bitcoin from illegal activities

[helloeverybody]

The process is always irreversible. Once you have the tainted coins, they an only be used for illegal actions and will never be exchanged to the get the bitcoins that are very clean. I however do believe that with time, this whole issue of tainted coins will be done away with. These are some of the things that have made it very difficult for the bitcoin to be accepted as a legal currency in most of the countries. Doing away with them will be of great value  to the world of clean bitcoins.

It should be a non issue, something like 90% (dont quote me on that) of bank notes have some coke residue and fiat is the number one currency used for buying and selling drugs. If you could track down which notes had specifically been used you wouldnt call them tainted, This isnt and shouldnt be an issue in the bitcoin world. i cant help it if i buy something and in turn get coins that were used for illegal activities.

[Erkallys]

Since this is a purely psychological aspect, there is no way to "clean it". By mixing you would just give it to another people, who wouldn't know about it and won't ever know since it is written nowhere.

[Wrc0427]

How many btc did you steal op?

[owm123]

Bitcoins used in illegal activities are called "tainted coins". As far as I know there is no way to 'clean' tainted coins other than mix it.
There never be any other service where you will be able to exchange 'tainted coins' for 'fresh coins'. Tainted coins will be tainted forever.

What about this one?:
Mint Exchange Service for Newly Mined Coins Rebuffs Bitcoin’s Fungibility
http://cointelegraph.com/news/114806/mint-exchange-service-for-newly-mined-coins-rebuffs-bitcoins-fungibility

[btvGainer]

Bitcoins used in illegal activities are called "tainted coins". As far as I know there is no way to 'clean' tainted coins other than mix it.
There never be any other service where you will be able to exchange 'tainted coins' for 'fresh coins'. Tainted coins will be tainted forever.

How can tainted coins be identified? How do we know the coins we are receiving or buying are not illegal or tainted?.Does it makes any difference if we have tainted coins?

[Kprawn]

You could consider passing your coins through multiple mixers to reduce the change that the government owns the lot of them... it will just cost you more in fees, but you will

have a better chance that these coins would be cleaned. It is not just criminals that need to mix their coins... many ordinary people might have received tainted coins for

payment for legal services rendered or for products sold. I use these mixers for that reason... you do not want to find out later that your coins was tainted and then they get

confiscated, if they get to your private keys.   

[owm123]

Bitcoins used in illegal activities are called "tainted coins". As far as I know there is no way to 'clean' tainted coins other than mix it.
There never be any other service where you will be able to exchange 'tainted coins' for 'fresh coins'. Tainted coins will be tainted forever.

How can tainted coins be identified? How do we know the coins we are receiving or buying are not illegal or tainted?.Does it makes any difference if we have tainted coins?

If you have tainted coins, drams like this one can be possible:
https://www.reddit.com/r/Bitcoin/comments/3mea6b/bitpay_is_blacklisting_certain_bitcoins_rejecting

And this happens because bitcoin is not fungible.

Lack of fungability means that 2 different bitcoins are not equal to each other. For example, freshly mined 1 bitcoin is considered more valuable than already used 1 bitcoin:
http://cointelegraph.com/news/114806/mint-exchange-service-for-newly-mined-coins-rebuffs-bitcoins-fungibility

Lack of fungability, can mean also that bitcoin may never see mass market adoption, as fungability is fundamental property of money:
http://jpkoning.blogspot.co.id/2016/01/what-makes-money-special-lawyers.html

And because bitcoin is not anonymous, tracking transactions and identifying users is possible. More resources about bitcoin being not anonymous are here: http://www.bitcoinisnotanonymous.com/

[jonald_fyookball]

- snip -
Imagine the following scenario:
- snip -

Ok, now imagine this scenario:

Alice buys 1 BTC from coinbase after confirming her identity.
Alice sends the 1 BTC through a mixer to an undercover DEA agent online to buy cocaine and supplies her mailing address.
Instead of shipping the cocaine, the DEA knocks down her door and arrests her.
She tries to claim that someone else must have ordered and paid for the cocaine to be delivered to her address to "set her up".
Since the DEA is running the mixer, they can prove that the bitcoins that were sent from her coinbase account were destined for the DEA undercover agent's address.

well... They wont have her address. But that's beside the main point that taint isnt by itself conclusivr.

