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Author Topic: laundering Bitcoins  (Read 1065 times)
granolageek
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December 21, 2012, 07:38:54 PM
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I do understand the principle of laundering bitcoin to reduce its traceability. However, all the services I've found seem expensive, and it's unclear what traffic they have. There's little point in the exercise if half of what gets passed on are the original coins I sent.

I saw a suggestion somewhere of simply parking the coins at Mt Gox for awhile. I'm wondering if Mt Gox is set up so this would work. The traffic there is certainly adequate.

It seems that the various webwallets wouldn't work. If it's truly a wallet, I'd get exactly the same coins back. But if Mt Gox has a common pile of coins, and simply keeps track of how many (but not which) belong to each account holder, it should work. Any coins passed from Mt Gox to another party would only be traceable back to Mt. Gox. Knowing deposited a given coin would give no information about who spent it.

Anyway, would this idea work, and if it would work in principle, would it work at Mt. Gox?

Thanks
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Stephen Gornick
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December 21, 2012, 07:58:49 PM
 #2

I saw a suggestion somewhere of simply parking the coins at Mt Gox for awhile. I'm wondering if Mt Gox is set up so this would work. The traffic there is certainly adequate.

Read this:

Quote
Reply from the Japanese FSA is overall positive for #MtGox now waiting for the official papers confirming this before publishing an announce
- https://twitter.com/MagicalTux/status/257071913870966784

Then this:

Quote
We may also share Members' Personal Information with law enforcement or regulatory agencies, as may be required by law
- https://mtgox.com/privacy_policy

Then this:

Quote
* Please be advised that accessing your account via the Tor network and/or public proxies may result in a temporary suspension of your account, and having to submit AML documents.
- https://mtgox.com/signup

You will probably realize that your quest for transaction privacy does not flow through an exchange.


It seems that the various webwallets wouldn't work. If it's truly a wallet, I'd get exactly the same coins back.

Mt. Gox offers a hosted (shared) E-Wallet.  That means you are not depositing into your own wallet but into an address in the E-Wallet provider's wallet:
 - http://en.bitcoin.it/wiki/EWallet

Quote
But if Mt Gox has a common pile of coins, and simply keeps track of how many (but not which) belong to each account holder, it should work. Any coins passed from Mt Gox to another party would only be traceable back to Mt. Gox. Knowing deposited a given coin would give no information about who spent it.

You make assumptions about what is logged and what is not.  Unless they specifically state that they do not log which bitcoin address funded which Mt. Gox user account, then you probably should assume that every bitcoin transaction in or out of the wallet is tied to an account on the exchange.   I don't know if this logging happens or how long it is retained but I do not remember ever seeing any claim by them that these transactions are not logged.

Instawallet claims to not retain this information for a very long period of time.

Blockchain.info/wallet offers a mixing service.
 - https://blockchain.info/wallet/send-anonymously
granolageek
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December 21, 2012, 08:31:27 PM
 #3

Thanks for pointing out the bitinfo service. It's got great documentation, but it starts about 3 levels deep. It's also the lowest cost I've seen.
geniusboy91
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December 22, 2012, 03:42:37 AM
 #4

Don't tumbling services do this for you? And those are pretty cheap I thought.
CountSparkle
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December 22, 2012, 04:50:33 AM
 #5

Just use Instawallet.org. It uses a common wallet for all addresses, so if you create a new Instawallet wallet, send your BTC there, and withdraw as soon as you're able, you will get someone else's coins. Same service as a tumbler or a mixer, but for free. Use Tor for even more anonymity.
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December 22, 2012, 11:58:55 AM
 #6

Why it is necessary to launder bitcoins anyway?

Buy Ukash Vouchers Online With Bitcoin (http://www.safevouchers.com)
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December 22, 2012, 04:32:34 PM
 #7

Why it is necessary to launder bitcoins anyway?

Launder is a term with a specific meaning.  

The term Money Laundering in Wikipedia reads: "the process of concealing the source of money obtained by illicit means".

But the desire for transaction privacy may have nothing to do with illicit actions or concealment.  It simply means Bitcoin transactions are traceable and I don't want my transactions traceable for whatever reason.

Maybe I want to donate to an organization that I might not publicly wish to be associated with.  Or maybe I'm spending from my offline (savings) wallet and don't want anyone to be able to figure out how much is in there.  Whatever.   It's my business and nobody else's.     And mixing services help me overcome how bitcoin transactions are traceable.
granolageek
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December 22, 2012, 09:14:16 PM
 #8

Why it is necessary to launder bitcoins anyway?

