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Title: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: OROBTC on August 31, 2020, 12:02:55 AM ...
Recently I have wondered about BTC fungibility as mixed BTC and even BTC that has been "ricochetef" a few times retains "taint", meaning, IMO, that there may be some problems when an owner wished to turn BTC into FIAT$, say, at an exchange. Some exchanges apparently do not like heavily tainted BTC it seems... LeGaulois provided an example of a wallet from another thread, showing origins of some of the BTC in a wallet: https://ip.bitcointalk.org/?u=https%3A%2F%2Fi.imgur.com%2F2BQmoxQ.png&t=616&c=7DaDjagrBb0aJg I myself have wallets that are "dirtier" than his, I mix most of the coins I get, but those newly received coins can come from anywhere. My question is: How do "they" mark or tag coins that come from gambling sites, dark markets, mixers, etc? I can understand that stolen BTC could be "tagged" fairly easily (at least until mixed?), but who does that? Who has that authority? Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: odolvlobo on August 31, 2020, 12:34:04 AM In short, they create large numbers of accounts at those services and deposit and withdraw coins, noting the addresses involved. If your coins come from an address linked to any of the known addresses at a particular service, then they can reasonably assume that your coins came from that service.
Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: DaveF on August 31, 2020, 12:44:56 AM Far gambling; many casinos have known hot wallets where they send payments from, so that is fairly simple to track.
Mixers are a bit more difficult, but since most of them are taking everyones coins and mixing them and then giving them back to people there is a good chance that there might be some coins in there from some transactions that some places will not like. But, mixers do create anonymity. For darnket markets and other places it depends. When raided / seized the feds usually find the wallet addresses and post them. -Dave Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: tranthidung on August 31, 2020, 03:16:56 AM What @DaveF said is right.
You can check list of top richest wallets there https://bitinfocharts.com/top-100-richest-bitcoin-addresses.html. If you exclude inactive addresses, you will have clearer overview. Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: Darker45 on August 31, 2020, 03:27:47 AM It's probably through transaction links created over time.
I remember a particular article about how Bitcoin could end up imitating the kind of clean and purity standards of gold, especially the ones implemented by the London Bullion Market Association (LBMA).[1] As of now, we are probably aware that there are certain premiums added to virgin Bitcoins. If this kind of standard is being implemented, those which are marked as tainted are going to be considered dirty and therefore relegated as second class Bitcoins. Those that do the tagging are probably the exchanges and custodians. However, I would stick to Bitcoin's fungibility and that 1 BTC is always worth 1 BTC regardless of where it came from. [1] https://www.coindesk.com/bitcoin-gold-staying-clean Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: pooya87 on August 31, 2020, 03:42:37 AM what is the site that screenshot belongs to? i really wish the address wasn't omitted so that we could investigate more or at least have the site to try other addresses and see the results.
in any case in most cases i've seen the "taint analysis" is pretty crappy. for example the worst thing i have seen so far is walletexplorer.com (belongs to a blockchain analysis company) used to categorize a lot of transactions that had absolutely nothing to do with coinjoin under "coinjoin mess". as for how, they always use the known information and follow the transactions down the line to try and link them to some sources. exchanges, gambling sites,... all have publicly known addresses and it is linked to their hot wallets and is linked to all the transactions they send (both withdrawals they pay out and deposits they move). similarly a lot of other places including dark market also have known addresses. you'd be surprised to learn how many of them are linked to their coinbase accounts! just check the news of how they catch them from time to time. Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: jseverson on August 31, 2020, 04:44:41 AM I can understand that stolen BTC could be "tagged" fairly easily (at least until mixed?), but who does that? Who has that authority? Pretty much every analytic service is independent, and are mostly worthless and shouldn't worry you -- exchanges and most people wouldn't care about their findings. Large firms like Chainanalysis and Coinbase have their own analytics and being tagged by them could actually carry consequences, but their methods aren't public. We can only reasonably assume that they follow movement, and are probably a lot more sophisticated (they can probably reasonably guess when coins change hands, etc.) than tools available for the public. Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: davis196 on August 31, 2020, 06:06:34 AM Quote I can understand that stolen BTC could be "tagged" fairly easily (at least until mixed?), but who does that? Who has that authority? Nobody(except the authorities) has the authority to claim what BTC are "dirty".In reality,companies like Coinbase can abuse their users by claiming that clean Bitcoins are dirty and blocking their accounts for no reason(which is illegal and Coinbase must be sued). Mixers might not provide protection,since most mixers might get banned after a few years,since they are used for mostly illegal activities.Getting "dirty darkweb bitcoins" thru a BTC mixer can be considered money laundering and sooner or later,the authorities will ban mixers... Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: avikz on August 31, 2020, 06:29:46 AM Quote How do "they" mark or tag coins that come from gambling sites, dark markets, mixers, etc? This is only possible for any known addresses. So I must say that such analysis are flawed and can't be 100% true! Also it is incorrect to tag all coins coming from casinos as dirty! These are generalization that simply doesn't make sense because not all casinos are illegal. This fungibility crisis is a smart business technique by the mining companies which are fetching them some premium over the actual market price. The less we think about it, the faster it will go away! Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: 20kevin20 on August 31, 2020, 06:54:42 AM The thing with blockchain analysis is, the more addresses are analyzed, the easier it is to find the source of coins. It's like some kind of puzzle where you have missing pieces.
