[HN Gopher] First Bitcoin "mixer" penalized for violating anti-m...
___________________________________________________________________
First Bitcoin "mixer" penalized for violating anti-money laundering
laws
Author : propter_hoc
Score : 205 points
Date : 2020-10-19 18:16 UTC (4 hours ago)
(HTM) web link (www.fincen.gov)
(TXT) w3m dump (www.fincen.gov)
| asdfasgasdgasdg wrote:
| Note that the civil forfeiture penalty is only part of it. He's
| also probably going to jail for some number of years:
|
| https://www.justice.gov/opa/press-release/file/1249026/downl...
| doggosphere wrote:
| Why do "mixers" still exist if we have trustless coinjoins?
|
| https://wasabiwallet.io/
| moeadham wrote:
| Helix shut down years ago. The tech that enables wasabi is
| pretty recent (segwit, etc).
| hackinthebochs wrote:
| Just wait until an enterprising DA decides to charge everyone
| in the coinjoin as a criminal conspiracy.
| colinmhayes wrote:
| IS this not a mixer?
| doggosphere wrote:
| I suppose it is a mixer, but with more modernized protocols.
|
| In earlier days AFAIK, a central coordinator was required to
| take custody of coins.
|
| Now its mostly trustless.
| propter_hoc wrote:
| This is a $60 million civil penalty and finding of fact from
| FinCEN, the money laundering & terrorist financing authority.
| Harmon appears to still be facing up to 17.5 years of prison on
| federal criminal charges as well.
|
| https://www.cincinnati.com/story/news/2020/02/13/bitcoin-lar...
| qwerty456127 wrote:
| This is ridiculous. Mixing is a foundation of cryptocirrency,
| cryptocirrencies don't make any sense without mixing. Who wants
| their entire transactions history to be public? That would make
| them an easy target for many kinds of fraud and other kinds of
| attacks.
| optimuspaul wrote:
| Wait, I thought the foundation of cryptocurrency was about
| trust not privacy.
| qwerty456127 wrote:
| But privacy is essential to make it possible. Seriously,
| would you choose a bank which would post details for every
| payment you make online, available for everybody to read? Try
| imagine what can bad people do with that information.
| [deleted]
| droffel wrote:
| > Mixing is a foundation of cryptocirrency, cryptocirrencies
| don't make any sense without mixing.
|
| I'm going to need a citation on this one. Many people who are
| still stuck on Bitcoin maximalism these days seem to have gone
| the "nothing to hide" route, and actively denigrate the idea
| that privacy tech should be implemented at all.
|
| > Who wants their entire transactions history to be public?
|
| Use Monero.
| knorker wrote:
| > cryptocirrencies don't make any sense
|
| that summarizes it better.
|
| Cryptocurrencies aren't a smart workaround around the financial
| system. They are simply violations of laws.
|
| They're not loopholes. Thousands of years of economic theory
| wasn't suddenly made obsolete by something new. It's just
| crime. Economic systems already knew we don't want money
| laundering and we do want reversibility. Some techie thinking
| mixers aren't money laundering and thinking reversibility is a
| bug doesn't make it so. They were on purpose. Because that's
| superior.
| [deleted]
| firloop wrote:
| If you want to launder money with impunity, don't do it in
| crypto. Just be a megabank.
|
| See: https://www.icij.org/investigations/fincen-files/, or Matt
| Taibbi's writeup of it: https://taibbi.substack.com/p/revenge-of-
| the-money-launderer...
| wnevets wrote:
| The easiest way to be above the law is to have a lot of money
| and give some of it to the right people.
| saiya-jin wrote:
| That would probably mean politicians that would push for laws
| making your life easier. Like lower taxation / easier
| avoidance, support for complex blurry ownership structures
| etc. Those on top are the best bet.
|
| Its interesting that neither US nor Europe does see anything
| wrong with direct monetary sponsorship of politicians before
| elections (on top of lobbyists which are seem to be proper
| legal bribing middlemen)
| fogihujy wrote:
| Or just use slot machines like everyone else.
| bootcampwhere wrote:
| Wait. What. Why not just buy chips, wait then cash then in.
| Won't you lose 30-50 percent with slots?
| gruez wrote:
| Is this effective anymore? AFAIK nowadays chips can be
| tracked on an individual basis, so it'd be very hard to pull
| off (assuming the casino isn't in on it).
|
| random search: https://www.protiviti.com/US-
| en/insights/higher-stakes-casin...
|
| >Examples of red flags include:
|
| >* Customer transfers chips to other individuals to cash out
|
| >* Customer redeems chips for casino checks that amount to
| significantly more than the amount of funds deposited with no
| apparent winnings to account for the additional amount
|
| >* Customer departs casino without cashing out chips, an
| activity referred to as "chip walking."
