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Author Topic: DEA agent discusses Bitcoin in class today  (Read 7951 times)
the joint
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October 27, 2011, 10:12:50 PM
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A DEA agent (a manager of the analyst department) came to my substance abuse elective class today to talk about drug origins and drug trafficking.  During the class, I asked him whether or not he has heard of Silk Road, and to my surprise he said he had.  I then asked whether or not the DEA is targeting Silk Road due to the small impact of the Bitcoin economy and the difficulty of linking Bitcoin drug transactions to specific individuals.  His response was, "Yes, and just because it's difficult doesn't mean it's impossible."

He actually became very curious and asked me several questions about Bitcoin in front of the class, mainly general questions about what gives BTC value and how the heck I could make any money off of it.  My professor also became very interested, and after class she asked me for a website for additional information about Bitcoin (I just gave her bitcoin.org because it's easy).

Interesting stuff.

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October 27, 2011, 10:15:19 PM
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I enjoyed reading your post after noticing your username Wink!
The DEA made an announcement about the Silk Road awhile ago, so I'm not too surprised about that. I'm not too surprised if the DEA is keeping very close tabs on Bitcoin.

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the joint
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October 27, 2011, 10:24:00 PM
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I'm sure my username is strictly a coincidence.

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October 27, 2011, 10:54:30 PM
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If you see this cop again, please tell him that last portion of ganja I purchased in Silk Road was the best and strongest I ever had. It made me into clueless zombie.

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October 27, 2011, 11:15:23 PM
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If you see this cop again, please tell him that last portion of ganja I purchased in Silk Road was the best and strongest I ever had. It made me into clueless zombie.
you got it

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October 27, 2011, 11:17:21 PM
 #6

In the case of the "drug war," it being difficult indeed has made it impossible, so his words are kinda funny. The DEA fails every day with more easily tracked trafficking methods. Bitcoin is just one more win for the free market demand of goods, and one more loss for the tyranny trying to prevent it.
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October 27, 2011, 11:20:29 PM
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The DEA fails every day with more easily tracked trafficking methods.

Exactly.  All paper cash transactions are untraceable, unless you are stupid enough to leave your fingerprints on the bills.  At least bitcoins have some electronic record.  The DEA should probably embrace bitcoins instead of paper cash.


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October 28, 2011, 12:30:06 AM
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I doubt DEA can keep any close tabs on bitcoin, it is simply anonymous Smiley
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October 28, 2011, 01:01:11 AM
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As long as there is no obvious corellation between adress transfering unusal amoun of coins and your real life identiy, you are safe. Speaking of Silk Road, most dangerous is cops busting some seller and using his SR seller account to gather information about buyers.

Use different recieving adress each time you recieve coins. Additionally you might want to run it trough Tor network. Bitcoin is meant for anonimity. And Internet is for porn and Tor hidden services is for drugs and CP.

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October 28, 2011, 01:13:52 AM
 #10

i've told this story before but i have a friend who's a DEA agent here locally who goes out on busts and works in the surveillance division where you'd think they'd know alot about Bitcoin, Tor, and PGP encryption.  Nope.  no clue.  he's says the difficult stuff gets sent back to Washington.
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October 28, 2011, 01:22:09 AM
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i've told this story before but i have a friend who's a DEA agent here locally who goes out on busts and works in the surveillance division where you'd think they'd know alot about Bitcoin, Tor, and PGP encryption.  Nope.  no clue.  he's says the difficult stuff gets sent back to Washington.
OMFG such a fail!

There are some really computer savvy people who decided to become rat and work in law enforcement and other 3 letter agencies, but majority of cops are dumb in computers just as general public. The nerds and hackers will win in long-term. I'm positive about it!

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October 28, 2011, 02:22:16 AM
 #12

I gave this analogy a few months ago.  Bitcoin is NOT anonymous.  Bitcoin simply has different anonymity traits versus cash in your pocket.