These addresses are tagged by certain parties, most of them probably being blockchain analysis companies and authorities. One issue I personally see is that they can be wrongfully flagged - it's like receiving a $5 bill from a complete stranger and being accused of being part of some kind of crime proxy because the said bill has been used before you in some kind of crime. Most people don't know that using previously used addresses in new transactions actually links the present to the past of a Bitcoin owner. That, along with some information such as addresses that belong to a certain company/individual, helps with finding out the source of someone's coins. Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: Karartma1 on August 31, 2020, 06:56:53 AM Blockchain analysis companies have been funded largely by governments (guess why). I saw their tools in action and they are incredibly accurate. You guys should never forget that every public blockchain is basically a time chain where all transactions are linked together. AI and machine learning, given the right inputs, can do crazy shit with data.
They have deep analytics on every blockchain tx ever made and don't forget many exchanges (if not all) do real-time tx monitoring giving your coins scores as the ones you see in that image. They go back and forth, doing many hops, to judge if your coins are clean enough. Then, never forget, under AML requirements they link your blockchain profile to your financial situation: if things do not match you will be asked for the SoF. Quoting below what I wrote elsewhere on the matter In Europe, under AMLD5, if one has to use whatever exchange to go in and out of fiat then expect to be asked for the infamous source of funds. If we are talking peanuts there shouldn't be many problems but for large sums expect to be scrutinized like hell. I believe all our privacy tools are good only into the bitcoin world: if we do real p2p btc txs or if we use the LN, for instance. The moment we link that to the fiat world, unfortunately, all those checks are inevitable. Exchanges do real-time monitoring nowadays and every tx is flagged: they mixed analytics services and chain analysis tools to understand where your btc have originated in the past. If there's no link between your documentation and their analysis, game over. tl;dr Privacy tools are fantastic, but don't expect them to be useful when you want to cash out from exchanges. Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: Kakmakr on August 31, 2020, 07:30:33 AM It is basically a hit&miss strategy with them.. They look at the Blockchain history of the source coins and they compare it to common known Bitcoin addresses (exit addresses) from casinos and also mixer services and if it originated from there, they taint it.
People like myself will use mixer services to protect myself and not for criminal reasons and most of my coins will be tainted according to their methods. (You have a right to mix the coins you received to destroy the bread crumb trail to your main hoard, so there is nothing wrong with that) Just imagine if you bought something online with bitcoins and the owner of that site can trace your Blockchain history back to your main hoard to see how many coins you have. (Easy if all your transactions are linked back to a bitcoin address with a fat balance) ::) Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: witcher_sense on August 31, 2020, 07:55:20 AM How do "they" mark or tag coins that come from gambling sites, dark markets, mixers, etc? In a nutshell, this is how they do that:[PDF]Automatic Bitcoin Address Clustering https://www.researchgate.net/publication/322670022_Automatic_Bitcoin_Address_Clustering/link/5ab338feaca272171001ceba/download [PDF]btctrackr : Finding and Displaying Clusters in Bitcoin https://www.cs.princeton.edu/~arvindn/teaching/spring-2014-privacy-technologies/btctrackr.pdf [PDF]Breaking Bad: De-Anonymising Entity Types on the Bitcoin Blockchain Using Supervised Machine Learning https://core.ac.uk/download/pdf/143481278.pdf [PDF]Unsupervised Clustering of Bitcoin Transaction Data https://www2.atmos.umd.edu/~ide/data/teaching/amsc663/14fall/amsc663_14proposalpresentation_stefan_poikonen.pdf [PDF]Bitcoin Blockchain Analysis https://is.muni.cz/th/v2dsl/bp_petkanic.pdf [PDF]Deanonymization and linkability of cryptocurrency transactions based on network analysis https://orbilu.uni.lu/bitstream/10993/39724/1/biryukov-tikhomirov-deanonymization-and-linkability.pdf [PDF]BITSCOPE: Scaling Bitcoin Address De-anonymization using Multi-Resolution Clustering https://izgzhen.github.io/bitscope-public/paper.pdf [PDF]Evaluating User Privacy in Bitcoin http://book.itep.ru/depository/bitcoin/User_privacy_in_bitcoin.pdf [PDF]User Categorization and Community Detection in Bitcoin Network http://snap.stanford.edu/class/cs224w-2017/projects/cs224w-62-final.pdf [PDF]Unsupervised Learning for Robust Bitcoin Fraud Detection https://digifors.cs.up.ac.za/issa/2016/Proceedings/Full/paper%2074.pdf [PDF]Applying the ETL Process to Blockchain Data. Prospect and Findings https://res.mdpi.com/d_attachment/information/information-11-00204/article_deploy/information-11-00204.pdf Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: Lucius on August 31, 2020, 09:03:54 AM what is the site that screenshot belongs to? i really wish the address wasn't omitted so that we could investigate more or at least have the site to try other addresses and see the results. Screenshot from OP originally belongs to this thread (https://bitcointalk.org/index.php?topic=5266401.msg54926530#msg54926530), and here you can see exactly what it is about. It is more than obvious that there is a great demand for better software that analyzes transactions on blockchain, not only for internal use of large crypto companies - but also for ordinary users who want to check if their coins are clean before sending them to exchange and take risks having their account frozen. And how do they do it? Well, considering that they have been working on it since 2012, there is no doubt that they have perfected various methods to date - witcher_sense is posted methods that are known to the public, and there should be no doubt that there are those that are still unknown. Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: Karartma1 on August 31, 2020, 12:25:36 PM How do "they" mark or tag coins that come from gambling sites, dark markets, mixers, etc? snipI hope you used sarcasm when you used the word in a nutshell ;D I knew most of those documents already but missed a few. Thanks for sharing: I will occupy many hours in the next weeks to read everything you posted. Allow me to add a report from CipherTrace to the compilation: gives an idea of how those intelligence companies use their data. https://ciphertrace.com/wp-content/uploads/2020/06/spring-2020-cryptocurrency-anti-money-laundering-report.pdf Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: thirdkiller on August 31, 2020, 01:57:55 PM Some do not understand what BTC really is, continuing to mislead others.
Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: o_e_l_e_o on August 31, 2020, 02:14:33 PM The less we think about it, the faster it will go away! The only reason it is an issue is because people continue to use and support centralized exchanges which engage in this kind of privacy invading behavior. If everyone stopped using exchanges like Coinbase which shut down accounts whenever they decide they don't like how you are spending you own money, then they would quickly adapt to stop doing it or they would cease to function. If you use bitcoin without trusting any third parties with your money, as it was intended, then this becomes a non-issue. As time goes on, this becomes an increasingly nonsensical position for exchanges to hold. As coins are forever being split and consolidated, mixed together, coinjoined together, and so on, at some point pretty much every bitcoin in active circulation will be "tainted" according to these algorithms.If everyone took their privacy seriously and mixed all their coins, this kind of "tainting" would become immediately useless. Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: bitcoin_paypal on August 31, 2020, 03:04:37 PM They just collect wide list of addresses on diffrent "hirisk" sites and monitor their addresses. Totally unhonest
Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: OROBTC on August 31, 2020, 06:55:04 PM ...
Thank you all for your replies! o_e_l_e_o and Karartma1 I mix "most" of the BTC I get, though usually not right away (if I buy $300 worth with my cell phone for example). And for the same reasons mentioned: making it harder for criminals to track finances and for better general privacy. I do hope that others, preferably many others, will mix their BTC as well to make more BTC equal to others... witcher-sense and Karartma1 Thanks as well for the links provided. I now have some reading (likely too advanced for me, still...). * * * General comment. I sense, have no proof of course, that all this "analysis", KYC/AML, PofFunds, etc. is all aimed at making BTC less useful. And by the "usual suspects" (.gov and/or banks). Since converting to BTC costs money (always more than 1% in my experience, often MUCH higher (BTC ATMs)), it's beginning to look like BTC will not be a game-changer for privacy. If the exchanges get overly picky about sources of BTC and make it harder to cash out, then that is bad news AFAIC. Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: fiulpro on August 31, 2020, 10:04:03 PM ... Recently I have wondered about BTC fungibility as mixed BTC and even BTC that has been "ricochetef" a few times retains "taint", meaning, IMO, that there may be some problems when an owner wished to turn BTC into FIAT$, say, at an exchange. Some exchanges apparently do not like heavily tainted BTC it seems... LeGaulois provided an example of a wallet from another thread, showing origins of some of the BTC in a wallet: https://ip.bitcointalk.org/?u=https%3A%2F%2Fi.imgur.com%2F2BQmoxQ.png&t=616&c=7DaDjagrBb0aJg I myself have wallets that are "dirtier" than his, I mix most of the coins I get, but those newly received coins can come from anywhere. My question is: How do "they" mark or tag coins that come from gambling sites, dark markets, mixers, etc? I can understand that stolen BTC could be "tagged" fairly easily (at least until mixed?), but who does that? Who has that authority? See the thing is Bitcoins is not Private, contrary to popular belief Bitcoins is semi-transparent at the same time any transaction can be tracked and rechecked by a number of people which is actually a good thing since this way transactions can be rechecked . This is good when it comes to tackling the problem of corruption or tracking some problematic users but at the same time this has: - Increased value of Virgin coins - Incorrectly blaming people for receiving tainted coins even though they might not have any hand in the illegal stuff People have been using the mixing and blending services now more than ever. Other than that even wallets are now linked to the banks and banks to the particular ID of a person which is very easy to link. This is an issue that does need to be resolved but for a normal bitcoiner I do believe until and unless you are not involved with any illegal activities it is of any significance. Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: Karartma1 on September 01, 2020, 06:58:23 AM * * * General comment. I sense, have no proof of course, that all this "analysis", KYC/AML, PofFunds, etc. is all aimed at making BTC less useful. And by the "usual suspects" (.gov and/or banks). Since converting to BTC costs money (always more than 1% in my experience, often MUCH higher (BTC ATMs)), it's beginning to look like BTC will not be a game-changer for privacy. If the exchanges get overly picky about sources of BTC and make it harder to cash out, then that is bad news AFAIC. I guess your concerns are valid ones. As I've already stated previously, this all started when the link between fiat currencies and crypto got created. 1BTC is 1BTC only when transacting in the Bitcoin realm, otherwise when, for whichever reason, one needs to exchange BTC for fiat, all that we have discussed is unavoidable. Let's see how this unfolds. Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: o_e_l_e_o on September 01, 2020, 11:44:35 AM Since converting to BTC costs money (always more than 1% in my experience, often MUCH higher (BTC ATMs)), it's beginning to look like BTC will not be a game-changer for privacy. The obvious answer to this is to not convert back and forth between BTC and fiat and just stay in BTC as much as possible. Earn bitcoin, accept bitcoin, spend bitcoin.If the exchanges get overly picky about sources of BTC and make it harder to cash out, then that is bad news AFAIC. It's bad news for centralized exchanges. More and more people will be refused service or will rightly stop using them over their shady practices of allowing deposits and then freezing accounts. Such people will move to decentralized exchanges and peer-to-peer trading. The growth of these things is only good for bitcoin and good for privacy. Other than that even wallets are now linked to the banks and banks to the particular ID of a person which is very easy to link. If your wallet is demanding KYC, then you should find a new wallet immediately. This is an issue that does need to be resolved but for a normal bitcoiner I do believe until and unless you are not involved with any illegal activities it is of any significance. Nonsense. Privacy is a fundamental right for everyone, regardless if you are doing anything illegal or not. If you don't think you need privacy, then please post a PDF of your most recent bank statement. Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: Karartma1 on September 01, 2020, 02:53:12 PM Since converting to BTC costs money (always more than 1% in my experience, often MUCH higher (BTC ATMs)), it's beginning to look like BTC will not be a game-changer for privacy. The obvious answer to this is to not convert back and forth between BTC and fiat and just stay in BTC as much as possible. Earn bitcoin, accept bitcoin, spend bitcoin.Chancellor on brink of second bailout for banks This is where it all started, Bitcoin is here to replace to old financial world. Of course, I am not being naive, I do recognize that for the majority of us is not possible to live fully on Bitcoin. But that should always be our end goal. I am pretty confident that one day we will be using Bitcoin only financial instruments or, at least, that's my dream since being into BTC. :) In the end, yes! Just stay in BTC as much as possible. Earn bitcoin, accept bitcoin, spend bitcoin. Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: Bigpiggy01 on September 01, 2020, 04:43:38 PM There have been multiple examples of exchanges, Binance in particular, "flagging" coins and asking users to video document how their coins ended up with them.
This is pretty bloody rich coming from the same exchange that does not care two hoots about having been used to launder hacked coins like the latest Ravencoin debacle. The way I see it, we need more people participating in mixing or this will get out of hand. Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: pooya87 on September 02, 2020, 03:06:52 AM General comment. I sense, have no proof of course, that all this "analysis", KYC/AML, PofFunds, etc. is all aimed at making BTC less useful. And by the "usual suspects" (.gov and/or banks). maybe a handful of them have some government ties but majority of them are just opportunists who have found an area that wasn't saturated already and started a business to make money. that's why we see all these chainanalysis services grow like mushrooms over the past couple of years. and that's why most of their services are pretty crappy too.Quote Since converting to BTC costs money (always more than 1% in my experience, often MUCH higher (BTC ATMs)), it's beginning to look like BTC will not be a game-changer for privacy. If the exchanges get overly picky about sources of BTC and make it harder to cash out, then that is bad news AFAIC. its a bad news for these exchanges and people who want to day trade bitcoin not for bitcoin or bitcoin users.another thing to keep in mind is that the entire system is not mature enough yet. for example how many major popular bitcoin exchanges we have? it is still only a handful. so they all have the power and don't have to compete with anything. if instead the number of exchanges was 50 (keep in mind that it is a global market) and they had to compete to get customers and stay afloat then they could never lose business by closing an account just because it contained a history of coinjoin transactions. additionally if majority of users were using coinjoins and other privacy oriented things then again these exchanges had to close all accounts instead of a select few. with that said i believe that slowly but surely things will change. for example if we look back a couple of years ago (eg. 2012-2013) there were only 1 big exchange (85% of volume) and a bunch of small ones but today there are more users, more exchanges,... this is just a period that we should get past before people realize bitcoin is not just something you trade on a centralized exchange to make fiat profit. Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: Karartma1 on September 02, 2020, 07:40:20 AM General comment. I sense, have no proof of course, that all this "analysis", KYC/AML, PofFunds, etc. is all aimed at making BTC less useful. And by the "usual suspects" (.gov and/or banks). maybe a handful of them have some government ties but majority of them are just opportunists who have found an area that wasn't saturated already and started a business to make money. that's why we see all these chainanalysis services grow like mushrooms over the past couple of years. and that's why most of their services are pretty crappy too.Chainalysis has made $10 million in five years from the U.S. government, with nearly a dozen agencies and a military branch tapping the blockchain forensics firm for everything from tracking tools to training on analyzing network data. All started with a $9,000 data software contract for a 3 letter agency in 2015. But just five years later, Chainalysis is now the cryptocurrency-tracing equivalent of Palantir, the data analytics company flush with lucrative government software contracts. https://www.coindesk.com/inside-chainalysis-multimillion-dollar-relationship-with-the-us-government Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: o_e_l_e_o on September 02, 2020, 09:45:24 AM if instead the number of exchanges was 50 (keep in mind that it is a global market) and they had to compete to get customers and stay afloat then they could never lose business by closing an account just because it contained a history of coinjoin transactions. additionally if majority of users were using coinjoins and other privacy oriented things then again these exchanges had to close all accounts instead of a select few. I don't think governments (certainly not the US government) will ease up on the restrictions and regulations they are placing on centralized exchanges. Centralized exchanges will always be sticking their noses where they don't belong and freezing accounts and seizing coins for trivial reasons. A multiplicity of centralized exchanges won't change that, as they will all have to play by the same rules. The real solution will be when the majority of users are trading freely and privately on decentralized exchanges.Chainalysis has made $10 million in five years from the U.S. government, with nearly a dozen agencies and a military branch tapping the blockchain forensics firm for everything from tracking tools to training on analyzing network data. These companies were not set up or launched by the government, but now that they exist, the government is more than happy to use them. There are many more firms which US government agencies have been paying for their privacy-invading expertise. Here are a few examples you can examine for yourself:Chainalysis - https://www.fpds.gov/ezsearch/fpdsportal?indexName=awardfull&templateName=1.5.1&s=FPDS.GOV&q=VENDOR_FULL_NAME%3A%22CHAINALYSIS+INC.