Is "money laundering" really that big of a deal?

[QuestionAuthority]

...this just made me think of a new alt coin CleanCoin™.

I'm anticipating a pretty good chance that we'll not need an alt coin for that since that may be the trajectory of Bitcoin proper.

One of the more interesting observations from the 2013 conference came from the security discussion.  With the exception of Ranier, there seemed to most like a no-brainer to employ tarnish/taint.  I anticipate it happening shortly after mining and SPV servers can be centralized enough to apply pressure at the network level.

The (likely correct) idea seemed to be that a relatively few entities honoring a taint framework would be sufficient to implement it because even those who dis-agreed and would otherwise take BTC at face value would have to worry about getting shafted going forward.  It would be interesting to know if any modeling has been attempted on this.

It was also interesting that ~vess gave a pretty clear warning about using mixing services.  The implication seemed to be that if/when taint is introduced, there will be no grandfathering.  A lot of people might be in for a rude awakening.  All my coins came from Tradehill-I, but I heard rumors that some ~allinvain coins had been deposited with them prior to some of my purchases.  So I might be looking at taking it up the ass for something I had no control over or knowledge about. (For those who are interested, several people took Tradehill coins straight to Mt. Gox and Mark immediately locked them based on his own taint analysis system I guess.)

It also strikes me that a taint system would be an outstanding method of encouraging users to pay fees where appropriate.  The tainting body itself is going to be needing some funding to do their job (e.g., gumshoe work in identifying legitimate thefts and what-not.)  And, of course, the Bitcoin Foundation probably deserves some cut of the economic activity for their services in shaping the solution's trajectory.

i agree with Alan Reiner's trepidation at tainting coins.

all sorts of problems can arise from trying to implement a tainting system namely b/c of temporal factors.

by the time any governing tainting body gets around to tainting criminal coins, they will most likely have passed through several pure addresses and whoever gets stuck unwittingly holding the tainted coins would be screwed.

not to mention if i wanted to sabotage a competitor or someone i didn't like by sending him/her tainted coins to  their donation address.

If a system were ever implemented that allowed exchanges/businesses to refuse to accept coins because at some point in the past they were tainted I would never again accept btc for payment. I would sell all that I have that are not tainted and never use Bitcoin again. I seriously doubt I'm alone in that regard. Could you imagine the Dollar surviving if you could have your money confiscated because some kid bought a bag of pot five years ago with the money in your pocket!

[cypherdoc]

...this just made me think of a new alt coin CleanCoin™.

I'm anticipating a pretty good chance that we'll not need an alt coin for that since that may be the trajectory of Bitcoin proper.

One of the more interesting observations from the 2013 conference came from the security discussion.  With the exception of Ranier, there seemed to most like a no-brainer to employ tarnish/taint.  I anticipate it happening shortly after mining and SPV servers can be centralized enough to apply pressure at the network level.

The (likely correct) idea seemed to be that a relatively few entities honoring a taint framework would be sufficient to implement it because even those who dis-agreed and would otherwise take BTC at face value would have to worry about getting shafted going forward.  It would be interesting to know if any modeling has been attempted on this.

It was also interesting that ~vess gave a pretty clear warning about using mixing services.  The implication seemed to be that if/when taint is introduced, there will be no grandfathering.  A lot of people might be in for a rude awakening.  All my coins came from Tradehill-I, but I heard rumors that some ~allinvain coins had been deposited with them prior to some of my purchases.  So I might be looking at taking it up the ass for something I had no control over or knowledge about. (For those who are interested, several people took Tradehill coins straight to Mt. Gox and Mark immediately locked them based on his own taint analysis system I guess.)