[DannyHamilton]

- snip -
Imagine the following scenario:
- snip -

Ok, now imagine this scenario:

Alice buys 1 BTC from coinbase after confirming her identity.
Alice sends the 1 BTC through a mixer to an undercover DEA agent online to buy cocaine and supplies her mailing address.
Instead of shipping the cocaine, the DEA knocks down her door and arrests her.
She tries to claim that someone else must have ordered and paid for the cocaine to be delivered to her address to "set her up".
Since the DEA is running the mixer, they can prove that the bitcoins that were sent from her coinbase account were destined for the DEA undercover agent's address.

well... They wont have her address. But that's beside the main point that taint isnt by itself conclusivr.

Of course they will.

She gave it to them to get the delivery.

Anyhow, I never said that taint "by itself is conclusive".  However, it can be used along with other circumstantial evidence to build a case and it can be used to refute defense claims that you might try to make.  It also might be used for probable cause when trying to acquire a search warrant.

Furthermore, it can be useful for building up a map of communications lines and interactions.  I'd be really surprised if law enforcement agencies weren't running mixers and building databases from the information they gather even if they never use any of it in court.

[unent]

The process is always irreversible. Once you have the tainted coins, they an only be used for illegal actions and will never be exchanged to the get the bitcoins that are very clean...

The US Marshalls auctioned off the dirty tainted Silk Road coins they confiscated. Those coins couldn't have got much dirtier, but they were clean after they had been auctioned off. We knew the addresses the US Marshalls stored them in, and any buyers can prove where they came from. The coins are now clean because all the buyers can say "I purchased them from the police".

[ATguy]

Lack of fungability means that 2 different bitcoins are not equal to each other. For example, freshly mined 1 bitcoin is considered more valuable than already used 1 bitcoin:
http://cointelegraph.com/news/114806/mint-exchange-service-for-newly-mined-coins-rebuffs-bitcoins-fungibility

It is just psychological thing. The newly mined coins can be later tainted as well if the miner did not paid the right income tax from the mining. So I dont see any difference here from any random Bitcoins, random cash bill note or money on my bank account received.

[owm123]

Lack of fungability means that 2 different bitcoins are not equal to each other. For example, freshly mined 1 bitcoin is considered more valuable than already used 1 bitcoin:
http://cointelegraph.com/news/114806/mint-exchange-service-for-newly-mined-coins-rebuffs-bitcoins-fungibility

It is just psychological thing. The newly mined coins can be later tainted as well if the miner did not paid the right income tax from the mining. So I dont see any difference here from any random Bitcoins, random cash bill note or money on my bank account received.

Its not a psychological thing. Fungability issue is a potentially big problem, and bitcoin core devs clearly acknowledge  this:
https://github.com/bitcoin/bitcoin/issues/6568

[johnyj]

I don't think mining equipment maker currently are regulated by AML/KYC rules, so you can guess lots of money laundering activities are targeting them. They are not regulated for the same reason that AML/KYC rules does not apply to FED, who is the money creator. However, kncminer just had its swedbank account shutdown by their bank, so it seems if the fiat money is involved, it will not work well even if it crosses boarder

Besides mining company, there are alt-coin exchanges that do not require id verification, but I think it is just a matter of time for all these crypto currency hubs to be regulated. I just saw http://blockchainalliance.org/ where most of the large exchanges/wallets are cooperating to combat criminal activities, they have realized that without a clear stance on this their business will be banned by the government world wide

[smoothie]

there is no other way other than mixing, it is what it was done with the siezed coins from us marshal office in 2014

future solution
make silk road only use 'dash' (darkcoin)
then let the druggies play with dash coins illegally and then swap for clean bitcoins. that way bitcoin doesnt touch silkroad directly

Why use Dash when it is documented by multiple users that sending say 1000 DASH takes several days using "DARKSEND".

hi folks,

using darksend for the first time and have to say its takin ages to complete. i set it to four rounds and its mixing since 20h now!

This user ^ sent me a PM saying it took several days although his post here says 20 hours (I'm guessing that it was with a smaller amount of dash.) Which makes it appear that the larger the transaction, the longer it takes.



Just use Monero (XMR). Use a mixin above 10 when sending a transaction and it takes a few seconds to send.