| notJim wrote:
| I feel like similar to the bank case, the key is to be a
| big enough high-roller that the casino helps you skirt the
| regulations. Tough times for the small time, mom-and-pop
| money launderer these days I suppose.
| joosters wrote:
| Why do chips come into it? Isn't the process just:
|
| 1) Insert cash into slot machine. Play through the cash for
| a while, losing x%
|
| 2) Cash out (machine gives you a printed ticket to take to
| the casino desk). Now you have a paper trail showing that
| you won $ from a casino, giving the money a legitimate
| source.
| pas wrote:
| Unless you hit jackpot/777/3lemons the question will be
| how did you come up with the initial amount to put into
| the machine.
|
| The way to launder money is to have a casino, and then
| give the illicit cash to random folks and have them lose
| at the casino.
| cordite wrote:
| I heard about people justifying these. Something about privacy.
|
| Everything just feels so twisted in perceptions tied to
| cryptocurrency.
| schoen wrote:
| One way you could think about this is that there are (at least)
| two very opposed intuitions about the status of cash vs.
| electronic funds transfers.
|
| One intuition is that cash is a really unfortunate technology
| that had to exist in the past as a compromise due to
| technological limitations [because strongly authenticating
| value transfers is hard in an offline world], but now that we
| have better technology, we can try to get rid of it or de-
| emphasize it, and make money the way it's supposed to be --
| like EFTs that are transparent (at least to states), traceable,
| seizeable, reversible.
|
| Another intuition is that custodial/intermediated EFT payments
| are a really unfortunate technology that had to exist in the
| past due to technological limitations as a compromise due to
| technological limitations [because making digital bearer
| instruments, especially fully or partly decentralized ones,
| work well is technologically difficult and fraught with subtle
| trade-offs], but now that we have better technology, we can try
| to get rid of them or de-emphasize them, and make money the way
| it's supposed to be -- like cash that's really owned outright
| by its bearers and provides privacy about who spent what where.
|
| The former view is for example Kenneth Rogoff's view in _The
| Curse of Cash_ or maybe the view of the Indian government in
| demonetizing some large-denomination notes in 2016, while the
| second is the traditional view of cypherpunks and some
| libertarians. The disagreements are pretty fundamental. :-)
| akerro wrote:
| So Bitcoin is officially money now?
| hcknwscommenter wrote:
| No. Accepting US dollars, "converting" those dollars into
| bitcoin, performing a mixing operation for the express purpose
| to make it difficult to track where those dollars went, and
| then sending back something worth the U.S. dollars you accepted
| (minus a fee), is money laundering.
| jayd16 wrote:
| Pretty sure you could be "laundering money" with any sort of
| asset.
| wmf wrote:
| It's whatever they want it to be. To FinCEN it's money. To IRS
| it's property.
| gamblor956 wrote:
| No, it's still money to the IRS as well, just like any
| currency that isn't USD.
|
| However, the tax code treats all non-USD currencies as assets
| for the purposes of determining when taxable events occur (as
| a result of differences in the exchange rate between the time
| the currency was acquired and when it was transacted away).
|
| For example, you acquire 100 GBP for $100 or 10 Bitcoin for
| $100. Then sometime later, you buy a car for $100 but pay for
| it with 90 GBP or 8 Bitcoin. There are two transactions: the
| non-taxable acquisition of the car, and the deemed exchange
| of the GBP or Bitcoin into USD. Because the GBP and Bitcoin
| are worth more now than when you first acquired them, you
| have foreign exchange income and get taxed on that.
| jcranmer wrote:
| > However, the tax code treats all non-USD currencies as
| assets for the purposes of determining when taxable events
| occur (as a result of differences in the exchange rate
| between the time the currency was acquired and when it was
| transacted away).
|
| There actually is one key difference. For most currencies,
| you can basically use a single exchange rate for all
| transactions. For bitcoin, you can't do that. Although note
| that one of the criteria that kicks you out of this rule is
| that currencies with high inflation (defined as roughly 10%
| annual inflation)... which would include bitcoin anyways.
| AndrewDucker wrote:
| Common methods of laundering money have included art and soap.
| Neither of those are money. Except insofar as many medium of
| exchange is.
| X6S1x6Okd1st wrote:
| It doesn't need to be money to be used for money laundering.
| xxpor wrote:
| Has been since 2013 as far as FinCEN is concerned:
| https://www.fincen.gov/sites/default/files/shared/FIN-2013-G...
| cft wrote:
| Then it should be treated by IRS as foreign currency (with
| transactions under $200 exempt from reporting). Now it's
| treated as property, where you have to report _every_
| transaction on sched D, even buying a coffee for $2.
| joemazerino wrote:
| What does this mean for coinjoin groups like samurai wallet and
| wasabi?
| [deleted]
| BitwiseFool wrote:
| This makes me very nervous about the Monero I own. It is
| understandable that the government would eventually use AML
| against Bitcoin mixing services. But how will the government go
| after cryptocurrencies that have mixing and transaction
| obfuscation built into their protocols?