It also strikes me that a taint system would be an outstanding method of encouraging users to pay fees where appropriate.  The tainting body itself is going to be needing some funding to do their job (e.g., gumshoe work in identifying legitimate thefts and what-not.)  And, of course, the Bitcoin Foundation probably deserves some cut of the economic activity for their services in shaping the solution's trajectory.

i agree with Alan Reiner's trepidation at tainting coins.

all sorts of problems can arise from trying to implement a tainting system namely b/c of temporal factors.

by the time any governing tainting body gets around to tainting criminal coins, they will most likely have passed through several pure addresses and whoever gets stuck unwittingly holding the tainted coins would be screwed.

not to mention if i wanted to sabotage a competitor or someone i didn't like by sending him/her tainted coins to  their donation address.

If a system were ever implemented that allowed exchanges/businesses to refuse to accept coins because at some point in the past they were tainted I would never again accept btc for payment. I would sell all that I have that are not tainted and never use Bitcoin again. I seriously doubt I'm alone in that regard. Could you imagine the Dollar surviving if you could have your money confiscated because some kid bought a bag of pot five years ago with the money in your pocket!

how about this one?

i intentionally send 1 Satoshi's worth of tainted coin to EVERY single address in existence on the blockchain.

[marcus_of_augustus]

Entertaining taint is unworkable, uneconomic and ultimately will lead to the demise of any monetary unit. Veseness is demonstrating his ignorance in monetary sciences to go spouting how great taint would be for bitcoin, it would be awful.

This has nothing to do with criminality or morality, it is a purely technical issue that when you study it hard enough leads to only one logical conclusion. Money must be fungible or else it is not money, it is something else.

[cypherdoc]

Entertaining taint is unworkable, uneconomic and ultimately will lead to the demise of any monetary unit. Veseness is demonstrating his ignorance in monetary sciences to go spouting how great taint would be for bitcoin, it would be awful.

This has nothing to do with criminality or morality, it is a purely technical issue that when you study it hard enough leads to only one logical conclusion. Money must be fungible or else it is not money, it is something else.

my impression of Vessenes from the conference is that he is a bumbling, giddy fool who can't stop talking and is in a rush to always speak first.

not to mention constantly interrupting others with stupid jokes.

[QuestionAuthority]

...this just made me think of a new alt coin CleanCoin™.

I'm anticipating a pretty good chance that we'll not need an alt coin for that since that may be the trajectory of Bitcoin proper.

One of the more interesting observations from the 2013 conference came from the security discussion.  With the exception of Ranier, there seemed to most like a no-brainer to employ tarnish/taint.  I anticipate it happening shortly after mining and SPV servers can be centralized enough to apply pressure at the network level.

The (likely correct) idea seemed to be that a relatively few entities honoring a taint framework would be sufficient to implement it because even those who dis-agreed and would otherwise take BTC at face value would have to worry about getting shafted going forward.  It would be interesting to know if any modeling has been attempted on this.

It was also interesting that ~vess gave a pretty clear warning about using mixing services.  The implication seemed to be that if/when taint is introduced, there will be no grandfathering.  A lot of people might be in for a rude awakening.  All my coins came from Tradehill-I, but I heard rumors that some ~allinvain coins had been deposited with them prior to some of my purchases.  So I might be looking at taking it up the ass for something I had no control over or knowledge about. (For those who are interested, several people took Tradehill coins straight to Mt. Gox and Mark immediately locked them based on his own taint analysis system I guess.)

It also strikes me that a taint system would be an outstanding method of encouraging users to pay fees where appropriate.  The tainting body itself is going to be needing some funding to do their job (e.g., gumshoe work in identifying legitimate thefts and what-not.)  And, of course, the Bitcoin Foundation probably deserves some cut of the economic activity for their services in shaping the solution's trajectory.

i agree with Alan Reiner's trepidation at tainting coins.

all sorts of problems can arise from trying to implement a tainting system namely b/c of temporal factors.

by the time any governing tainting body gets around to tainting criminal coins, they will most likely have passed through several pure addresses and whoever gets stuck unwittingly holding the tainted coins would be screwed.

not to mention if i wanted to sabotage a competitor or someone i didn't like by sending him/her tainted coins to  their donation address.

