7 ms·

Bitcoin Black Market Competition Heats Up

68 points by cgi_man 13y ago

contacternst 13y ago
I kept hearing about how Bitcoin was so often used for "money laundering" and illegal activities. Are these sites what all the fuss is about?
- Pitarou 13y ago
  Yes, they are. That, and the potential for tax evasion, of course.
- dlss 13y ago
  In general, money laundering is much a bigger problem than p2p drug sales. Money laundering is anything that turns illegally acquired cash into seemingly legitimate funds. People do this because they are worried about the physical security aspects of having that much cash on hand, or would like to make a purchase where cash won't be accepted (eg house, car, stock). I think real money laundering using bitcoin would be hard right now -- most current methods work by piggy backing on a real business, and just inflating earnings. (For example, you might buy a laundromat and then add +50% income from your dirty money, making it look legitimate to an auditor). As it stands now, after you'd transfered the illegal money, you'd still have some awkward questions about where you'd gotten it from if/when you get audited. (Perhaps someone with more experience can comment here, but it seems bad to me). Re: illegal transactions, I think the biggest kind of illegal activity that bitcoin makes easier is illegal digital goods / services (eg, corporate espionage, buying bulk stolen credit cards, etc). This is because using bitcoin means you don't have to worry about masking your physical location or banking details from your counter party (basically the same reason people used liberty reserve before it was shut down). I'm sure one day bitcoin will be used for larger scale money transfers, but right now it just wouldn't make sense to move cartel levels of cash (eg 100 million+/wk) through bitcoin -- that's just too high percentage of the network's total volume to be feasible (mtgox volume is currently something like 20 million USD/wk)
  - Glyptodon 13y ago
    I think it also includes anything that intentionally obscures the provenance of money even if it's never used illegally.
gesman 13y ago
The sooner these "hard" drug sellers will be busted - the better for everyone, including Bitcoin future.
- eightyone 13y ago
  People should be allowed to put whatever they want in their body. The war on drugs is a seismic failure that does nothing but propagate the prison industrial complex. The most popular drugs on these sites are marijuana and psychedelics such as LSD and psilocybin mushrooms that are by no means "hard" drugs. Making things illegal, especially drugs, doesn't make them go away. Your just pushing them underground where they aren't regulated.
  - qwertzlcoatl 13y ago
    “If the words ‘life, liberty, and the pursuit of happiness’ don’t include the right to experiment with your own consciousness, then the Declaration of Independence isn’t worth the hemp it was written on.” - Terence McKenna
    - Wingman4l7 13y ago
      While an admirable sentiment, it's technically incorrect -- the Declaration of Independence (or at least the copy in the National Archive) was written on parchment paper: http://www.usconstitution.net/constfaq_a8.html#Q145 http://www.usconstitution.net/constfaq_a8.html#Q145
      - qwertzlcoatl 13y ago
        Taken from the source you provided: "It is likely, however, that drafts of the documents were written on paper made from hemp. In that period, most paper was made from hemp or flax and a mixture of recycled rags and cloth." So, technically, the Declaration of Independence was written on hemp. It was then transferred to a more durable platform provided by the Netherlands.
deleted 13y ago
[deleted]
- llamataboot 13y ago
  Like alcohol and tobacco marketing?
al1x 13y ago
Atlantis is significant because it's the first market of its kind to support Litecoin, a lesser-known scrypt-based bitcoin alternative.
vichu 13y ago
The attitude of the Atlantis CEO seems much different from the founder of SilkRoad, Dread Pirate Roberts. Whereas the Atlantis CEO seems very into this business for the money and fame, DPR seems more interested in the ideological standpoint of it all (libertarian ideals and all that jazz). Quotation from Dread Pirate Roberts: All that being said, my primary motivation is not personal wealth, but making a difference. As corny as it sounds, I just want to look back on my life and know that I did something worthwhile that helped people. It’s fulfilling to me. Source: http://www.forbes.com/sites/andygreenberg/2013/04/29/collected-quotations-of-the-dread-pirate-roberts-founder-of-the-drug-site-silk-road-and-radical-libertarian/ http://www.forbes.com/sites/andygreenberg/2013/04/29/collect... EDIT: some formatting mistakes
- qwertzlcoatl 13y ago
  Atlantis CEO also claimed that their service is technically much more sophisticated than SilkRoad. His/Her answer when asked what Atlantis has that SR doesn't: “To put it bluntly, a well written codebase and server setup. SR claims to have suffered from ‘DDoS’ attacks, which is very unlikely due to the way Tor hidden services are designed. It’s far more likely to me and technical gurus I’ve consulted that it was a result of poor or uncoping infrastructure. Most likely database related. Ironically we still received all the blame for the supposed ‘attacks’.” http://weirderweb.com/2013/06/13/atlantis-wasnt-built-in-a-day-520800-in-sales-and-counting/ http://weirderweb.com/2013/06/13/atlantis-wasnt-built-in-a-d...
