is not, in fact, illegal. From the very same link you posted: only laundering "the proceeds of specified unlawful activity" is illegal. It is totally 100% legal to launder clean money.