Bitcoin-AML: Who's who with whom?

[Atrax]

Hi all,
there's a lot of companies which conduct Anti-Money-Laundering services regarding Bitcoin and other cryptocurrencies. However, most of them operate in the dark and work with tax authorities, secret services, police and so on. I don't want to sound paranoid, but a lot of crypto exchanges work with them.
This thread will - hopefully - grow over the time. It is meant to collect information on the AML-providers, who they share their data with as well as who works with them.

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[Atrax]

Chainalysis

Chainalysis is obviously the biggest player in the field of Anti Money Laundering Services regarding Bitcoin and other cryptocurrencies.

"Techchrunch" summarized the company's history: "Specifically, Michael Gronager, who was then COO of the Kraken bitcoin exchange, spied an opportunity to team up with a new friend, Jonathan Levin, a post-graduate economist from Oxford who’d written academic works on crytpocurrencies. The two were already discussing intelligence software that could trace specific transactions on the blockchain and be sold to law enforcement. Before long, their young company, Chainalysis, was the official investigator on the Mt. Gox case, hired by its bankruptcy trustee to find all those missing coins.
Its small team “cracked the case probably two months in,” Levin says now.
It was a far bigger credit than most companies start off with, and Chainalysis smartly ran with it, signing up customers like the Federal Bureau of Investigation, the Drug Enforcement Administration, the Internal Revenue Service and Europol to help them catch criminals."

And "Fortune" wrote: "The latest reminder of this comes via a report that the Internal Revenue Service is using software to unmask bitcoin users who have failed to report profits. According to a contract unearthed by the Daily Beast, the IRS is paying a company called Chainalysis to help identify the owners of digital “wallets” that users employ to store their bitcoins.

In a letter to the IRS, the co-founder of Chainalysis says the company has information on 25 percent of all bitcoin addresses and that it deploys millions of tags to help track and identify transactions."

In some news articles, the authors write that the company is originally located in Switzerland. This is, though, not true anymore. There was a company by the name Chainalysis LLC in Switzerland with the Delaware-company "Chainalysis Inc." as main shareholder. The Swiss company has since been liquidated, and Chainalysis writes that they have offices today in New York, Washington, D.C. and Copenhagen, Europe.

So the company is based in the US, working with the FBI, DEA, IRS and Europol in Europe?

As if this weren't enough warning signs, they also use a .com-url which makes them and their clients subject of the US jurisdiction. And potentially all Bitcoin-users who are somehow connected to one of Chainalysis' clients.

But: Who are these clients? Chainalysis doesn't reveal. However, one of their investors is the Digital Currency Group which has, in turn, a lot of exchanges in its portfolio, like Coinbase, Kraken, Shapeshift, Circle - just to name a few.

What is the risk? Potentially, all client data can be end up with the US government. For exchanges in some countries, this would be a violation of data secrecy laws. Furthermore, as mentioned before, even users of cryptocurrencies could become subject of US jurisdiction.

Summary: Do not use ANY service that is using Chainalysis.

[wujek]

I wonder if localbitcoins work with them

[buwaytress]

I somehow doubt that most of them operate in the dark. In fact, almost any licenced exchange now, at least those operating within the EU, EEA and Swiss jurisdictions are all performing AML/KYC compliance procedures - as required by their licence. With AML anyway, this may not actually require verification. A very simple example of pure AML is alerting the central bank of transactions that fulfil several criteria. Usually a limit, or a frequency, or a sanctioned/watchlist recipient.

Operating in the dark suggests that they are collecting and transmitting information without the user's knowledge - which would put them very much at odds with privacy laws, and rendering any information collected by states illegal. So, you're probably wrong. Course, am hardly surprised anything's done the right way these days. States make laws around themselves.

[Bergda78]

I do not think that anyone can see anything. If you consider that the government does not know how to regulate that with the tax. How could then accomplish after who paid what and where? In my opinion, all this will take a while. It will not go very long because the city can not afford to do that. Too much money goes to the windmill. I think

[BuyBuyBitcoin]

We follow the Anon exchanges, will add any new ones we come across.

https://www.bestbitcoinbuyers.com/buy-bitcoin-anonymously/

Bisq
Hodlhodl
Paxful
Changelly
CoinMama (super small amounts though)
Wall of Coins
Mycelium local trader app 

Trading altcoins through binance has been MOST people preferred no-KYC trading platform in 2018.

[buwaytress]

We follow the Anon exchanges, will add any new ones we come across.

https://www.bestbitcoinbuyers.com/buy-bitcoin-anonymously/

Bisq
Hodlhodl
Paxful
Changelly
CoinMama (super small amounts though)
Wall of Coins
Mycelium local trader app 

Trading altcoins through binance has been MOST people preferred no-KYC trading platform in 2018.

Agree with Bisq, Hodlhodl and Wall of Coins... in that order of personal preference. They've all tried some level of decentralisation - which is as good as it gets at this stage. For me, no requirement for verification is pretty much the main attraction, but then you need a system of protection for funds, so it's got to be a really robust system for e-scrow and multisig. I can say Bisq ticks most of the boxes.