If a system were ever implemented that allowed exchanges/businesses to refuse to accept coins because at some point in the past they were tainted I would never again accept btc for payment. I would sell all that I have that are not tainted and never use Bitcoin again. I seriously doubt I'm alone in that regard. Could you imagine the Dollar surviving if you could have your money confiscated because some kid bought a bag of pot five years ago with the money in your pocket!

how about this one?

i intentionally send 1 Satoshi's worth of tainted coin to EVERY single address in existence on the blockchain.

Right, are they going to ban every transaction. The whole idea is ridiculous!

[tvbcof]

If a system were ever implemented that allowed exchanges/businesses to refuse to accept coins because at some point in the past they were tainted I would never again accept btc for payment. I would sell all that I have that are not tainted and never use Bitcoin again. I seriously doubt I'm alone in that regard. Could you imagine the Dollar surviving if you could have your money confiscated because some kid bought a bag of pot five years ago with the money in your pocket!

how about this one?

i intentionally send 1 Satoshi's worth of tainted coin to EVERY single address in existence on the blockchain.

Most people don't understand 'taint'.  Or 'tarnish' which was probably invented to help understand, but made things worse.  It is perfectly possible to compute the percentage of a transaction which had a 'bad' history.  So, your idea to ruin everything would only have the effect of ruining everything by a tiny fraction.  And you your $1 might be worth $.95 due to the 5 year old pot purchase.  Better than $0 though, right?  And we solve a lot of crime after all.

And also it would be difficult to make an algorithm which was able to characterize 'bad'.  For this we need a trusted body consisting at least partially of humans (until great strides are made in AI) to decide how bad is bad.  These people will need compensation as will the infrastructure they operate to perform the calculations and communicate with the rest of the network.

Don't feel bad.  Someone in the audience insisted on making an ass out of himself by not getting it (twice!) in the QA session.

---

Speaking of the Q&A, another interesting thing about that session was the suggestion about sending private keys around.  When the round-table figured out what he was saying, they pretty much all turned a few shades more pale.

This tells me that the analysis which is being performed is probably not yet sophisticated enough to overcome that extra degree of freedom.

It is said to be a 'bad idea'.  It actually works fine.  I've done it.  It seems like a bad idea for the recipient unless he knows what he's doing.  I don't see any real dis-advantages for the person giving up the funds.  I mean, they are assumed to be a total loss by the nature of the transaction.

[Chaoskampf]

This whole tainting argument is beyond absurd.

[tvbcof]

Entertaining taint is unworkable, uneconomic and ultimately will lead to the demise of any monetary unit. Veseness is demonstrating his ignorance in monetary sciences to go spouting how great taint would be for bitcoin, it would be awful.

This has nothing to do with criminality or morality, it is a purely technical issue that when you study it hard enough leads to only one logical conclusion. Money must be fungible or else it is not money, it is something else.

my impression of Vessenes from the conference is that he is a bumbling, giddy fool who can't stop talking and is in a rush to always speak first.

not to mention constantly interrupting others with stupid jokes.

That was not my impression of him (though I wish I could say it were.)  I thought he seemed very bright and capable.  I sense that he and I are diametrically opposed on certain philosophical issues and visions of the future.  But I sense that about myself and most everyone else in one respect or another.

[justusranvier]

my impression of Vessenes from the conference is that he is a bumbling, giddy fool who can't stop talking and is in a rush to always speak first.

My impression of him has rapidly turned less benign as the events of the last few days have unfolded.

[ruggedman_dan]

OP is on point. Couldn't agree more.

Personally, I don't really even view it as a crime. If I were a criminal, laundering would just be another daily task of mine. Along with running numbers, selling white, pimping hoes and shaking down suckas.

What smart criminal would not launder?

[oakpacific]

...this just made me think of a new alt coin CleanCoin™.