  - haakon 13y ago
    > SR claims to have suffered from ‘DDoS’ attacks, which is very unlikely due to the way Tor hidden services are designed. This is wrong; Tor hidden services are quite easy to DDoS for someone familiar with Tor. In fact, the attack was described on the Tor blog [1] shortly before it was executed against Silk Road, so this is likely where the attacker got the idea. [1] https://blog.torproject.org/blog/hidden-services-need-some-love https://blog.torproject.org/blog/hidden-services-need-some-l...
    - glomph 13y ago
gizmo686 13y ago
It seems like this is a boom for law enforcement. One of the fundamental aspects of bitcoin is that every transaction is recorded and publicly view able. In order to anonomize your currency you bassicly need to go through a mixing service, which takes bitcoins from a pool of users, and redistributes them back to the same users, but at new accounts, so it would be 'impossible' for someone to follow the money using only the blockchain. There are two ways around the impossibility. One is to do statistical analysys to try and infer which two accounts are the same person. If you reguarly use the same service, this would likely be quite doable. The other way around this is to compromise the mixing service (either hacking, or with a warrent). There is currently research being done to make bitcoin properly annonomous [1] [1] http://zerocoin.org/ http://zerocoin.org/
- deleted 13y ago
  [deleted]
- johnyzee 13y ago
  I am wondering if mixing services might be illegal. As far as I know there are laws prohibiting attempts to conceal or obscure the source of money. Since almost all methods of acquiring bitcoin lead back to a bank account, it would be trivial to trace anybody putting money into the mixing service and potentially prosecute them under anti-laundering laws. Paying cash for bitcoin (i.e. localbitcoin) is not traceable in this manner, but if you have large amounts of untraceable cash then you have probably already successfully laundered money, and though bitcoin is a more convenient store of value it would not be the tool that enabled it. So I agree, seems regulators should be fine with Bitcoin.
  - haakon 13y ago
    > it would be trivial to trace anybody putting money into the mixing service Not really; you can't tell which bitcoin addresses belong to a mixing service and which ones don't; it's all just transactions from one address to another. You may know the owner of the originating address, but not the receiver. There are also mixing service that run as Tor hidden services just like the illegal marketplaces themselves, so you can't really prosecute those.
stayhome 13y ago
Honeypot?
bitcoindomains 13y ago
Dear Atlantis, Can I list domains on your bazaar? Got a juicy one: http://atlantisrky4es5q.com http://atlantisrky4es5q.com
DanBC 13y ago
Their aggressive twitter campaign is clearly against the Twitter ToS (https://twitter.com/AtlantisMarket https://twitter.com/AtlantisMarket)
- qwertzlcoatl 13y ago
  I'm pretty sure their start-up style video advertising its illegal service flouts the YouTube’s user guidelines too.
mxxx 13y ago
10BTC says this is a DEA sting.
- qwertzlcoatl 13y ago
  I can't find out if they tumble the Bit and Litecoins they receive, like Silkroad does. If they don't tumble I could see this being a major honeypot, as people could be traced.
- mvanvoorden 13y ago
  As long as you encrypt all your communications, you have nothing to fear, especially not as a seller. Doing it right makes you completely anonymous. Only if you're a buyer, there comes a moment when you have to give a postal address to a seller and give up your anonimity. If the seller turns out to be law enforcement, this might cause a problem. On the other hand, why would law enforcement go after the buyers? That doesn't solve anything, it's the sellers they want. Even if the service is completely run by DEA/FBI/etc, taking the right precautions can help you stay anonymous. That's what's so beautiful about Tor, Bitcoin and PGP :)
  - _s 13y ago
    Even for buyer is difficult to know if it's actually you making the purchase or someone else using your name / address.
  - TheAnimus 13y ago
    >On the other hand, why would law enforcement go after the buyers? That doesn't solve anything, it's the sellers they want. Because if you go after a seller, you have just removed a player from the market, assuming constant demand, you have just raised the margins for those who have the fixed amount of supply. This is why after a 'big drugs bust' prices sometimes go up, which makes it more attractive for new players. Going after the consumer is exactly the way to stop that. As it removes the demand. If you had even just a one in twenty chance of being busted for trying to buy something on these markets, it would greatly reduce the number of people willing to do so. Or we could, you know, look again at prohibition.
aj700 13y ago
Big mistake in the first para. This is what happens when MSM covers tech. Tor and the discretion of the sellers makes Silk Road EFFECTIVELY anon, not bitcoin per se. The sellers have your postal address and your bitcoin data.

