Tainted Bitcoins?

[jedaite]

Hello,

I buy Bitcoin locally with cash and charge a 3.5 percent commission. I then sell the Bitcoin in Kraken and cash out.
I've been noticing that some of the Bitcoins I get are tainted (https://blockchain.info/taint/*bitcoin address here*) and I'd like to know what risks I'm taking by selling such Bitcoins there.

Should I be worried?

[BillyBobZorton]

Hello,

I buy Bitcoin locally with cash and charge a 3.5 percent commission. I then sell the Bitcoin in Kraken and cash out.
I've been noticing that some of the Bitcoins I get are tainted (https://blockchain.info/taint/*bitcoin address here*) and I'd like to know what risks I'm taking by selling such Bitcoins there.

Should I be worried?

This brings us to the old bitcoin problem: lack of fungibility. Since the blockchain is public, some addresses have been linked to criminal activity. It shouldn't be a problem, because all bitcoins should be considered valid, but if authorities decide it's a problem, then it becomes a problem, unfortunately.

I hope future improvements in privacy such as CoinJoin and Confidential Transactions can be enabled by default and work seamlessly. Meanwhile yes, you should worry about coins linked to criminals...

[FlamingFingers]

The word 'tainted' used on Blockchain.info has a meaning of how related two addresses are. It's a measure they use to correlate addresses that are sending transactions to each other.  It has no risks at the least, unless you are fishing for anonymity. It has another meaning of how the addresses might be involved in money/Bitcoin laundering, but that's not the case here.

You can read more on this link: https://bitcointalk.org/index.php?topic=92416.0

[Coin-Keeper]

Some of this may come down to just how tainted they are.  You likely know how to view the taint (example):

https://blockchainbdgpzk.onion/taint/1YOURBITCOINADDRESS

If it came down to it would it be worth it to you to spend 2-3% running through a commercial tumbler?  Its effective, but a few percentage points add up over time.  Most of my coins are tumbled but I have them for the long haul.  A few percentage points was nothing compared to how now the prices have exploded.  Years from now an anonymous coin wallet with some decent value would make this worth it to me.  Everybody has a different take.

[BitcoinNewsMagazine]

Try checking the address at https://www.walletexplorer.com/ to see if any interesting known wallets come up. This is the only site I know available to public which links bitcoin addresses to names.

[Nagadota]

If it says that the coins are tainted, you should run them through a reliable mixer/tumbler and they'll come out clean and much harder to trace as well.  Bitmixer sets fees of 0.5%, so it wouldn't take too much of a dig into your money.

You'll probably be okay, but people who deal with cash want to stay anonymous and could be criminals, so you'd be best off selling after covering your tracks.

[unamis76]

No risk in selling/buying/owning tainted Bitcoins. Many dollar bills have traces of drugs and there's even the term Contaminated currency. Do you not accept fiat bills because of this? Same goes for Bitcoin. If you did nothing wrong, you have nothing to fear, either with tainted coins or contamined bills.

[BitcoinNewsMagazine]

If it says that the coins are tainted, you should run them through a reliable mixer/tumbler and they'll come out clean and much harder to trace as well.  Bitmixer sets fees of 0.5%, so it wouldn't take too much of a dig into your money.

You'll probably be okay, but people who deal with cash want to stay anonymous and could be criminals, so you'd be best off selling after covering your tracks.

Mixers are no longer reliable. There is bitcoin analytics software on the market which can trace bitcoin through mixers. You should expect companies like Coinbase who are licensed off ramps to fiat to carefully check incoming bitcoin. Everyone has heard stories of Coinbase closing accounts without reason, well this is why.

[jedaite]

Hey guys, thanks a lot for the useful replies. I greatly appreciate them. Also, I want to say that I bought like 1.45 btc from Kraken like the other day and it was 29% tainted. What do you think about that?


@BitcoinNewsMagazine May I ask how to use that service? I mean, I input my wallet there and get all sorts of data. I was thinking that if some of my coins were sent from a known wallet (aka well known wallet with stolen funds) then I would've seen a message about it there?

I apologize, I'm not good with interpreting that data.

[BitcoinNewsMagazine]

If you put one of your bitcoin addresses in https://www.walletexplorer.com and see that one of the inputs traces back to a known gambling or suspicious hot wallet well, you would have a problem if you tried to sell that bitcoin on Coinbase. walletexplorer.com is not really up to date or actively maintained any more as the developer now works for a paid service chainalysis.com.

[Quantus]

By converting currency for a fee you are operating as a money transmitter and my be breaking the law.

You could also be accused of money laundering if your trading with criminals.

If a seller tells you point blank the funds are used or have been used for/in illegal transactions/activities then you are an accomplice to any and all of those crimes after the fact.

Know your local laws.

In addition if you have stolen coins from an online exchange and then turn around and try to sell those same coins on the same exchange they were stolen from they might have legal ground to just take back their coins and give you the finger.

[memecoin]

Nothing to worry about here. Tainted as in they're closely linked with other addresses. Not that that is bad!