|
| I've heard the argument that it is impossible for the US
| Government to regulate decentralized cryptocurrencies. FinCEN
| cannot force a change in the Bitcoin or Monero protocols. However
| it is entirely within the government's authority to regulate the
| users of said currencies. So I imagine the government would add
| onerous reporting requirements for any citizen or corporation
| holding privacy based coins in order to circumvent their privacy
| features.
| hdjfktkrk wrote:
| In a way having Monero is like having large piles of cash. As
| long as you can prove they came from legitimate sources and
| that all taxes on them were paid, you have nothing to worry
| about.
|
| You also need to be careful not to deny in an official way that
| you own Monero if that is the case.
| 6gvONxR4sf7o wrote:
| Mixing and transaction obfuscation are built into good old
| fashioned cash, right? I wonder what the legal basis is there,
| and how that could be applied to a cryptocurrency with cash-
| like properties.
| benlivengood wrote:
| Not really; every federal reserve note has a serial number.
| People just assumed that no one had the incentive or ability
| to track them.
| RandomBacon wrote:
| Here's what a law firm says about privacy coins:
|
| https://www.perkinscoie.com/images/content/2/3/v3/237411/Per...
|
| TL;DR: I wouldn't be nervous if I was you.
| sgp_ wrote:
| Creator of the Breaking Monero series and a compliance analyst
| at a cryptocurrency OTC desk here.
|
| This mixer was penalized for running an unlicensed MSB. This is
| far more about that then it is about banning privacy
| technologies generally. For traditional Bitcoin mixers as in
| this case, someone receives money from users and then transmits
| money to many users. This is money transmission and requires
| registration with FinCEN and sometimes requires registration
| with states (though some states have exemptions for completely
| crypto to crypto transmission that doesn't touch USD or other
| fiat).
|
| Mixing in this case is interactive where there is a clear money
| transmitter. In Monero's case, the ring signature "mixing"
| (mixing is a terrible/misleading way to refer to ring
| signatures) is non-interactive, and there is no intermediary
| (eg: a mixer) acting as a money transmitter. Thus, there is
| nothing to fear from this specific enforcement action.
|
| I'm happy to answer other questions as well. But for money
| transmission to occur, an intermediary needs to accept customer
| funds. For a Monero transfer, there is no intermediary. Someone
| could build an MSB on Monero itself which would require
| registration, but using Monero to send funds directly to a
| merchant for one's own purchase, for example, is not money
| transmission.
| josu wrote:
| >This mixer was penalized for running an unlicensed MSB.
|
| In addition to laundering money. But they were charged with
| money laundering too.
|
| "COUNT ONE (Conspiracy To Launder Monetary Instruments)"
|
| https://www.justice.gov/opa/press-
| release/file/1249026/downl...
| A4ET8a8uTh0 wrote:
| This.
|
| It should also be noted that government does not seem to know
| how to deal with privacy oriented coins ( ref#1 - discussion
| of current regime for crypto as seen by US AG ). That said,
| they seem to suggest ( page 41 ) that using Monero is
| inherently risky and prone to illicit activity and businesses
| allowing its use "should consider the increased risks".
| Knowing how banks read those types of documents, you can
| safely bet banks will simply refuse to bank anyone if there
| is even a whiff of transaction with Monero, Zcash, Dash.
|
| Ref#1:https://www.justice.gov/ag/page/file/1326061/download
|
| edit: Disclaimer. Do not be an idiot. I am just a guy on the
| internet. If in doubt, hire an actual lawyer.
| hn_throwaway_99 wrote:
| I don't necessarily disagree with you that the specifics of
| this case may not be exactly applicable to Monero. However, I
| think people are being _woefully_ naive if they think that
| the US Government will be OK with people sending large sums
| of money anonymously. Whether it be through finding existing
| laws that can be applied, or just flat out changing the law
| to explicitly ban these types of transactions, I can
| guarantee that when people think they have found a technical
| loophole the law usually comes down on the side of "does
| what you're doing constitute behavior that the original
| legislation was meant to prohibit". Just look at what
| happened with Aereo [1], I think the same thing will (at
| least eventually) happen with cryptocurrencies where the
| ledger isn't fully traceable.
|
| [1] https://en.wikipedia.org/wiki/Aereo
| chris_wot wrote:
| Indeed, it wouldn't take much for them to legislate to make
| the whole ring signature mechanism illegal.
| kenniskrag wrote:
| Or you just can't exchange crypto currencies against
| dollars because the finance industry is already regulated
| and has to follow the rules.
| onetimemanytime wrote:
| >> _But for money transmission to occur, an intermediary
| needs to accept customer funds. For a Monero transfer, there
| is no intermediary. Someone could build an MSB on Monero
| itself which would require registration, but using Monero to
| send funds directly to a merchant for one 's own purchase,
| for example, is not money transmission._
|
| They are huge fines and decades in jail sentences at play in
| money laundering. How sure are you? Not that anyone is going
| to do X or Y because someone in a thread said so, but things
| aren't as simple sometimes. Add the potential penalties
| and...