68 points by cgi_man 13y ago

I kept hearing about how Bitcoin was so often used for "money laundering" and illegal activities. Are these sites what all the fuss is about?

Pitarou 13y ago
Yes, they are. That, and the potential for tax evasion, of course.
dlss 13y ago
In general, money laundering is much a bigger problem than p2p drug sales. Money laundering is anything that turns illegally acquired cash into seemingly legitimate funds. People do this because they are worried about the physical security aspects of having that much cash on hand, or would like to make a purchase where cash won't be accepted (eg house, car, stock). I think real money laundering using bitcoin would be hard right now -- most current methods work by piggy backing on a real business, and just inflating earnings. (For example, you might buy a laundromat and then add +50% income from your dirty money, making it look legitimate to an auditor). As it stands now, after you'd transfered the illegal money, you'd still have some awkward questions about where you'd gotten it from if/when you get audited. (Perhaps someone with more experience can comment here, but it seems bad to me). Re: illegal transactions, I think the biggest kind of illegal activity that bitcoin makes easier is illegal digital goods / services (eg, corporate espionage, buying bulk stolen credit cards, etc). This is because using bitcoin means you don't have to worry about masking your physical location or banking details from your counter party (basically the same reason people used liberty reserve before it was shut down). I'm sure one day bitcoin will be used for larger scale money transfers, but right now it just wouldn't make sense to move cartel levels of cash (eg 100 million+/wk) through bitcoin -- that's just too high percentage of the network's total volume to be feasible (mtgox volume is currently something like 20 million USD/wk)
- Glyptodon 13y ago
  I think it also includes anything that intentionally obscures the provenance of money even if it's never used illegally.

gesman 13y ago

The sooner these "hard" drug sellers will be busted - the better for everyone, including Bitcoin future.

eightyone 13y ago
People should be allowed to put whatever they want in their body. The war on drugs is a seismic failure that does nothing but propagate the prison industrial complex. The most popular drugs on these sites are marijuana and psychedelics such as LSD and psilocybin mushrooms that are by no means "hard" drugs. Making things illegal, especially drugs, doesn't make them go away. Your just pushing them underground where they aren't regulated.
- qwertzlcoatl 13y ago
  “If the words ‘life, liberty, and the pursuit of happiness’ don’t include the right to experiment with your own consciousness, then the Declaration of Independence isn’t worth the hemp it was written on.” - Terence McKenna
  - Wingman4l7 13y ago
    While an admirable sentiment, it's technically incorrect -- the Declaration of Independence (or at least the copy in the National Archive) was written on parchment paper: http://www.usconstitution.net/constfaq_a8.html#Q145 http://www.usconstitution.net/constfaq_a8.html#Q145
    - qwertzlcoatl 13y ago
      Taken from the source you provided: "It is likely, however, that drafts of the documents were written on paper made from hemp. In that period, most paper was made from hemp or flax and a mixture of recycled rags and cloth." So, technically, the Declaration of Independence was written on hemp. It was then transferred to a more durable platform provided by the Netherlands.

deleted 13y ago

[deleted]

llamataboot 13y ago
Like alcohol and tobacco marketing?

al1x 13y ago

Atlantis is significant because it's the first market of its kind to support Litecoin, a lesser-known scrypt-based bitcoin alternative.

vichu 13y ago

The attitude of the Atlantis CEO seems much different from the founder of SilkRoad, Dread Pirate Roberts. Whereas the Atlantis CEO seems very into this business for the money and fame, DPR seems more interested in the ideological standpoint of it all (libertarian ideals and all that jazz). Quotation from Dread Pirate Roberts: All that being said, my primary motivation is not personal wealth, but making a difference. As corny as it sounds, I just want to look back on my life and know that I did something worthwhile that helped people. It’s fulfilling to me. Source: http://www.forbes.com/sites/andygreenberg/2013/04/29/collected-quotations-of-the-dread-pirate-roberts-founder-of-the-drug-site-silk-road-and-radical-libertarian/ http://www.forbes.com/sites/andygreenberg/2013/04/29/collect... EDIT: some formatting mistakes