[ObscureBean]

I'm not sure I understand this, why exactly would it matter that a specific Bitcoin was at one point used in an illegal transaction? Surely people cannot be that hypocritical. I'm fairly certain most of us have at one point handled laundered money without knowing but nobody seem to care about that.

[smooth]

I'm not sure I understand this, why exactly would it matter that a specific Bitcoin was at one point used in an illegal transaction? Surely people cannot be that hypocritical. I'm fairly certain most of us have at one point handled laundered money without knowing but nobody seem to care about that.

Because there is a giant database in the sky that records, forever, exactly where those Bitcoin came from and where they go. There is no such database for money you physically handle.

If satoshi could have figured out how to make Bitcoin work without everything having a public and traceable permanent record, he would have, but he couldn't. He even posted about that a few times.

@jonald_fyookball even in your original case, Bob is not going to want to touch those coins because he doesn't want the DEA coming to his door (shooting his dog, etc.) whether he is selling drugs or not. In fact, especially if he isn't. So at that point when he has to be careful where his Bitcoins come from and what they have been associated with, fungibility is already lost. Coinbase/Bitpay users are already in this situation, whether they know it or not.

You have people on this thread saying the exact same thing. They pay to mix their coins (and hope they aren't getting dirty coins back) just because they are worried about where they came from. Now you have mixed coins, or coins that come from a known-legal source, worth more than unmixed unknown-source coins. That's also not fungible.

[ObscureBean]

Because there is a giant database in the sky that records, forever, exactly where those Bitcoin came from and where they go. There is no such database for money you physically handle.

Ok fine but that still doesn't explain why people should care where the Bitcoin has been. I mean you've got a clear conscience, you haven't done anything illegal so what's the problem? I'm even reading comments where people are suggesting that a 'used' Bitcoin could be viewed as being worth less than a freshly mined one. Like what?? 

[smooth]

Because there is a giant database in the sky that records, forever, exactly where those Bitcoin came from and where they go. There is no such database for money you physically handle.

Ok fine but that still doesn't explain why people should care where the Bitcoin has been. I mean you've got a clear conscience, you haven't done anything illegal so what's the problem?

I 100% don't care what you did with your Bitcoin.

Other people care. I may or may not care that they care. For example, if I hypothetically have a Coinbase account and hypothetically find it useful and don't want it to get closed, nor have reports filed with the government over my "suspicious activity" then I hypothetically might try to avoid Bitcoin that have been involved with so-called "bad" activities (or sending Bitcoin to people likely to do so).

I'm even reading comments where people are suggesting that a 'used' Bitcoin could be viewed as being worth less than a freshly mined one. Like what?? 

It absolutely is worth less, if people are willing to pay to mix it or pay more to exchange for "clean" coins, or pay a premium to buy miners with it that have a virtually guaranteed negative ROI. It doesn't even matter what their reason is. As long as that's the market, then that's the market.

[khalized]

"Pecunia non olet"
As Latin said, Money don't Smell!

after a mixing all money are "good". the same with fiat cash, we can give money/accept money, from the baddiest business, but it's not our fault, a lot of cash is marked with blood.

[ObscureBean]

Because there is a giant database in the sky that records, forever, exactly where those Bitcoin came from and where they go. There is no such database for money you physically handle.

Ok fine but that still doesn't explain why people should care where the Bitcoin has been. I mean you've got a clear conscience, you haven't done anything illegal so what's the problem?

I 100% don't care what you did with your Bitcoin.

Other people care. I may or may not care that they care. For example, if I hypothetically have a Coinbase account and hypothetically find it useful and don't want it to get closed, nor have reports filed with the government over my "suspicious activity" then I hypothetically might try to avoid Bitcoin that have been involved with so-called "bad" activities (or sending Bitcoin to people likely to do so).

I'm even reading comments where people are suggesting that a 'used' Bitcoin could be viewed as being worth less than a freshly mined one. Like what?? 

It absolutely is worth less, if people are willing to pay to mix it or pay more to exchange for "clean" coins, or pay a premium to buy miners with it that have a virtually guaranteed negative ROI. It doesn't even matter what their reason is. As long as that's the market, then that's the market.

I get what you're saying, I just think it would be pretty shitty/unfortunate if Bitcoin heads down that path. I understand that people are free to decide that this Bitcoin is worth more to them than the identical one next to it but somehow it just feels wrong. Maybe that's just me.