Perish forbid that I should do anything illegal, but it turns out that I can buy asthma inhalers in India, and Wellbutrin on Silk Road for far less than at my neighborhood pharmacy. I have valid prescriptions for both items, but could save $30/month on each on the black market. Bitcoin is the only "rule abiding" way of buying prescription drugs from India, and the only way to buy anything on Silk Road.

I'm not worried about inhalers from India -- they might get confiscated, but the feds don't want the bad PR of prosecuting life-saving meds. However if they got Silk Road, they'd likely come after everyone they could trace. As long as I were to PGP my shipping address, bitcoin would be the only way back to me. (Even if the NSA can crack PGP, they won't out themselves for even that level of drug bust.)
CountSparkle
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December 22, 2012, 09:46:24 PM
 #9

A combination of Instawallet and Silk Road's built in tumbler should keep you safe. Be careful with Wellbutrin, though. Not because someone on AT can send you shoddy merch, but because news recently came out that the company that actually manufactures it changed the formula about 5 years ago and made it completely ineffective. Search for the news on google.
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December 23, 2012, 06:55:49 AM
 #10

Use small traders around the place who will send you cash in the mail or similar.

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atifkhan
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December 25, 2012, 07:32:07 PM
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I think blockchain offer this service and the coins are sent from a totally unrelated wallet. The fee of 1.5% seems reasonable.....

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December 25, 2012, 07:47:16 PM
 #12

Why it is necessary to launder bitcoins anyway?
Why did you chose a nickname SAFEVoucher instead of using your real name?
atifkhan
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December 25, 2012, 07:50:28 PM
 #13

is he the owner of safevouchers.com ?

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greyhawk
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December 25, 2012, 07:51:41 PM
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Maybe his full name is Safe Voucher? This is a multicultural platform after all.
jabetizo
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December 26, 2012, 01:37:42 AM
 #15

I saw a suggestion somewhere of simply parking the coins at Mt Gox for awhile. I'm wondering if Mt Gox is set up so this would work. The traffic there is certainly adequate.

Read this:

Quote
Reply from the Japanese FSA is overall positive for #MtGox now waiting for the official papers confirming this before publishing an announce
- https://twitter.com/MagicalTux/status/257071913870966784

Then this:

Quote
We may also share Members' Personal Information with law enforcement or regulatory agencies, as may be required by law
- https://mtgox.com/privacy_policy

Then this:

Quote
* Please be advised that accessing your account via the Tor network and/or public proxies may result in a temporary suspension of your account, and having to submit AML documents.
- https://mtgox.com/signup

You will probably realize that your quest for transaction privacy does not flow through an exchange.


It seems that the various webwallets wouldn't work. If it's truly a wallet, I'd get exactly the same coins back.

Mt. Gox offers a hosted (shared) E-Wallet.  That means you are not depositing into your own wallet but into an address in the E-Wallet provider's wallet:
 - http://en.bitcoin.it/wiki/EWallet

Quote
But if Mt Gox has a common pile of coins, and simply keeps track of how many (but not which) belong to each account holder, it should work. Any coins passed from Mt Gox to another party would only be traceable back to Mt. Gox. Knowing deposited a given coin would give no information about who spent it.

You make assumptions about what is logged and what is not.  Unless they specifically state that they do not log which bitcoin address funded which Mt. Gox user account, then you probably should assume that every bitcoin transaction in or out of the wallet is tied to an account on the exchange.   I don't know if this logging happens or how long it is retained but I do not remember ever seeing any claim by them that these transactions are not logged.

Instawallet claims to not retain this information for a very long period of time.

Blockchain.info/wallet offers a mixing service.
 - https://blockchain.info/wallet/send-anonymously

how about if one provides fake information when creating a mtgox account, then logs in via a proxy, deposits and immediately withdraws bitcoins?

payb.tc
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December 26, 2012, 01:46:26 AM
 #16

how about if one provides fake information when creating a mtgox account, then logs in via a proxy, deposits and immediately withdraws bitcoins?

that's called "donating to mt gox"

(i.e. you won't be able to withdraw)
jabetizo
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December 26, 2012, 01:49:55 AM
 #17

haha good to know, thanks for the warning Smiley

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