| sgp_ wrote:
| Don't take my word for it. Read what FinCEN says directly:
|
| https://www.fincen.gov/sites/default/files/2019-05/FinCEN%2
| 0...
| beervirus wrote:
| Is this legal advice about the definition of "money
| transmitter"? It sure reads that way.
| wolco2 wrote:
| Have you paid for this advice? Are you a client? Was this
| directed at you?
|
| If not then this is opinion.
| beervirus wrote:
| > Have you paid for this advice?
|
| Payment is generally not required to establish an
| attorney-client relationship.
|
| > Are you a client? Was this directed at you?
|
| No, but I'm looking at it from the perspective of the
| poster it _was_ directed at.
| 6gvONxR4sf7o wrote:
| At the very least, wouldn't an attorney be required to
| establish an attorney-client relationship?
|
| BTW here's some legal advice: don't jaywalk. I think it's
| illegal in some places.
| gamblor956 wrote:
| No, a preexisting attorney-client relationship isn't
| always required. Offering advice pertaining to the
| application of laws or regulations to a specific person's
| facts is generally considered offering legal advice.
|
| Some states regulate this very heavily, others don't care
| as much. Generally, California tends to regulate this
| pretty heavily for lawyers (for purposes of creating an
| attorney-client relationships that can subject them to
| malpractice claims) but otherwise not at all for non-
| lawyers unless they specifically hold themselves out to
| be in the business of providing legal advice (very common
| with immigration issues). So, offering random advice on
| the internet wouldn't be an issue for a non-lawyer (but
| could be one for a practicing lawyer if they get too
| specific).
| lkbm wrote:
| My understanding (that is, I was told by a lawyer I know)
| is that if the person receiving the information thinks
| there's an attorney-client relationship, there is.
| Presumably there's some defense of "a reasonable person
| wouldn't have thought that", but this is why lawyers tend
| to be very diligent about saying "this is not legal
| advice".
| [deleted]
| gamblor956 wrote:
| Legal advice is regulated where it means applying the law
| to the specific facts of another person's case, because
| that is considered the "practice" of law.
|
| Applying the law to a generic set of facts, or to your own
| facts, is fine.
| sgp_ wrote:
| Obviously not legal advice, but FinCEN's guidance is quite
| easy to follow here:
|
| https://www.fincen.gov/sites/default/files/2019-05/FinCEN%2
| 0...
|
| > Providers of anonymizing services, commonly referred to
| as "mixers" or "tumblers," are either persons that accept
| CVCs and retransmit them in a manner designed to prevent
| others from tracing the transmission back to its source
| (anonymizing services provider), or suppliers of software a
| transmittor would use for the same purpose (anonymizing
| software provider).
|
| > An anonymizing services provider is a money transmitter
| under FinCEN regulations. The added feature of concealing
| the source of the transaction does not change that person's
| status under the BSA.
|
| > An anonymizing software provider is not a money
| transmitter. FinCEN regulations exempt from the definition
| of money transmitter those persons providing "the delivery,
| communication, or network access services used by a money
| transmitter to support money transmission services." This
| is because suppliers of tools (communications, hardware, or
| software) that may be utilized in money transmission, like
| anonymizing software, are engaged in trade and not money
| transmission.
|
| Another resource: https://www.perkinscoie.com/en/news-
| insights/anti-money-laun...
| jdmichal wrote:
| > Providers of anonymizing services, commonly referred to
| as "mixers" or "tumblers," are either persons that accept
| CVCs and retransmit them in a manner designed to prevent
| others from tracing the transmission back to its source
| (anonymizing services provider), or suppliers of software
| a transmittor would use for the same purpose (anonymizing
| software provider).
|
| How does that not make Monero itself liable as an
| "anonymizing software provider"?
| sgp_ wrote:
| Well, you see what FinCEN says about those:
|
| > An anonymizing software provider is not a money
| transmitter. FinCEN regulations exempt from the
| definition of money transmitter those persons providing
| "the delivery, communication, or network access services
| used by a money transmitter to support money transmission
| services." This is because suppliers of tools
| (communications, hardware, or software) that may be
| utilized in money transmission, like anonymizing
| software, are engaged in trade and not money
| transmission.
|
| In simple terms, the Monero developers are providing
| software (the Monero network, nodes, and wallet software)
| that can be used for money transmission, but the
| developers do not need to register as MSBs unless they
| also have a side company that conducts money
| transmission.
| 0xffff2 wrote:
| Nothing posted on a pseudo-anonymous internet forum is ever
| legal advice.
| dcolkitt wrote:
| I wholeheartedly agree with your assessment. But at the end
| of the day, this defense is predicated on making a US federal
| judge understand all those technical details.