Changelly though, weren't they now following in footsteps of Shapeshift with KYC and freezing amounts thought to be stolen?

And Binance. I'm not sure how long more they can run without bowing to KYC requirements. The 2 BTC daily limit for unverified accounts there is pretty good though.

[squatter]

Changelly though, weren't they now following in footsteps of Shapeshift with KYC and freezing amounts thought to be stolen?

Indeed, I would steer clear of Changelly. I don't believe they mandate KYC like Shapeshift, but they've been known to confiscate "suspicious" transfers and then require KYC. It seems like they specifically target Monero.

And Binance. I'm not sure how long more they can run without bowing to KYC requirements. The 2 BTC daily limit for unverified accounts there is pretty good though.

I'm really surprised they haven't either prohibited US customers or changed their KYC thresholds. Given their size -- and what Shapeshift did -- I'm sure the US government is breathing down their neck.

[timerland]

Hi all,
there's a lot of companies which conduct Anti-Money-Laundering services regarding Bitcoin and other cryptocurrencies. However, most of them operate in the dark and work with tax authorities, secret services, police and so on. I don't want to sound paranoid, but a lot of crypto exchanges work with them.
This thread will - hopefully - grow over the time. It is meant to collect information on the AML-providers, who they share their data with as well as who works with them.

It seems obvious enough to me that if a service is collecting AML information from their users, they are going to share it with the police or regulatory entities if something is deemed to be fishy.

If a user signs up to any service that requires ID verification, they should be expecting their account information to be completely transparent to all government entities, as well as the company themselves. If you're not comfortable with that, then it's a good idea to not register or use their services in the first place.

There are services like Changelly, Changenow, HitBTC etc. that I'd not use because they seem to be collecting more information that it is necessary. Not only is this extra information ptoentially going to be shared with parties that are unknown to us, it is also an excuse they can use to hold customer funds and stall.

[buwaytress]

Indeed, I would steer clear of Changelly. I don't believe they mandate KYC like Shapeshift, but they've been known to confiscate "suspicious" transfers and then require KYC. It seems like they specifically target Monero.

Also several complaints I've seen on this forum and on others outside of reddit, all with Changelly at the centre of the problems. Every service is bound to have its detractors but when the frequency persists, then you know it can't be random coincidence but an emerging pattern. I've used Changelly myself in the past, but when there are other options that don't give the same issues...

And Binance. I'm not sure how long more they can run without bowing to KYC requirements. The 2 BTC daily limit for unverified accounts there is pretty good though.

I'm really surprised they haven't either prohibited US customers or changed their KYC thresholds. Given their size -- and what Shapeshift did -- I'm sure the US government is breathing down their neck.

They certainly have had governments breathing down their neck. China, anyway, which is why they just shifted their operations to Japan and then now Malta. But yeah, we've already seen the US govt take their chase overseas and offshore. 1Broker was the biggest catch this year and if THEY were targeted, even when USA seemingly didn't have jurisdiction, I wouldn't dismiss Binance as a target, unless their current HQ jurisdiction (Malta) is backing them? I wonder if UK's backing for Malta makes it protected from Big Brother US.

[Harlot]

As long as you are not doing anything wrong or doing something illegal within the system you shouldn't be paranoid that these companies are within good terms with the government. Do not treat the government as the bad guys here as they are actually the ones who are trying to catch the bad guys within the system. AML is something not to be scared of at all I know for a fact that if you are trading big amounts chances of you alerting the exchange as well as the government are big as there is a certain threshold they are flagging but if you are not evading taxes or laundering money don't even be afraid that they are knocking in your door.

[Atrax]

As long as you are not doing anything wrong or doing something illegal within the system you shouldn't be paranoid that these companies are within good terms with the government. Do not treat the government as the bad guys here as they are actually the ones who are trying to catch the bad guys within the system. AML is something not to be scared of at all I know for a fact that if you are trading big amounts chances of you alerting the exchange as well as the government are big as there is a certain threshold they are flagging but if you are not evading taxes or laundering money don't even be afraid that they are knocking in your door.

I strongly disagree with what you write.

Who says what's wrong and what not? Just an example: There are countries in which certain substances are legal, while they may be illegal in the US. Giving US governmental entities access to this data is potentially dangerous. u seem to think that we are dealing here with a provident government. Think again...

The government tries to catch the bad guys, you write. So you wouldn't be bothered if all these information about Bitcoin users would be shared with all possible governments, right? Or are you writing only about one single government? And if so: Which one do you have in mind?

What you write is fundamentally against all Bitcoin stands for.

[Harlot]

~snip~

I strongly disagree with what you write.

Who says what's wrong and what not? Just an example:

The government specifically the judiciary department is the one who is saying what is wrong and what is not, that is why we have courts in our country to know if we are guilty or not

There are countries in which certain substances are legal, while they may be illegal in the US. Giving US governmental entities access to this data is potentially dangerous. u seem to think that we are dealing here with a provident government. Think again...