I'm anticipating a pretty good chance that we'll not need an alt coin for that since that may be the trajectory of Bitcoin proper.

One of the more interesting observations from the 2013 conference came from the security discussion.  With the exception of Ranier, there seemed to most like a no-brainer to employ tarnish/taint.  I anticipate it happening shortly after mining and SPV servers can be centralized enough to apply pressure at the network level.

The (likely correct) idea seemed to be that a relatively few entities honoring a taint framework would be sufficient to implement it because even those who dis-agreed and would otherwise take BTC at face value would have to worry about getting shafted going forward.  It would be interesting to know if any modeling has been attempted on this.

It was also interesting that ~vess gave a pretty clear warning about using mixing services.  The implication seemed to be that if/when taint is introduced, there will be no grandfathering.  A lot of people might be in for a rude awakening.  All my coins came from Tradehill-I, but I heard rumors that some ~allinvain coins had been deposited with them prior to some of my purchases.  So I might be looking at taking it up the ass for something I had no control over or knowledge about. (For those who are interested, several people took Tradehill coins straight to Mt. Gox and Mark immediately locked them based on his own taint analysis system I guess.)

It also strikes me that a taint system would be an outstanding method of encouraging users to pay fees where appropriate.  The tainting body itself is going to be needing some funding to do their job (e.g., gumshoe work in identifying legitimate thefts and what-not.)  And, of course, the Bitcoin Foundation probably deserves some cut of the economic activity for their services in shaping the solution's trajectory.

I am going to tell you one of the things that will happen.

"Polluted" coins will fall in price, while "fresh" new coins will gain, illicit businesses will carry on as usual, it's not like the big bosses are the only ones who know how to employ taint analysis.

And let's not forget about colored coins, which can used once by, say, drug dealer and discarded.

Vessnes should resign from Bitcoin Foundation for no other reason but his utter failure to understand Bitcoin alone.

[crazy_rabbit]

Uncheck money laundering is a huge deal. It is by and large used for criminal and/or politically motived (IE: terrorism or otherwise) operations. One of the core methods that holds organised crime at bay is the government's ability to constrict their money supply. You can only get so large as an organisation if you do all your transactions in cash.

[oakpacific]

Uncheck money laundering is a huge deal. It is by and large used for criminal and/or politically motived (IE: terrorism or otherwise) operations. One of the core methods that holds organised crime at bay is the government's ability to constrict their money supply. You can only get so large as an organisation if you do all your transactions in cash.

Those guys are far more innovative then our authorities, I assure you, and Bitcoin just give them a platform.

[lixiaolai]

From the very beginning, I couldn't understand why people believe money laundering is somehow like "unique" to bitcoin? while the answer is pretty clear: not at all!

[Chaoskampf]

From the very beginning, I couldn't understand why people believe money laundering is somehow like "unique" to bitcoin? while the answer is pretty clear: not at all!

"money laundering" is a purely arbitrary abstraction that's applied to whatever those who apply these labels want to apply it to. You could say that when I buy anything, I'm laundering my money into that thing I just bought. It's absolutely arbitrary, like most legal statutes. It's only applied at the whim of those people who manipulate the legal system to suit their needs (i.e. the power elite).

[aigeezer]

You can only get so large as an organisation if you do all your transactions in cash.

Only as large as these guys got?... Federal Reserve Notes are legal tender, with the words "this note is legal tender for all debts, public and private" printed on each note.

It depends who you know.

[deadweasel]

From the very beginning, I couldn't understand why people believe money laundering is somehow like "unique" to bitcoin? while the answer is pretty clear: not at all!

"money laundering" is a purely arbitrary abstraction that's applied to whatever those who apply these labels want to apply it to. You could say that when I buy anything, I'm laundering my money into that thing I just bought. It's absolutely arbitrary, like most legal statutes. It's only applied at the whim of those people who manipulate the legal system to suit their needs (i.e. the power elite).