You take 100 usd bill from a ATM
You go and buy something illegal from a house using that 100 usd
Later that day the Law kicks in the door of the house in which you acquired your illegal object
They find 1000 usd in 100 usd bills and in some super advanced government DB are able to link one of the 100usd bills serial number to the ATM transaction you made earlier in the day.
Law knocks at your door looking to understand
You tell them that you purchased ice cream for your daughter from a street vendor earlier in the day (got lots of change in 20s).  "I have no idea what that guy did with my bejamin after I gave it to him mr officer"


You buy 100 btc from a, "fully compliant with the law," trading site in which your name and address is registered, and available to the SEC
You go and buy something illegal from a house (website) using that 100 btc
Later that day the Law kicks in the door of the house (website [1]) in which you acquired your illegal object
They find 1000 btc on a laptop after a forensic review of the computers contents (they can do this).  Looking at the block chain they find that 100 btc came from the trading site to your wallet and then to the illegal item sellers computer
Law kicks in your door, because it is NOT possible that you didn't buy the illegal item unless you can forensically prove that you got hacked, and even then the hacker would have been taking directly from your wallet to the illegal item seller, rather to some, "holding," account

I'm in no means discouraging the use of bitcoin, but I do believe it is important for people to understand the traits associated with it.  There are other traits about btc that make it revolutionary to the idea of individual liberty, but casually buying illegal items with it isn't one of them.





[1] in the case of silk road it would be a a seller who had been moving a lot of product (via tor) and his neighbors notice a lot of cars coming and going.  During thanksgiving the neighbors new son-in-law (DEA guy) is told about all the, "traffic from that house."  Point here is that no matter how anonymous a seller is in some perfect anonymous market, they still can draw attention from their buying activities.
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October 28, 2011, 02:42:47 AM
 #13

I gave this analogy a few months ago.  Bitcoin is NOT anonymous.  Bitcoin simply has different anonymity traits versus cash in your pocket.

You buy 100 btc from a, "fully compliant with the law," trading site in which your name and address is registered, and available to the SEC
You go and buy something illegal from a house (website) using that 100 btc
Later that day the Law kicks in the door of the house (website [1]) in which you acquired your illegal object
They find 1000 btc on a laptop after a forensic review of the computers contents (they can do this).  Looking at the block chain they find that 100 btc came from the trading site to your wallet and then to the illegal item sellers computer
Law kicks in your door, because it is NOT possible that you didn't buy the illegal item unless you can forensically prove that you got hacked, and even then the hacker would have been taking directly from your wallet to the illegal item seller, rather to some, "holding," account

I'm in no means discouraging the use of bitcoin, but I do believe it is important for people to understand the traits associated with it.  There are other traits about btc that make it revolutionary to the idea of individual liberty, but casually buying illegal items with it isn't one of them.

Why would you do that?

How about:
* You buy BTC from a guy in my neighborhood by handing him some cash.
* You buy BTC from an exchange outside the US that says frak off United States our nation doesn't give a shit.
* You mine your own BTC
* You buy some BTC and pass it through an anonymizing service a dozen or so times.
* You buy some BTC deposit it on a online poker site, periodically adding and withdrawing funds from a pooled account.

Just because you aren't smart/creative enough to think of ways to protect your privacy doesn't mean other's can't.
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October 28, 2011, 02:47:41 AM
 #14

I gave this analogy a few months ago.  Bitcoin is NOT anonymous.  Bitcoin simply has different anonymity traits versus cash in your pocket.

You buy 100 btc from a, "fully compliant with the law," trading site in which your name and address is registered, and available to the SEC
You go and buy something illegal from a house (website) using that 100 btc
Later that day the Law kicks in the door of the house (website [1]) in which you acquired your illegal object
They find 1000 btc on a laptop after a forensic review of the computers contents (they can do this).  Looking at the block chain they find that 100 btc came from the trading site to your wallet and then to the illegal item sellers computer
Law kicks in your door, because it is NOT possible that you didn't buy the illegal item unless you can forensically prove that you got hacked, and even then the hacker would have been taking directly from your wallet to the illegal item seller, rather to some, "holding," account

I'm in no means discouraging the use of bitcoin, but I do believe it is important for people to understand the traits associated with it.  There are other traits about btc that make it revolutionary to the idea of individual liberty, but casually buying illegal items with it isn't one of them.

Why would you do that?

How about:
* You buy BTC from a guy in my neighborhood by handing him some cash.
* You buy BTC from an exchange outside the US that says frak off United States our nation doesn't give a shit.
* You mine your own BTC
* You buy some BTC and pass it through an anonymizing service a dozen or so times.
* You buy some BTC deposit it on a online poker site, periodically adding and withdrawing funds from a pooled account.