|
| I think the most commonsense reform is to have computer crime
| handled by specialized courts, much the same as tax law
| currently is. These domains are simply too complex to have
| them handled by legal generalists, who are expected to learn
| it all from first principles on each and every case.
| pas wrote:
| Can't tax law cases eventually make it to the Supreme Court
| anyway?
| jskdvsksnb wrote:
| Anything can go to the supreme court if you try hard
| enough: https://www.law.cornell.edu/wex/mandamus
|
| But also yes, the Supreme Court has discretionary appeals
| jurisdiction over any federal case.
| garmaine wrote:
| The Department of Justice released an enforcement memo just
| last week that states merely using Monero, zcash, etc. are
| treated as criminally suspicious :(
| CryptoPunk wrote:
| I'm not a lawyer, but I believe regulatory agencies would need
| new legislation to make use of privacy-protecting
| cryptocurrency software illegal. It's that legislation that I
| would worry about.
| jl2718 wrote:
| I suppose the liability, if so broadly interpreted, would fall
| on the miners, but only if it could be proven that they won a
| block that contained a transaction used for illicit purposes.
|
| The interpretation that somebody is liable for mixing at all,
| with no illicit use proven within the transactions, is probably
| questionable. The miners are also not receiving dirty money as
| compensation, so even more so.
|
| And even with illicit use shown, laundering can happen with
| just about anything you can buy and sell, so, unless every
| retail store is doing KYC, then they could also be exposed to
| such liability.
|
| Above all, I don't know if coercion is a successful long-term
| strategy for defeating privacy coins. Even for criminals, the
| value must tie back to average citizens purchasing it from
| them, and even with no enforcement they would not want to be
| part of that, and the value would collapse. If a privacy coin
| does have value, it reflects political fears of the average
| citizen, and aggressive enforcement unaligned with common
| values may actually increase its value.
|
| The dollar system is the most valuable partially because it
| does enforce common values, and permits all else within. But
| obviously not everybody believes that this is guaranteed in the
| future.
| giancarlostoro wrote:
| If you report your earnings when you sell I don't know if
| there's an issue. I think the government is going to be losing
| if they want to go after people before they cash out.
| Technology will always be miles ahead of bureaucracy.
| blibble wrote:
| not sure what use your cashed out earnings will be once they
| confiscate them after they lock you up
|
| governments have years to come after you (and in many
| countries: the rest of your life)
| droffel wrote:
| Lock you up for what? Using Monero doesn't mean you're a
| criminal. Am I misunderstanding, or are you implying that
| caring about my privacy is a criminal act, and that paying
| taxes on perfectly legitimate income is (or would become)
| illegal?
| blibble wrote:
| engaging in money laundering? who knows
|
| that's the point: even if you're not doing anything shady
| you don't really know what sort of long term risk you're
| taking on if you're using something that looks to
| governments as if it's tailor made for money laundering
| droffel wrote:
| I guess I shouldn't use a VPN, because that might look
| like I have something to hide. Using cash? No way! If I
| use cash I might look like a criminal. Leave my cell
| phone at home? No way, I wouldn't want to be suspicious,
| would I? I need the government to surveil me every second
| of every day, because if they don't, maybe I'm a
| criminal.
|
| At what point do you say enough is enough, and embrace
| the idea that you should minimize your digital footprint
| whenever possible?
| blibble wrote:
| all of your examples also have some level of risk, which
| is going to be essentially negligible
|
| a technology specifically designed to allow untracable
| electronic monetary transactions is going to be many
| orders of magnitude riskier to use
| ineedasername wrote:
| If transaction obfuscation violates laws regarding trackability
| of financial transactions, then and cryptocurrency that builds
| obfuscation into their protocols has a product that is
| inherently illegal. It would be no different than building any
| feature into software that violates the law, say DRM
| circumvention as an example.
|
| However I don't know if obfuscation alone would be considered
| illegal: In this case, the services went beyond merely
| facilitating obfuscation. They were not properly registered as
| a Money Services Business, and they specifically marketed their
| services for use in illicit transactions. Going back to the DRM
| example, it's the difference between software that has
| legitimate uses but _could_ be used to break DRM (Think binary
| editors to crack a video game 's DRM) as compared to
| advertising your binary editor not as a general purpose tool,
| but for that specific illegal purpose.
|
| (Disregarding, for a moment, the philosophical issues
| surrounding the use of DRM, on which I tend to lean more
| towards less use of DRM)
| iongoatb wrote:
| The DOJ just released a report that explicitly says that use of
| privacy coins like Monero is a "high risk activity" and
| "indicative of possible criminal conduct".
|
| https://cointelegraph.com/news/doj-says-use-of-privacy-coins...
| john_alan wrote:
| In reference to companies accepting it, not individual users.
| Come on man.