%22 Elliptic - https://www.fpds.gov/ezsearch/fpdsportal?indexName=awardfull&templateName=1.5.1&s=FPDS.GOV&q=VENDOR_FULL_NAME%3A%22ELLIPTIC+INC.%22 CipherTrace - https://www.fpds.gov/ezsearch/fpdsportal?indexName=awardfull&templateName=1.5.1&s=FPDS.GOV&q=VENDOR_FULL_NAME%3A%22CIPHERTRACE%2C+INC.%22 Coinbase - https://www.fpds.gov/ezsearch/fpdsportal?indexName=awardfull&templateName=1.5.1&s=FPDS.GOV&q=VENDOR_FULL_NAME%3A%22COINBASE%2C+INC.%22 Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: Karartma1 on September 02, 2020, 09:59:08 AM Chainalysis has made $10 million in five years from the U.S. government, with nearly a dozen agencies and a military branch tapping the blockchain forensics firm for everything from tracking tools to training on analyzing network data. These companies were not set up or launched by the government ...Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: Killrbit on September 02, 2020, 12:29:41 PM if instead the number of exchanges was 50 (keep in mind that it is a global market) and they had to compete to get customers and stay afloat then they could never lose business by closing an account just because it contained a history of coinjoin transactions. additionally if majority of users were using coinjoins and other privacy oriented things then again these exchanges had to close all accounts instead of a select few. I don't think governments (certainly not the US government) will ease up on the restrictions and regulations they are placing on centralized exchanges. Centralized exchanges will always be sticking their noses where they don't belong and freezing accounts and seizing coins for trivial reasons. A multiplicity of centralized exchanges won't change that, as they will all have to play by the same rules. The real solution will be when the majority of users are trading freely and privately on decentralized exchanges.Exactly this I think the only real solution is dexes, and seeing the current volumes on uniswap is really encouraging, wether that is part of the current Defi trend, or a long term trend is still up in the air though. However with regard to a Dex can anyone think of a way where the government could impose restrictions or some form penalties on the facilitators(maybe the operators of the dex) or perhaps by tainting any coins that pass through them. Also how how would one implement a Dex or another solution for say bitcoin. Assuming you don't want to use wrapped coins Chainalysis has made $10 million in five years from the U.S. government, with nearly a dozen agencies and a military branch tapping the blockchain forensics firm for everything from tracking tools to training on analyzing network data. These companies were not set up or launched by the government, but now that they exist, the government is more than happy to use them. There are many more firms which US government agencies have been paying for their privacy-invading expertise. Here are a few examples you can examine for yourself:Chainalysis - https://www.fpds.gov/ezsearch/fpdsportal?indexName=awardfull&templateName=1.5.1&s=FPDS.GOV&q=VENDOR_FULL_NAME%3A%22CHAINALYSIS+INC.%22 Elliptic - https://www.fpds.gov/ezsearch/fpdsportal?indexName=awardfull&templateName=1.5.1&s=FPDS.GOV&q=VENDOR_FULL_NAME%3A%22ELLIPTIC+INC.%22 CipherTrace - https://www.fpds.gov/ezsearch/fpdsportal?indexName=awardfull&templateName=1.5.1&s=FPDS.GOV&q=VENDOR_FULL_NAME%3A%22CIPHERTRACE%2C+INC.%22 Coinbase - https://www.fpds.gov/ezsearch/fpdsportal?indexName=awardfull&templateName=1.5.1&s=FPDS.GOV&q=VENDOR_FULL_NAME%3A%22COINBASE%2C+INC.%22 [/quote] I think the biggest in the bunch here is coin base I mean it is still the go to exchange for most people's first crypto purchases, so it could be very easy for a centralized govt to create issues for users ( freezing accounts and such ) which could harm a lot of innocent people how many have no idea regarding the origin of some their coins. Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: o_e_l_e_o on September 02, 2020, 12:49:18 PM perhaps by tainting any coins that pass through them. It is very difficult to track coins which are traded through a true DEX, for the exact reason that there is no centralized wallet to which the coins must first be deposited. In some cases the coins pass directly from one person to another, and in others they pass first of all through a multi-sig escrow address which is a single use address and is indistinguishable from other multi-sig addresses. Blockchain analysis fails in these cases, and the only way to reliably track these trades would be to infiltrate the DEX in question.Further, even if government's did manage to taint coins being traded peer-to-peer, then who cares? Provided you don't use centralized exchanges, it doesn't actually matter if they think your coins are tainted or not. Also how how would one implement a Dex or another solution for say bitcoin. Fiat to bitcoin (and vice versa) DEXs already exist. Look at Bisq as a great example.Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: Killrbit on September 02, 2020, 03:05:11 PM perhaps by tainting any coins that pass through them. It is very difficult to track coins which are traded through a true DEX, for the exact reason that there is no centralized wallet to which the coins must first be deposited. In some cases the coins pass directly from one person to another, and in others they pass first of all through a multi-sig escrow address which is a single use address and is indistinguishable from other multi-sig addresses. Blockchain analysis fails in these cases, and the only way to reliably track these trades would be to infiltrate the DEX in question.Yes but while there may be no centralized wallet there is always the issue of the individual/organization controlling the Dex correct. For example the Ether delta case where the sec bought charges against its founder Zachary Coburn. Source: https://www.sec.gov/news/press-release/2018-258 Further, even if government's did manage to taint coins being traded peer-to-peer, then who cares? Provided you don't use centralized exchanges, it doesn't actually matter if they think your coins are tainted or not. Yea assuming you don't use a centralized exchange then that's fine, but how practical is that for the average user. For instance lets say an individual has received payment for goods and services provided in ether how could he then possibly know if said payment includes tainted coins or not (assuming it eventually gets identified as being tagged somewhere down the line). And wouldn't this then be harmful for the long term adoption of cryptocurrencies as a payment mechanism. Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: o_e_l_e_o on September 02, 2020, 03:13:51 PM Yes but while there may be no centralized wallet there is always the issue of the individual/organization controlling the Dex correct. That's why I specifically mentioned Bisq.Not only is Bisq a decentralized exchange, but the Bisq platform itself is decentralized. You run the software yourself on your own computer, and connect directly to other users via Tor. Just like with bitcoin, even if governments shutdown the the website, shutdown the GitHub, stopped the developers from working on it, you can still run it yourself and connect to other users. Yea assuming you don't use a centralized exchange then that's fine, but how practical is that for the average user. Sure, using DEXs is currently not as easy as using centralized exchanges, but that doesn't make it impossible for the average user. With the caveat I mentioned above, that the real long term solution is the proliferation of DEXs until they have become the "standard" way of buying and selling bitcoin, then I don't see this as an issue.For instance lets say an individual has received payment for goods and services provided in ether how could he then possibly know if said payment includes tainted coins or not (assuming it eventually gets identified as being tagged somewhere down the line). And wouldn't this then be harmful for the long term adoption of cryptocurrencies as a payment mechanism. An individual cannot possibly know all the different algorithms that different centralized services are using to tagged coins as "tainted". But as I said above, this is bad for the long term outlook of centralized exchanges - they are adopting an untenable position that will be impossible for them to continually enforce as time goes on. I don't see this as bad for bitcoin. If anything, it will encourage people to use more peer-to-peer and decentralized services, which I see as a positive.Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: pooya87 on September 03, 2020, 07:18:25 AM if instead the number of exchanges was 50 (keep in mind that it is a global market) and they had to compete to get customers and stay afloat then they could never lose business by closing an account just because it contained a history of coinjoin transactions. additionally if majority of users were using coinjoins and other privacy oriented things then again these exchanges had to close all accounts instead of a select few. I don't think governments (certainly not the US government) will ease up on the restrictions and regulations they are placing on centralized exchanges. Centralized exchanges will always be sticking their noses where they don't belong and freezing accounts and seizing coins for trivial reasons. A multiplicity of centralized exchanges won't change that, as they will all have to play by the same rules. The real solution will be when the majority of users are trading freely and privately on decentralized exchanges.they will surely keep forcing KYC but it is different from freezing an account just because it had a transaction history that might have been coinjoin related. and whenever a state or even a country forces ridiculous laws the companies simply relocate their headquarters as it has happened multiple times in the past. there are lots of other countries that don't have such stupid rules they can go to or even a new exchange can be created there. the later is what i meant about multiplicity of CEX but i agree that the ultimate solution is using DEX all the way. Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: Killrbit on September 03, 2020, 07:53:18 AM if instead the number of exchanges was 50 (keep in mind that it is a global market) and they had to compete to get customers and stay afloat then they could never lose business by closing an account just because it contained a history of coinjoin transactions. additionally if majority of users were using coinjoins and other privacy oriented things then again these exchanges had to close all accounts instead of a select few. I don't think governments (certainly not the US government) will ease up on the restrictions and regulations they are placing on centralized exchanges. Centralized exchanges will always be sticking their noses where they don't belong and freezing accounts and seizing coins for trivial reasons. A multiplicity of centralized exchanges won't change that, as they will all have to play by the same rules. The real solution will be when the majority of users are trading freely and privately on decentralized exchanges.they will surely keep forcing KYC but it is different from freezing an account just because it had a transaction history that might have been coinjoin related. Yes as the use of bitcoin increases as a payment mechanism, it is natural that governments in order to protect their own monopoly will force centralized exchanges to start freezing tainted accounts ( many already black list wallets with hacked coins), but what about real world transactions, could someone eventually try and blacklist wallets containing coins with a tainted history lets say wallets containing laundered coins or coins that have been passed through a mixer or Dex even if the current owner could seemingly prove that it was unknown to him when he acquired said coins. i think most wallets would contain some amount of coins like these, perhaps a centralized authority would try to blacklist them if it contains tainted coins above a certain threshold ( maybe above 25% - 30% or so). I get that something like this would be very difficult to enforce assuming the use of bitcoin has proliferated in the hands of enough people and is used as an everyday payment mechanism , which is way i mentioned that they might try and target wallets above a certain threshold. Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: Killrbit on September 03, 2020, 08:37:57 AM Yes but while there may be no centralized wallet there is always the issue of the individual/organization controlling the Dex correct. That's why I specifically mentioned Bisq.Not only is Bisq a decentralized exchange, but the Bisq platform itself is decentralized. You run the software yourself on your own computer, and connect directly to other users via Tor. Just like with bitcoin, even if governments shutdown the the website, shutdown the GitHub, stopped the developers from working on it, you can still run it yourself and connect to other users. So i did some reading up on bisq and from what i could gather it does seem on a technical level to be what an ideal Dex should be like, and an exchange that could resist to a very large degree centralized censorship. here are a few reviews on it that i read if anyone's interested 1) https://cryptogeek.info/en/exchanges/bisq 2) https://www.cointelligence.com/exchanges_list/bisq/ But the recent hack on it a few months back does show that it is still exploitable. An attacker here was able to change other users’ default fallback address for a failed trade to one controlled by him. Source: https://www.coindesk.com/hacker-exploits-flaw-in-decentralized-exchange-bisq-to-steal-250k Another question i had with regard to bisq was the fiat gateway and payment methods. Since a user would have to provide his own account details in order to receive or make a payment in fiat wouldn't this then open up its own risks, and couldn't a centralized authority then use this as way to trace a user and link bitcoins to their original sources ? 1) https://docs.bisq.network/payment-methods.html Sure, using DEXs is currently not as easy as using centralized exchanges, but that doesn't make it impossible for the average user. yes and this should only become easier with time as User interfaces gradually improve and we start seeing volumes on them, most definitely some thing to look forward to. Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: o_e_l_e_o on September 03, 2020, 11:25:38 AM and whenever a state or even a country forces ridiculous laws the companies simply relocate their headquarters as it has happened multiple times in the past. Sure, but they can still be prevented from operating in a country or state unless they comply with specific rules and regulations, regardless of where they are headquartered.perhaps a centralized authority would try to blacklist them if it contains tainted coins above a certain threshold ( maybe above 25% - 30% or so). I'm not sure I follow you here. Bitcoin itself does not have a central authority. Centralized exchanges, services, websites, etc., are free to blacklist coins, since they are private businesses and can essentially do what they like. There is no central authority which could blacklist coins from being transferred or sent to another address altogether, though. The only way to do that would be with a fork which the community would never agree to.Another question i had with regard to bisq was the fiat gateway and payment methods. Since a user would have to provide his own account details in order to receive or make a payment in fiat wouldn't this then open up its own risks, and couldn't a centralized authority then use this as way to trace a user and link bitcoins to their original sources ? With Bisq, you only provide your fiat payment details to the other party, not to Bisq itself. Having said that, a government agency could still pose as a buyer on Bisq to collect bank details of people trying to trade. If this is a particular concern of yours, then you should look in to anonymous payment methods such as cash or anonymous money orders.Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: Cryptocurrency Hunter on September 03, 2020, 12:57:11 PM They label Bitcoin badly. In doing so, they accuse it of money laundering.I think Bitcoin decentralized has a successful sheltered system so sometimes I see good tags and get happy transfer money securely to each other in seconds with sample Bitcoin or it is a great app to buy an item. I think these tags are way better for Bitcoin.
Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: bitcoindusts on September 03, 2020, 01:03:54 PM Since converting to BTC costs money (always more than 1% in my experience, often MUCH higher (BTC ATMs)), it's beginning to look like BTC will not be a game-changer for privacy. The obvious answer to this is to not convert back and forth between BTC and fiat and just stay in BTC as much as possible. Earn bitcoin, accept bitcoin, spend bitcoin.If that so, how can one identify the value of BTC? And since BTC is created as currency, we cannot avoid linking fiat currency to BTC. Old world is always linked to new world same with finances. I am pretty confident that one day we will be using Bitcoin only financial instruments or, at least, that's my dream since being into BTC. :) Well, we are already using Bitcoin as financial instrument but I think it is too much for a dream for Bitcoin to the only financial instrument to be use in this world and this will never happen. In the end, yes! Just stay in BTC as much as possible. Earn bitcoin, accept bitcoin, spend bitcoin. If only all merchants will accept Bitcoin as it is. Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: Killrbit on September 03, 2020, 04:21:47 PM and whenever a state or even a country forces ridiculous laws the companies simply relocate their headquarters as it has happened multiple times in the past. Sure, but they can still be prevented from operating in a country or state unless they comply with specific rules and regulations, regardless of where they are headquartered.perhaps a centralized authority would try to blacklist them if it contains tainted coins above a certain threshold ( maybe above 25% - 30% or so). I'm not sure I follow you here. Bitcoin itself does not have a central authority. Centralized exchanges, services, websites, etc., are free to blacklist coins, since they are private businesses and can essentially do what they like. There is central authority which could blacklist coins from being transferred or sent to another address altogether, though. The only way to do that would be with a fork which the community would never agree to. What I meant here was not whether bitcoin has a central authority to stop the movement of blacklisted coins, one can always move your coins on a peer to peer basis. But that the state could perhaps stop you or at the very least make it difficult for you to use wallets where chain analysis can prove that a large portion of the coins in said wallet can be traced back to a tainted wallet/source. Assuming of course that chain analysis becomes more sophisticated in the future as well.( while we are talking about chain analysis how effective do you think chain hopping is as a way of obscuring data from chain analysis companies) And by stop or hinder i don't mean on a peer to peer basis but perhaps when an everyday average user who may have bought some bitcoin from a friend and is now trying to use this to make a payment at say a starbucks or a Walmart. ( wouldn't this then negatively effect the adoption of bitcoin as a day to day payment mechanisim) Again maybe all this could be rendered moot once we can implement schnorr signatures and taproot or some other future privacy features. Thoughts ? Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: o_e_l_e_o on September 03, 2020, 06:26:49 PM -snip- There will always be ways to obfuscate where your coins came from - mixers, coinjoin, payjoin, peer-to-peer trading, atomic swaps to and from Monero, and so on. If a state does blacklist your address, there will always be a way around it.It also becomes an impossible task as time goes on. Because of all the things I've just mentioned, particularly mixers and coinjoins, tainted coins regularly get mixed in among other circulating coins. Lets say there is a coinjoin with 1 tainted input and 50 outputs. Are all those outputs now tainted? What if all those outputs are later coinjoined again somewhere down the line, with another 50 outputs each. Are all 2500 outputs now tainted? If you look far enough back in time, then the majority of coins in active circulation can be claimed to be tainted in some way or another. With the growth of DEXs, mixers, coinjoins, etc., this is only going to get worse as time goes on. You obviously can't blacklist every address, so then you must choose a completely arbitrary cut off for how far back in time you look. 5 transactions? 10? 20? Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: moni3z on September 03, 2020, 10:46:31 PM If you remember legendary scammer 'pirateat40' the SEC had completely tracked every coin he spent and detailed how they did this in their court filing, look it up
Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: bearexin on September 04, 2020, 04:27:46 AM Exchanges marking bitcoins as tainted, or whatever they say it is, is totally wrong and is just a way for them to steal money. I know it might be possible with some help of some software to identify an address that is owned by a criminal, but it’s impossible to identify when the coins has been sent to an innocent person. There are people who buy their coins peer-to-peer, like some of my friends who send and receive bitcoins among themselves.
So, assuming that one of them was involved in a criminal activity and their coin is tainted, and they send it to another friend who is completely innocent, so the receiver will then have to suffer for something they have no clue about? Well, I know they are just doing all these things to keep the market safe. Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: Killrbit on September 05, 2020, 10:42:39 AM I know it might be possible with some help of some software to identify an address that is owned by a criminal, but it’s impossible to identify when the coins has been sent to an innocent person. There are people who buy their coins peer-to-peer, like some of my friends who send and receive bitcoins among themselves. So, assuming that one of them was involved in a criminal activity and their coin is tainted, and they send it to another friend who is completely innocent, so the receiver will then have to suffer for something they have no clue about? Well, I know they are just doing all these things to keep the market safe. This is exactly what i fear. The thing is Bitcoin today is still just a drop in the ocean retaliative to the financial world. And i could very well imagine that as it starts to have a greater footprint in the financial world, at least large enough to make a government feel threatened, u could start seeing them taking increasingly arbitrary actions like this as a way to discourage the little guy from using/ adopting Bitcoin. (And yes while there plenty of precautions one can take to avoid a scenario like this how, how practical would that be to do for an everyday user who simply wants to buy a cup of coffee ) Now that's not to say how effective or feasible such arbitrary measures would be once Bitcoin proliferates in the hands of enough people (or with the implementation of privacy features) which is why i thought maybe they would try and target wallets containing more then a certain threshold of tainted coins. But history is on our side here, with governments time and time again trying to curtail a popular technology only to inevitably fail with massive blow-back. The printing press comes to mind. Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: o_e_l_e_o on September 05, 2020, 11:27:52 AM And yes while there plenty of precautions one can take to avoid a scenario like this how, how practical would that be to do for an everyday user who simply wants to buy a cup of coffee It's probably worth pointing out that the entities freezing accounts or seizing coins are, to date, only centralized exchanges and centralized payment processors. I have spent bitcoin directly from mixers and from coinjoins at countless websites and physical merchants, and never once encountered a problem with where my coins came from or even been asked the question.In terms of the "cup of coffee" scenario, then long term this is likely a payment which would be being made over Lightning as opposed to on the main chain. Onion routing would solve this problem completely, as the merchant wouldn't even know the source of the coins, let alone whether or not they are tainted. target wallets containing more then a certain threshold of tainted coins. Provided you have not handed out your xpub or linked your addresses together in the same transactions, then it is impossible to even tell which two addresses belong to the same wallet.But history is on our side here, with governments time and time again trying to curtail a popular technology only to inevitably fail with massive blow-back. Bitcoin is designed to be censorship resistant. They can blacklist as many different addresses or UTXOs as they like. Nothing can stop people from trading peer to peer.Title: Re: How do "they" tag BTC (from gambling, mixers, dark markets, etc.)? Post by: Reatim on December 24, 2020, 02:00:31 AM In past gambling sites are very common place where people use to mix their coins because of different addresses and masking their identity .
But nowadays gambling sites Will hold your account if they're Logs triggered by something close to mixing activities. and also there are Mixing company that has been closed or freezed by authorities because of this kind of activities. Having more strict rules and tools will prevent this from happening though sites is gaining really big on this. |