Then it is your own responsibility to know if what your bringing to the U.S. is illegal in their country. You cannot blame them that you have no time reading their laws. It is your fault being irresponsible.

The government tries to catch the bad guys, you write. So you wouldn't be bothered if all these information about Bitcoin users would be shared with all possible governments, right? Or are you writing only about one single government? And if so: Which one do you have in mind?

What you write is fundamentally against all Bitcoin stands for.

Information incriminating you in other charges won't even be admissible in court if obtained in an illegal way even if it means they are sharing it to other branches. So I still wonder why are you afraid sharing your information to them? Why are you so afraid that you think this information could still be use against you? If you are found guilty in the first charge I doubt they will even use the other evidence against you, what they will be doing is wasting their taxpayer's money to a person who is already in jail.

[Atrax]

There are countries in which certain substances are legal, while they may be illegal in the US. Giving US governmental entities access to this data is potentially dangerous. u seem to think that we are dealing here with a provident government. Think again...

Then it is your own responsibility to know if what your bringing to the U.S. is illegal in their country. You cannot blame them that you have no time reading their laws. It is your fault being irresponsible.

As a citizen of my country, I must know my laws. If I am in my country and live without violating a law but use cryptocurrencies for a purpose which may be illegal in the US, why should I be afraid of US laws? You are speaking word for a totalitaristic state.

Information incriminating you in other charges won't even be admissible in court if obtained in an illegal way even if it means they are sharing it to other branches. So I still wonder why are you afraid sharing your information to them? Why are you so afraid that you think this information could still be use against you? If you are found guilty in the first charge I doubt they will even use the other evidence against you, what they will be doing is wasting their taxpayer's money to a person who is already in jail.

First: Where do you read that I'm afraid? That's your assumption.
Second: The US courts say that, if a cryptocurrency is broadcasted through US based nodes, it is automatically a case for US courts, even if the companies are not located in and not connected to the US but through those nodes. So as I said before: A citizen of the free world can do all according to the laws in his country. But if the US wants, they still can get this person to court if a legal action in country A is illegal in the US.

If you "translate" this into the real world, we end up with the situation that you say something in the US and get to court for this once in Europe.

[figmentofmyass]

The US courts say that, if a cryptocurrency is broadcasted through US based nodes, it is automatically a case for US courts, even if the companies are not located in and not connected to the US but through those nodes.

you got a source for that court precedent? because i've never heard of anything like that.

the feds have issued enforcement actions against foreign companies who served USA customers while violating AML or securities laws, and courts have upheld those indictments. but i've never seen any court case that ruled on node propagation in a decentralized p2p protocol.....

[Atrax]

The US courts say that, if a cryptocurrency is broadcasted through US based nodes, it is automatically a case for US courts, even if the companies are not located in and not connected to the US but through those nodes.

you got a source for that court precedent? because i've never heard of anything like that.

the feds have issued enforcement actions against foreign companies who served USA customers while violating AML or securities laws, and courts have upheld those indictments. but i've never seen any court case that ruled on node propagation in a decentralized p2p protocol.....

For this, you should look at the Tezos-case: There were four considerations, one of them the following:

... (4) the purchaser contributions were validated, rendering transactions irrevocable, by a network of global nodes clustered more densely in the United States than in any other country. Therefore, Judge Seeborg concluded that the Exchange Act applied.

Now if you combine this with the decisions from 2011, it looks even worse:

Erik Barnett, assistant deputy director of ICE said told the Guardian that the agency will actively target web sites that are breaking US copyright laws even if their servers are not based in the US. According to Barnett, all web sites that use the .com and .net TLDs are fair game and that, since the Domain Name Service (DNS) indexes for those web sites are routed through the US-based registry Versign, ICE believes it has enough to "seek a US prosecution".

According to the Guardian, ICE is not focusing its efforts just on web sites that stream dodgy content but those that link to them, something the newspaper claims has "considerable doubt as to whether this is even illegal in Britain". It points out that the only such case to have been heard by a judge in the UK was dismissed.

[pakiplay]

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[audaciousbeing]

I don't see the need for calling them out because no matter the review they get, so far it cannot be proved that they have violated the regulations of their establishment and disclosing information to illegal bodies for exploitation then their business will continue to progress. Exchange sites would patronise them so far they can prove their worth to them and they don't necessarily have to work in the dark because they really don't deal with end users directly as their actions are between the exchange sites that hire them whom they would direct their report to.

Again, giving information to law enforcement agencies would only be wrong if its done without due process or meant for victimisation purposes other than that, there is nothing wrong. If you are not comfortable giving your information, just don't visit their site.

[darylalban]

Ciphertrace is one I know of that has a lot of partnerships with exchanges. I know they work with authorities and courts when tracking specific wallets in hopes of catching the individual

[darylalban]

I am a big proponent of Ciphertrace because of their quarterly AML reports as well as working with top exchanges like Binance. They are also working to create a better process for the travel rule with Shyft