|
| "Companies that choose to offer AEC products should consider
| the increased risks of money laundering and financing of
| criminal activity, and should evaluate whether it is possible
| to adopt appropriate AML/CFT measures to address such risks."
| droffel wrote:
| So is using cash. Lots of things could be 'indicative of
| possible criminal conduct'. Thankfully, the US operates under
| presumed innocence until proven guilty. This attitude of
| people claiming you shouldn't seek privacy lest you 'look
| like a criminal' is disappointing. I expect better from HN.
| zepearl wrote:
| Ok, you aren't wrong, but let's try not to be too naive -
| unluckily what's good for you (privacy, flexibility, speed,
| ...) is good as well for the "bad" guys.
|
| I guess that the final question will be if it's used more
| for "good" or for "bad" purposes (or maybe just if the
| amount of "bad" purposes surpasses a certain acceptable
| level).
|
| (same thing about cash - I think that most governments keep
| introducing stricter rules about cash
| withdrawals/deposits/transfers)
| CryptoPunk wrote:
| The bad guys can also be IN the government. When the
| government consistently omits threats from state bodies
| in its risk analyses, then the public tends to overlook
| that danger and heed, or at least not vigorously oppose,
| calls by the government to reduce privacy and increase
| surveillance.
| asdfasgasdgasdg wrote:
| > This attitude of people claiming you shouldn't seek
| privacy lest you 'look like a criminal' is disappointing. I
| expect better from HN.
|
| "Indicative of possible criminal conduct" means more than
| just "looking like a criminal." That means, if you were to
| be arrested for something, your use of Monero might count
| as evidence that you were involved in criminal activity.
| Combined with enough other circumstantial evidence, it
| might even contribute to your conviction, even without a
| smoking gun. This would depend on the judge and jury, but
| it's worth noting.
|
| I don't think it's "better" for people to ignore the risks
| of certain behaviors and pretend those risks don't exist.
| You apparently care a lot about optimizing a particular
| dimension: privacy. Recognize that other people have
| different mixes of priorities. Not everyone must agree with
| yours. Some people who disagree with you might even comment
| on this very site, as offensive as that is.
| kache_ wrote:
| If you're using monero correctly, no one should know you
| own any.
| pas wrote:
| How can one buy Monero anonymously? Let's say I have 100
| USD and a bank card, what's the step by step process?
| Does this also work with 1 000 000 USD?
| WJW wrote:
| I wonder how many people (as a percentage) use monero
| "correctly" enough that they can remain anonymous even
| when faced with the resources of a nation-state hacking
| team. I'd wager it's single digit percentages at most and
| even that is pretty high.
| wolco2 wrote:
| I think he was lamenting the loss of priority of privacy
| within the general hn makeup.
|
| If everyone took your advice no one would protest, write
| a political comment against anyone in power, take any
| position that isn't accepted by all and be ready to drop
| that opinion when society shifts.
|
| You live in a free society. Use your freedom or risk
| losing it.
| asdfasgasdgasdg wrote:
| What is my advice that would lead to this tragic outcome?
| I'm rereading it and I don't see it. Do you mean my
| advice to be respectful of individual people who disagree
| with you?
|
| Privacy has never been more important to the aggregate HN
| commenter than it is today. Moreover, nothing I said
| enjoins people from making political statements or
| protests.
| woah wrote:
| If you're arrested for something, your possession of a
| pry bar might count as evidence you were involved in
| criminal activity
| newacct583 wrote:
| > Lots of things could be 'indicative of possible criminal
| conduct'.
|
| Deliberately hiding the origin of funds is _itself_
| criminal conduct, though. It 's true that AML statutes tend
| to be hyperspecific, because it's a difficult area to
| regulate. So areas like crytocurrency mixing are gray and
| uncertain even among law enforcement lawyers. It's not
| true, however, that there is an inherent right to
| unrestricted private transfer of money.
|
| Bascially, the statement you're reading is not saying
| "Mixing is probably illegal because the money must have
| been illegal to begin with". It's saying that "Mixing is
| probably money laundering on its face, no matter where the
| money came from."
|
| At some point governments are going to need to step in and
| clarify this with laws. But don't fool yourself: Crypto
| mixers are going to end up being subject to effectively the
| same reporting requirements that banks are. What you want
| (perfect financial privacy) you can't have, sorry. That
| ship sailed decades ago.
| jdmichal wrote:
| EDIT: I'm wrong please disregard.
|
| You can have it. You just need to do everything in cash
| and not use the banking system. Of course, there's a lot
| of advantages to the banking system... But you can still
| use things like safety deposit boxes for storage, gold to
| help protect against inflation, etc.
| PeterisP wrote:
| You can't do everything in cash anonymously, at least not
| legally, because large cash transactions are subject to
| similar laws and require the business receiving the cash
| to identify you and report the transaction - e.g. Form
| 8300 in USA.