+1

[n8rwJeTt8TrrLKPa55eU]

I'll just leave this here to corroborate most of what has already been (wisely) said in this thread.   This is why Bitcoin is important.

Be Careful About This . . .
By Eric Peters, Automotive Columnist

If you like to buy used cars, you may also like to pay cash. It’s a great way to convince a seller you’re serious — and ready to deal. Unfortunately — these days — it can also lead to literally unimaginable trouble. Not from the seller. Not even from street thugs.

But from the thugs acting color of “the law” — who wear state-issued costumes and drive state-issued vehicles.

Let’s say you’re going to try to close a deal on a car you saw advertised. You e-mailed or spoke with the owner on the phone. The vehicle sounds like the ticket and the price he’s asking is in the ballpark as far as what you’d like to pay. So, you arrange to meet up — with the intention of buying the thing if it’s as-advertised, checks out mechanically and if you and the seller can agree on a fair price.

Prior to heading out, you stop by your bank to get the money for the deal out of your account. If the amount is $10,000 or more, the bank — now a de facto agent of the government — will (by law) report that to the government. It is deemed inherently “suspicious” merely to withdraw that sum of your own money from your own account. But that’s not the big danger. The big danger comes when you leave the bank and head out to check out the car you’re interested in buying.

Let’s say you get stopped along the way for a minor traffic offense. During the “your papers, please” rigmarole, the cop notices the envelope with the cash for your purchase sitting on the seat beside you. Uh-oh. That is more than merely suspicious. It is in fact legally sufficient provocation for the cop to seize your money. It is regarded as prima facie evidence of “drug activity.” No additional or corroborating evidence (such as actual drugs in the car) is required. Merely to be found in possession of more cash than the cops (and courts) arbitrarily decree to be in excess of what “common people … carry” is enough — in the words of Tennessee thug-in-costume (that is, “officer”) Larry Bates, who relieved NJ insurance adjuster George Reby of $22,000 (story here) merely because Reby was found to be carrying $22,000 in cash during a probable cause-free search of his vehicle in the wake of a traffic stop. According to Bates, Reby “could not prove (the money) was legitimate.”

So Bates simply took the money.

In other words, it’s up to us to prove that whatever cash we have is “legitimate” — else the state’s badged goons can just take it. This is called civil forfeiture by the organized gangs who justify their depredations under color of law.

You may never see your money again — and even if you do, be assured, it will take a great deal of your time and effort (and more of your money) to get it back. In Reby’s case, he had to travel all the way back to TN from NJ in order to plead with the state thugs to return his money — which they eventually (and clearly, begrudgingly) did.

And Reby’s ordeal is not a case of a thug cop acting beyond his authority. This sort of thing is now happening routinely — as deliberate policy — and the courts have amen’d it as ok.

Consider the case of Texas resident Javier Gonzales. He was on his way to buy a used car (he owned a used car lot at the time) and was carrying $10,032 in a briefcase. He was pulled over by two Texas costumed highwaymen — members of the state-sanctioned gang that calls itself the Jim Wells County Task Force — for the crime of not having a front license plate on his vehicle. Gonzales made the error of answering yes when the gang members queried him as to whether he was carrying “large amounts of money.” Naturlich, a drug sniffing dog was then brought up — and it “signaled” the presence of drugs. No actual drugs were found during the subsequent seizure of Gonzales’ car — and his cash.

Here’s a look at how the process works; it’s a different case — but the tactics are the same:

http://www.youtube.com/watch?v=rJqq6KCOkdM

Later on, Gonzales was presented with a waiver that gave him the opportunity to “sign over his money” and go free — or face arrest for money-laundering. Again, no evidence of anything was produced — let alone presented to a court. It was sufficient merely to have money — and that the thugs-in-blue (cammo, lately) wanted it.