qwertzlcoatl 13y ago
Atlantis CEO also claimed that their service is technically much more sophisticated than SilkRoad. His/Her answer when asked what Atlantis has that SR doesn't: “To put it bluntly, a well written codebase and server setup. SR claims to have suffered from ‘DDoS’ attacks, which is very unlikely due to the way Tor hidden services are designed. It’s far more likely to me and technical gurus I’ve consulted that it was a result of poor or uncoping infrastructure. Most likely database related. Ironically we still received all the blame for the supposed ‘attacks’.” http://weirderweb.com/2013/06/13/atlantis-wasnt-built-in-a-day-520800-in-sales-and-counting/ http://weirderweb.com/2013/06/13/atlantis-wasnt-built-in-a-d...
- haakon 13y ago
  > SR claims to have suffered from ‘DDoS’ attacks, which is very unlikely due to the way Tor hidden services are designed. This is wrong; Tor hidden services are quite easy to DDoS for someone familiar with Tor. In fact, the attack was described on the Tor blog [1] shortly before it was executed against Silk Road, so this is likely where the attacker got the idea. [1] https://blog.torproject.org/blog/hidden-services-need-some-love https://blog.torproject.org/blog/hidden-services-need-some-l...
  - glomph 13y ago

gizmo686 13y ago

It seems like this is a boom for law enforcement. One of the fundamental aspects of bitcoin is that every transaction is recorded and publicly view able. In order to anonomize your currency you bassicly need to go through a mixing service, which takes bitcoins from a pool of users, and redistributes them back to the same users, but at new accounts, so it would be 'impossible' for someone to follow the money using only the blockchain. There are two ways around the impossibility. One is to do statistical analysys to try and infer which two accounts are the same person. If you reguarly use the same service, this would likely be quite doable. The other way around this is to compromise the mixing service (either hacking, or with a warrent). There is currently research being done to make bitcoin properly annonomous [1] [1] http://zerocoin.org/ http://zerocoin.org/

deleted 13y ago
[deleted]
johnyzee 13y ago
I am wondering if mixing services might be illegal. As far as I know there are laws prohibiting attempts to conceal or obscure the source of money. Since almost all methods of acquiring bitcoin lead back to a bank account, it would be trivial to trace anybody putting money into the mixing service and potentially prosecute them under anti-laundering laws. Paying cash for bitcoin (i.e. localbitcoin) is not traceable in this manner, but if you have large amounts of untraceable cash then you have probably already successfully laundered money, and though bitcoin is a more convenient store of value it would not be the tool that enabled it. So I agree, seems regulators should be fine with Bitcoin.
- haakon 13y ago
  > it would be trivial to trace anybody putting money into the mixing service Not really; you can't tell which bitcoin addresses belong to a mixing service and which ones don't; it's all just transactions from one address to another. You may know the owner of the originating address, but not the receiver. There are also mixing service that run as Tor hidden services just like the illegal marketplaces themselves, so you can't really prosecute those.

stayhome 13y ago

Honeypot?

bitcoindomains 13y ago

Dear Atlantis, Can I list domains on your bazaar? Got a juicy one: http://atlantisrky4es5q.com http://atlantisrky4es5q.com

DanBC 13y ago

Their aggressive twitter campaign is clearly against the Twitter ToS (https://twitter.com/AtlantisMarket https://twitter.com/AtlantisMarket)

qwertzlcoatl 13y ago
I'm pretty sure their start-up style video advertising its illegal service flouts the YouTube’s user guidelines too.

mxxx 13y ago

10BTC says this is a DEA sting.

qwertzlcoatl 13y ago
I can't find out if they tumble the Bit and Litecoins they receive, like Silkroad does. If they don't tumble I could see this being a major honeypot, as people could be traced.
mvanvoorden 13y ago
As long as you encrypt all your communications, you have nothing to fear, especially not as a seller. Doing it right makes you completely anonymous. Only if you're a buyer, there comes a moment when you have to give a postal address to a seller and give up your anonimity. If the seller turns out to be law enforcement, this might cause a problem. On the other hand, why would law enforcement go after the buyers? That doesn't solve anything, it's the sellers they want. Even if the service is completely run by DEA/FBI/etc, taking the right precautions can help you stay anonymous. That's what's so beautiful about Tor, Bitcoin and PGP :)
- _s 13y ago
  Even for buyer is difficult to know if it's actually you making the purchase or someone else using your name / address.
- TheAnimus 13y ago
  >On the other hand, why would law enforcement go after the buyers? That doesn't solve anything, it's the sellers they want. Because if you go after a seller, you have just removed a player from the market, assuming constant demand, you have just raised the margins for those who have the fixed amount of supply. This is why after a 'big drugs bust' prices sometimes go up, which makes it more attractive for new players. Going after the consumer is exactly the way to stop that. As it removes the demand. If you had even just a one in twenty chance of being busted for trying to buy something on these markets, it would greatly reduce the number of people willing to do so. Or we could, you know, look again at prohibition.

aj700 13y ago

Big mistake in the first para. This is what happens when MSM covers tech. Tor and the discretion of the sellers makes Silk Road EFFECTIVELY anon, not bitcoin per se. The sellers have your postal address and your bitcoin data.