| jdmichal wrote:
| Huh. I'm quite familiar with the banking side of AML
| having worked at one. But I was completely unaware of
| this.
| newacct583 wrote:
| AML reporting requirements cover cash transfers too,
| though. Yes, there are more holes in the protocols
| because of the messiness of the medium (broadly it's the
| same thing crypto regulation would face), but in general
| MANY people who would have to touch that cash you're
| hoarding are required to report large transfers.
|
| Money laundering is a crime, all by itself. It doesn't
| matter where the money comes from or what form it takes.
| The spirit behind AML legislation, long established, is
| that the government has the right to see where money is
| held and to whom it is transferred.
|
| Minutiae about mechanism might appeal to software nerds,
| but it doesn't address the underlying issue. This fight
| was fought, _and lost_ , more than half a century ago.
| CryptoPunk wrote:
| >>Deliberately hiding the origin of funds is itself
| criminal conduct, though.
|
| No, money laundering is deliberately hiding the origins
| of the proceeds of crime. Making an effort to maintain
| financial privacy is not in itself illegal.
|
| >>It's saying that "Mixing is probably money laundering
| on its face, no matter where the money came from."
|
| No, money laundering is by definition hiding the origins
| of illegally obtained money. If the money is not the
| proceeds of criminal enterprise, then hiding its origins
| is not, by definition, money laundering.
|
| Exercising privacy-protection with respect to legally
| obtained money may be illegal, or with new laws be made
| illegal, but it does not and will not ever fall under the
| definition of money laundering, as that is not the
| definition of money laundering.
| tcberry wrote:
| That can still mean that you may be vulnerable to civil
| forfeiture, since your pile of Monero doesn't receive the
| same presumption of innocence.
| CryptoPunk wrote:
| It also says that use of such coins is not necessarily for
| use in or proof of crime.
| sgp_ wrote:
| There are many ways to account for this in a risk-based
| approach however. Asking for basic information about a
| customer's occupation and source of funds (as is common when
| opening a bank account) can adequately address ML/TF risks.
| You don't see exchanges freaking out over other higher-risk
| activities like onboarding PEPs, but they can do this with
| proper risk controls.
|
| https://www.perkinscoie.com/en/news-insights/anti-money-
| laun...
| doggosphere wrote:
| Governments could certainly compel exchanges to not list Monero
| or other privacy coins.
|
| But even if they compelled users to list addresses of the coins
| they own, the nature of Monero makes it very redundant. It
| would be ineffective and a waste of time, and it wouldn't stop
| users from exchanging it.
| kilo_bravo_3 wrote:
| What is the overlap between cryptocurrency aficionados who rail
| against the "corrupt banksters who launder money for cartels and
| need to be replaced" and people who don't like this?
| skim_milk wrote:
| I love lawyerspeak.
|
| > As such, they have an obligation to register with FinCEN; to
| develop, implement, and maintain an anti-money laundering
| compliance program
|
| Hmm yes, this business which existed to launder money did not
| implement anti-money-laundering measures, therefore it will be
| fined.
| cosmojg wrote:
| I wonder what this means for mixers which themselves run on
| blockchains (specifically thinking of Ethereum's Tornado.cash).
| Would they go after the developers who wrote the code and
| published it on the blockchain? Or would they go after the miners
| who run the code (knowingly or not) and process the transactions
| involved in laundering?
| xwvvvvwx wrote:
| Current guidance is that non custodial protocols are not
| classified as money transmitters and so are exempt from KYC/AML
| regulations: https://www.coincenter.org/fincens-new-
| cryptocurrency-guidan...
| m_a_g wrote:
| Probably the miners. This is one of the unfortunate side
| effects of fully decentralized networks.
| sgp_ wrote:
| Miners are unlikely to be money transmitters under current
| regulatory guidance since they never "accept" money for
| transmission. They only verify transactions that they never
| have custody over.
| tudorconstantin wrote:
| That sounds to me as if going after the maker of a knife that
| was used in a murder if they can't find the killer.
| reaperducer wrote:
| When your only tool is a hammer, you aim for the nails.
| tyre wrote:
| In this case the maker of the knife is the person who wrote
| the code. The person who did the illegal action (processed
| the transaction) is the miner. Or miners for multiple
| confirmations?
| bduerst wrote:
| More like going after the shop owner who intentionally
| turns a blind eye to ongoing illegal activity on their
| property.
| ardy42 wrote:
| > That sounds to me as if going after the maker of a knife
| that was used in a murder if they can't find the killer.
|
| ...or the maker of a pipe bomb if they can't find the
| bomber (or even if they can, since there aren't a lot of
| legitimate uses for pipe bombs).
|
| I can't really think of any use for for a cryptocurrency
| mixer than as part of a scheme for obscuring the true
| source of some funds.