Just because you aren't smart/creative enough to think of ways to protect your privacy doesn't mean other's can't.

I don't for one minute deny that one could partake in other activities to increase the anonymity factor of btc transactions.  What I'm trying to illustrate is that the model of anonymity of btc is different than cash.  People who intricately understand what kind of information is stored in the block chain will understand all of this.  Many people don't understand all of this very well (get use to it) including 99.999% of law enforcement at this time.
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October 28, 2011, 03:21:47 AM
 #15

I think what I would say to law enforcement is this: money is information and as such can be sent anywhere on Earth instantly, with almost no cost, and in complete privacy.  Bitcoin or no bitcoin, this ability exists.  There was a time, not that long ago, when it was nearly impossible to track criminal activity using the financial system.  Law enforcement needs to understand that it's becoming increasingly difficult (if not impossible) to track criminals using the financial system and they need to adapt to that reality.  There are aspects of the legal code I don't agree with (in particular, I believe the war on drugs does more harm than good...and locking up people for prostitution is beyond ridiculous), but I do believe that we need a system of laws and law enforcement.  I want our legal system and law enforcement to be effective while at the same time respecting and protecting human liberty.

We need to recognize that honest people have a right to private transactions and that this right is essential to our liberty.  I believe that the founders of the United States could not comprehend a day where it was practically impossible for two parties to engage in a private transaction, yet that day is upon us.  Had they conceived of such a possibility, I am sure they would have taken measures to protect this right.  I find it ironic that a tool such as a computer and the internet affords us so many freedoms of communication and yet, it poses such a dangerous threat to this most very basic human right.  I believe that the next amendment to the US constitution should be one that protects the right to freedom and privacy in financial transactions.

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October 28, 2011, 06:35:21 AM
 #16

We need to recognize that honest people have a right to private transactions and that this right is essential to our liberty.  I believe that the founders of the United States could not comprehend a day where it was practically impossible for two parties to engage in a private transaction, yet that day is upon us.  Had they conceived of such a possibility, I am sure they would have taken measures to protect this right.  I find it ironic that a tool such as a computer and the internet affords us so many freedoms of communication and yet, it poses such a dangerous threat to this most very basic human right.  I believe that the next amendment to the US constitution should be one that protects the right to freedom and privacy in financial transactions.

Why would you limit it to financial transactions?

Google and Facebook provide "free" services in return for data-mining your life an pushing you targeted advertising.

The customers of Google and Facebook are actually the advertisers. The users are the product being sold.

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October 28, 2011, 07:36:47 AM
 #17

As long as there is no obvious corellation between adress transfering unusal amoun of coins and your real life identiy, you are safe. Speaking of Silk Road, most dangerous is cops busting some seller and using his SR seller account to gather information about buyers.

Which still only gives you the names of a bunch of potheads who don't actually sell anything, just like tens of millions of others in the country. You could get the same by asking around at a jam band festival.
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October 28, 2011, 08:53:54 AM
 #18

  Looking at the block chain they find that 100 btc came from the trading site to your wallet and then to the illegal item sellers computer

You are assuming the buyer purchased the goods straight from his Mt Gox account. Im not even sure if you can do that, without transferring the funds to your private wallet, but even if you can, you would have to be drop dead stupid to do that to buy drugs. Moreover, it would require a court order for Mt Gox to hand over his personal details (assuming they even have them). Its not impossible, but its unlikely and assuming utter stupity.

Thats not to say bitcoin is untraceable if your paint a more realistic scenario where the bitcoins are sent from mt gox to a private wallet and then to the seller, but it will become orders of magnitude more difficult, and damn near impossible if you use some precautions.

If you want to catch silk road buyers, the obvious way to do that is to pretend being a drugs seller on Silk Road. Not sure about the legality of that tactic though, where I live I think that would not be legal but IANAL.

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October 28, 2011, 09:04:09 AM
 #19

It would require a court order if MtGox didn't offered already to hand your head in a silver platter the minute they ask for it... And Britcoin/Intersango will do the same...

http://in.reuters.com/article/2011/06/15/financial-bitcoin-idINN1510930920110615

You guys are really clueless sometimes.

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October 28, 2011, 09:27:05 AM
 #20

Where does it say they hand out private information without court order?
Regardless, that is not the issue, when it comes to drug trafficking or other illegal activities, its usually not a bright idea to hide behind a need for a court order.

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