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Yes, HSBC laundered money for Mexican drug cartels. Surprise: the business of handling money flows attracts criminals. That's why it is heavily regulated. When

by FabHK 2y ago

Yes, HSBC laundered money for Mexican drug cartels. Surprise: the business of handling money flows attracts criminals. That's why it is heavily regulated. When the HSBC money laundering was revealed, what was TradFi's answer? Let's stop it, and crack down on it further. What is the crypto answer? Oh, rules are still occasionally broken, so let's just scrap all the rules and launder all the money we can (and break sanctions, and so on).

diggan 2y ago
> What is the crypto answer? Oh, rules are still occasionally broken, so let's just scrap all the rules and launder all the money we can (and break sanctions, and so on). I feel like you're (hopefully) talking about a specific case here where some exchange was exposed as actively ignoring activity they knew to be illegal. Could you share what story you're talking about here?
- FabHK 2y ago
  No, not talking about a specific case. I am talking about crypto in general. The distinguishing feature of blockchain is permissionlessness. The point of crypto is that you can transfer it without any regard to any rules [1] (by virtue of the diffusion of responsibility due to decentralization enabled by permissionlessness enabled by Sybil resistance mechanisms such as PoW or PoS). [1] Of course, if you hack the DAO that the people running the blockchain are invested in, they'll stop it, fix things, undo the hack. So there are some rules, but chosen by crypto bros, not old-fashioned things like legislative chambers or so.
  - diggan 2y ago
    > No, not talking about a specific case. I am talking about crypto in general. Aha, you're talking about one part of the cryptocurrency ecosystem. There are other parts of the ecosystem that don't go willy-nilly breaking regulations just for the fun of it, probably Coinbase is one of the best examples of that. So while your comment probably speaks to a lot of people, I don't think you can generalize that the entire ecosystem is out after breaking sanctions and launder money. You probably realize this yourself too, bit sad you don't include that in your comments though.
    - FabHK 2y ago
      Coinbase is a centralized old fashioned listed company that (even though they dislike it) has to follow the laws applicable to it. They do KYC and maybe even a bit of token AML and CTF. Then you can exchange fiat into crypto, send it to an unhosted (=self-hosted) wallet, and then do with the crypto as you wish without following any rules whatsoever, by design. Furthermore, there are many less regulated parts of the cryptocurrency ecosystem that do not even abide by that modicum of regulation. Look, any bank could trivially replicate 100% of the functionality of a cryptocurrency, or a stable coin, with a good old-fashioned database (even a distributed database, so you have all the frequently cited benefits of decentralization - nearly all). And then they'd be shut down, because they'd be in violation of all sorts of laws and enabling all sorts of crimes. (This is not a hypothetical: see what happened to Liberty Reserve, e-gold, and others that had this glorious idea prior to crypto. They were all swiftly shut down.) So, while the entire ecosystem might not initially have set out to break sanctions and launder money and subvert other rules, that is the use case which the technology enables compared to pre-Nakamoto technology.
      - diggan 2y ago
        Coinbase is part of "crypto in general", so regardless of how you'd like to move the goal post now, you yourself confirmed just now that not all cryptocurrency is about "scrap all the rules and launder all the money we can".
        FabHK 2y ago
        The essential feature of crypto is that you can transfer it without regards to rules. There are on/off ramps dealing with crypto as well as fiat, thus centralized entities, and they have to obey the rules indeed. Look, guns are about shooting people. But at shooting ranges people are not shot. Nevertheless, guns are about shooting people.

by FabHK 2y ago

diggan 2y ago

> What is the crypto answer? Oh, rules are still occasionally broken, so let's just scrap all the rules and launder all the money we can (and break sanctions, and so on). I feel like you're (hopefully) talking about a specific case here where some exchange was exposed as actively ignoring activity they knew to be illegal. Could you share what story you're talking about here?

FabHK 2y ago
No, not talking about a specific case. I am talking about crypto in general. The distinguishing feature of blockchain is permissionlessness. The point of crypto is that you can transfer it without any regard to any rules [1] (by virtue of the diffusion of responsibility due to decentralization enabled by permissionlessness enabled by Sybil resistance mechanisms such as PoW or PoS). [1] Of course, if you hack the DAO that the people running the blockchain are invested in, they'll stop it, fix things, undo the hack. So there are some rules, but chosen by crypto bros, not old-fashioned things like legislative chambers or so.
- diggan 2y ago
  > No, not talking about a specific case. I am talking about crypto in general. Aha, you're talking about one part of the cryptocurrency ecosystem. There are other parts of the ecosystem that don't go willy-nilly breaking regulations just for the fun of it, probably Coinbase is one of the best examples of that. So while your comment probably speaks to a lot of people, I don't think you can generalize that the entire ecosystem is out after breaking sanctions and launder money. You probably realize this yourself too, bit sad you don't include that in your comments though.
  - FabHK 2y ago
    Coinbase is a centralized old fashioned listed company that (even though they dislike it) has to follow the laws applicable to it. They do KYC and maybe even a bit of token AML and CTF. Then you can exchange fiat into crypto, send it to an unhosted (=self-hosted) wallet, and then do with the crypto as you wish without following any rules whatsoever, by design. Furthermore, there are many less regulated parts of the cryptocurrency ecosystem that do not even abide by that modicum of regulation. Look, any bank could trivially replicate 100% of the functionality of a cryptocurrency, or a stable coin, with a good old-fashioned database (even a distributed database, so you have all the frequently cited benefits of decentralization - nearly all). And then they'd be shut down, because they'd be in violation of all sorts of laws and enabling all sorts of crimes. (This is not a hypothetical: see what happened to Liberty Reserve, e-gold, and others that had this glorious idea prior to crypto. They were all swiftly shut down.) So, while the entire ecosystem might not initially have set out to break sanctions and launder money and subvert other rules, that is the use case which the technology enables compared to pre-Nakamoto technology.
    - diggan 2y ago
      Coinbase is part of "crypto in general", so regardless of how you'd like to move the goal post now, you yourself confirmed just now that not all cryptocurrency is about "scrap all the rules and launder all the money we can".
      - FabHK 2y ago
        The essential feature of crypto is that you can transfer it without regards to rules. There are on/off ramps dealing with crypto as well as fiat, thus centralized entities, and they have to obey the rules indeed. Look, guns are about shooting people. But at shooting ranges people are not shot. Nevertheless, guns are about shooting people.