[jedaite]

Thanks a lot guys, I appreciate your input. If anyone else wants to chime in, feel free to do so.
I'm reading each and every reply.

Thanks again and enjoy your weekend!

[talkbitcoin]

Hey guys, thanks a lot for the useful replies. I greatly appreciate them. Also, I want to say that I bought like 1.45 btc from Kraken like the other day and it was 29% tainted. What do you think about that?


@BitcoinNewsMagazine May I ask how to use that service? I mean, I input my wallet there and get all sorts of data. I was thinking that if some of my coins were sent from a known wallet (aka well known wallet with stolen funds) then I would've seen a message about it there?

I apologize, I'm not good with interpreting that data.

the "taint" you see on blockchain.info is not what you think it is. read the answer that FlamingFingers gave you.
and when you are buying bitcoin from an exchange service like Kraken and withdraw it to your personal bitcoin address, the coins will come from Kraken's wallet and usually if you search the address that sent you those coins in walletexplorer you'll see kraken as a result. that service is good but not complete, it is mostly there to show their capability of blockchain analysis and as a free advertisement for their paid work.

[paul gatt]

Hello,

I buy Bitcoin locally with cash and charge a 3.5 percent commission. I then sell the Bitcoin in Kraken and cash out.
I've been noticing that some of the Bitcoins I get are tainted (https://blockchain.info/taint/*bitcoin address here*) and I'd like to know what risks I'm taking by selling such Bitcoins there.

Should I be worried?

Contaminated bitcoin is not a rare case. This happens very often. And of course, we always have a solution for that, so many systems can handle your concerns. Right on this forum, bitmixers and bitblenders are the two most reliable mixing systems. Try it, and you will get the best results. Don't hesitate!

[7788bitcoin]

Contaminated bitcoin is not a rare case. This happens very often. And of course, we always have a solution for that, so many systems can handle your concerns. Right on this forum, bitmixers and bitblenders are the two most reliable mixing systems. Try it, and you will get the best results. Don't hesitate!

In fact, many tainted coins were spread to others by the "mixers". I guess we do not need to worry about this for the time being. The exchanges (includeing bitcoin <--> Altcoin exchanges, such as Poloniex) are doing their best to avoid illegal activities.

[naughty1]

Contaminated bitcoin is not a rare case. This happens very often. And of course, we always have a solution for that, so many systems can handle your concerns. Right on this forum, bitmixers and bitblenders are the two most reliable mixing systems. Try it, and you will get the best results. Don't hesitate!

In fact, many tainted coins were spread to others by the "mixers". I guess we do not need to worry about this for the time being. The exchanges (includeing bitcoin <--> Altcoin exchanges, such as Poloniex) are doing their best to avoid illegal activities.

The "mixer" is not a means of spreading contaminated currency; otherwise, it will clean and secure your currency, which is completely safe and legal. Therefore, there is no reason to talk about polonox avoiding illegal activities, which is irrelevant. But in reality, we can not distinguish between contaminated currencies, so the mixer is just a precautionary measure.

[Kprawn]

It is for this exact reason why I am supporting mixer software. You are trading with cash every day that might have been stolen or used to buy

drugs... does that make you a criminal? The tainted coins were used for some criminal activity... but you were not the person that were involved

with the crime. To be safe, you can just push the coins through a mixer to clean them. 

[Ayers]

By converting currency for a fee you are operating as a money transmitter and my be breaking the law.

You could also be accused of money laundering if your trading with criminals.

If a seller tells you point blank the funds are used or have been used for/in illegal transactions/activities then you are an accomplice to any and all of those crimes after the fact.

Know your local laws.

In addition if you have stolen coins from an online exchange and then turn around and try to sell those same coins on the same exchange they were stolen from they might have legal ground to just take back their coins and give you the finger.

how can someone prevent this? tainted bitcoin could be the one that someone is using to buy altcoin on some exchange and then bought by someone else which is innocent and didn't know that they were tainted also tainted bitcoin can be mixed with other not tainted bitcoin and sold with them on some exchange without no one knowing or worse sold to someone who have nothing to do with those criminal and spread them to friends and such

[jorneyflair]

Hello,

I buy Bitcoin locally with cash and charge a 3.5 percent commission. I then sell the Bitcoin in Kraken and cash out.
I've been noticing that some of the Bitcoins I get are tainted (https://blockchain.info/taint/*bitcoin address here*) and I'd like to know what risks I'm taking by selling such Bitcoins there.

Should I be worried?

That was a really big issue some time ago, because bitcoin was mostly used for illegal activities.
When it was not known so well, and when it was actually cheap, BTC was really hard to spend in a regular online shop with legit things: the stores simply didnt know about bitcoin yet.

Back in those times, illegal activities was the big part of the BTC volume, but it has changed. People now are using it for a good purposes mostly, but tainted bitcoins are still present in the network.

Just find a reasonable mixer service, and deposit them there. If you will let them go through it, im sure that will fix your issue.
You should always check if your payments do not contain tainted bitcoins.