|
| I don't think it would make sense to go after individual
| miners for processing transaction initiated by a mixer,
| just like it wouldn't make sense to go after a bank for
| processing a legitimate-looking transaction that was part
| of some kind of fraud scheme that had no awareness of.
| seibelj wrote:
| I can't think of any purpose of a VPN except to obfuscate
| your internet history. What are you trying to hide?
| ardy42 wrote:
| > I can't think of any purpose of a VPN except to
| obfuscate your internet history. What are you trying to
| hide?
|
| Money laundering (obfuscating the source of money) is
| actually a crime _and for good reason_. Obfuscating your
| internet history is not.
| CryptoPunk wrote:
| >>Money laundering (obfuscating the source of money)
|
| No, that is not the definition of money laundering. It
| does not broadly criminalize efforts to maintain
| financial privacy.
|
| Money laundering means hiding the source of illegally
| obtained money.
| leetcrew wrote:
| isn't it only money laundering if the funds themselves
| were illegally obtained? if I buy crypto with my wages
| from a legal job, put them through a tumbler, and then
| buy a dildo, why is that a problem?
| miguelmota wrote:
| It's a problem if the source of funds are obtained
| illegally. Using tumblers is not illegal, but if using
| tumblers to make 'dirty' money appear clean then that's a
| problem.
| jcranmer wrote:
| I use a VPN to access my work's corporate services which
| are not available outside of the corporate network.
|
| This is probably the single most common use of VPN
| software.
| JoeAltmaier wrote:
| That sounds like a kind of "everybody is a criminal
| unless proved otherwise" argument? How about arguing,
| bitcoin makes simple privacy the default? You don't have
| to be a drug dealer, to want to keep everybody else's
| nose out of your business.
| ardy42 wrote:
| > That sounds like a kind of "everybody is a criminal
| unless proved otherwise" argument? How about arguing,
| bitcoin makes simple privacy the default? You don't have
| to be a drug dealer, to want to keep everybody else's
| nose out of your business.
|
| IIRC, Bitcoin _doesn 't_ make privacy the default. It's
| easy to trace transaction on its blockchain, hence the
| need for mixers if you want to obscure the origin of some
| cryptocurrency.
| JoeAltmaier wrote:
| But does that identify anybody? I'm a noob here; does
| every bitcoin ID come with a user identifying record?
| hombre_fatal wrote:
| No, taint analysis is done backwards from points of
| transaction (Coinbase, retailers, etc) and the US
| government clearly does a lot of it. If you run a Bitcoin
| casino, the DOJ will email you asking for info about a
| given Bitcoin address/txn from time to time, for example,
| as they track the exchange of hands.
| lucasnortj wrote:
| Good, cryptos are for cranks and criminals and should be illegal
| bootcampwhere wrote:
| I bet you hn idiots are just loving this story!!!
| nojito wrote:
| Mixers don't even work.
| loourr wrote:
| Good luck FinCEN, you've now just forced mixers to go dark.
| There's no killing them.
| bufferoverflow wrote:
| They don't even have to go dark. There are fully autonomous
| decentralized mixers like CashFusion running on Bitcoin Cash.
| stevespang wrote:
| Agreed. Offshore even.
| gamblor956 wrote:
| They don't need to kill the mixers. In fact, forcing them to go
| dark makes it much easier to accomplish FinCEN's end goal.
|
| Once mixers are go dark "dark," the presumption is that anyone
| using their services is doing so with the intent of avoiding
| money laundering laws, which will drive away the few legitimate
| users they had, reducing their usefulness as mixers because
| tainted coins will simply be mixed with other tainted coins.
| knorker wrote:
| Only a fool would use a mixer for legitimate purposes.
|
| Money laundering laws make it so that mixers don't actually
| "clean" the money. But legally they do make the clean money
| dirty.
|
| By mixing your clean money with dirty money, you end up with
| only dirty money. So why would you anti-clean legally
| obtained money?
| ddevault wrote:
| To spend it on illegal things.
| colinmhayes wrote:
| There were never legitimate users of mixers.
| gamblor956 wrote:
| I generally agree, as all of the legitimate uses I could
| think of would be more easily accomplished without the use
| of mixers (or even cryptocurrency), but their may be use
| cases I hadn't thought of.
| [deleted]
| CookieMon wrote:
| Of course there were. With crypto's it's the basic privacy
| - you shouldn't know who I donated to or what else I bought
| just because I purchased something off you. Mixing is how
| cryptos achieve that.
|
| I understand pragmatically wanting to avoid it in cryptos
| like Bitcoin with a high transaction fee and mixing not
| being normal as I imagine most people wanting to sign up to
| a service and pay significant money to mix are those
| needing to offload dirty money, but mixing can offer normal
| privacy in cryptos where near-free non-custodial mixing is
| built into the coin or wallet like Monero or Bitcoin Cash.
| ivalm wrote:
| Of course there is, simply make it a crime to use coins that at
| any point in their history touched a mixing service.
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