A bewildered Gonzalez told NPR:

“So at that time we got in our car and we left, still trying to figure out what just happened. We got officers that took our cash. We got officers that told us we can’t get an attorney. So I’m thinking, are these guys officers of law? Did I just get robbed of my money?” (Italics added.)

Yes, Mr. Gonzales — that’s exactly what happened.

And it could just as easily happen to you, too.

Gonzales eventually got his money back — after hiring an attorney and spending a great deal of money and time pursuing his case through the courts. But the fact that it was taken under color of law and that asset forfeiture laws have not been repealed or even scaled back but in fact been implemented with ever-increasing aggressiveness is the thing to take away from all of this.

America has become a country littered with laws — but which has become essentially a lawless place. It is no longer necessary for the law enforcers to have evidence — tangible, external, substantive — that some law has been violated. It is enough for them merely to wish to take what you have, merely because you have it — and they do not.

So, be very, very careful when you next go used car shopping. The thugs are out there, just itching to make you “stand and deliver.”

http://blog.motorists.org/be-careful-about-this/?utm_source=rss&utm_medium=rss&utm_campaign=be-careful-about-this

[CompNsci]

Uncheck money laundering is a huge deal. It is by and large used for criminal and/or politically motived (IE: terrorism or otherwise) operations. One of the core methods that holds organised crime at bay is the government's ability to constrict their money supply. You can only get so large as an organisation if you do all your transactions in cash.

What is the real evidence that this is true?

As I've noted before, what is the magnitude of terrorist related transactions? And is there any evidence that these AML laws actually inhibit transfers for such people?

[QuantumQrack]

...this just made me think of a new alt coin CleanCoin™.

I'm anticipating a pretty good chance that we'll not need an alt coin for that since that may be the trajectory of Bitcoin proper.

One of the more interesting observations from the 2013 conference came from the security discussion.  With the exception of Ranier, there seemed to most like a no-brainer to employ tarnish/taint.  I anticipate it happening shortly after mining and SPV servers can be centralized enough to apply pressure at the network level.

The (likely correct) idea seemed to be that a relatively few entities honoring a taint framework would be sufficient to implement it because even those who dis-agreed and would otherwise take BTC at face value would have to worry about getting shafted going forward.  It would be interesting to know if any modeling has been attempted on this.

It was also interesting that ~vess gave a pretty clear warning about using mixing services.  The implication seemed to be that if/when taint is introduced, there will be no grandfathering.  A lot of people might be in for a rude awakening.  All my coins came from Tradehill-I, but I heard rumors that some ~allinvain coins had been deposited with them prior to some of my purchases.  So I might be looking at taking it up the ass for something I had no control over or knowledge about. (For those who are interested, several people took Tradehill coins straight to Mt. Gox and Mark immediately locked them based on his own taint analysis system I guess.)

It also strikes me that a taint system would be an outstanding method of encouraging users to pay fees where appropriate.  The tainting body itself is going to be needing some funding to do their job (e.g., gumshoe work in identifying legitimate thefts and what-not.)  And, of course, the Bitcoin Foundation probably deserves some cut of the economic activity for their services in shaping the solution's trajectory.

i agree with Alan Reiner's trepidation at tainting coins.

all sorts of problems can arise from trying to implement a tainting system namely b/c of temporal factors.

by the time any governing tainting body gets around to tainting criminal coins, they will most likely have passed through several pure addresses and whoever gets stuck unwittingly holding the tainted coins would be screwed.

not to mention if i wanted to sabotage a competitor or someone i didn't like by sending him/her tainted coins to  their donation address.

If a system were ever implemented that allowed exchanges/businesses to refuse to accept coins because at some point in the past they were tainted I would never again accept btc for payment. I would sell all that I have that are not tainted and never use Bitcoin again. I seriously doubt I'm alone in that regard. Could you imagine the Dollar surviving if you could have your money confiscated because some kid bought a bag of pot five years ago with the money in your pocket!

Same here.