SEC tendering for blockchain analysis companies

[gentlemand]

https://www.fbo.gov/index?s=opportunity&mode=form&id=c18a03f93cf06df47dab8a1c1a7f87a9

How do we interpret this move? Does this mean they're moving towards something that increases their ETF passing abilities or just gives them the opportunity to nail more people?

I'd like to know how many cases have been built based on blockchain analysis. I have a sneaking feeling that much of it is utter bilge.

[cellard]

Im wondering if chainanalysis company thing found out about all the remaining Mt Goxed coins by now? as far as I can remember there were $millions worth of bitcoin in unknown addresses... or perhaps all the addresses are already know? but many of them sitting on wallets that they haven't been able to intercept.

Anyway this is why I was talking about the danger of sending mixed coins in an exchange. I did mix some coins as a test, now the doubt is, are one of these coins flagged by some hidden government list? this is the problem. Laws aren't clear on what would happen, but most likely you would end up in trouble, so im not willing to risk that just because I used some coins as a test on a mixer.

[squatter]

https://www.fbo.gov/index?s=opportunity&mode=form&id=c18a03f93cf06df47dab8a1c1a7f87a9

How do we interpret this move? Does this mean they're moving towards something that increases their ETF passing abilities or just gives them the opportunity to nail more people?

I don't get it. What's the connection to an ETF? Blockchain analysis might improve their ability to identify manipulation -- I don't really know -- but it's not going to give them jurisdiction over offshore exchanges where manipulation is occurring.

Maybe they want to zero in on DEX trading, since security tokens are always issued on smart contract protocols, and all that activity is on-chain.

I'd like to know how many cases have been built based on blockchain analysis. I have a sneaking feeling that much of it is utter bilge.

Probably some of the darknet market arrests. I imagine government agencies and blockchain data companies will continue honing their surveillance abilities over time.

[Lucius]

Why SEC just not call NSA and ask for some of their tools like OAKSTAR, MONKEYROCKET or XKeyScore system? NSA is working on this from 2013, and by now they probably have more advanced programs for tracking transaction and identifying users.

What exactly is the purpose of this market research, it is difficult to conclude at this time. I can only say that many are mistaken about anonymity of BTC transaction and hiding their identity in that process. Big Brother watching everything, and Snowden discovered that users of BTC are particularly interesting for secret services.

[buwaytress]

I think it'd be naive not to see this as a cynical move from the SEC. Maybe they don't want to nail people rightaway, but they certainly want to learn how people and their spending behaviours (or sending behaviours) are tracked. My surprise here though, is that they haven't yet got in touch with FBI or the IRS, who've already been known to use the Chainalysis Dick Tracys... somethiing tells me they have and this tendering is formality.

[avikz]

https://www.fbo.gov/index?s=opportunity&mode=form&id=c18a03f93cf06df47dab8a1c1a7f87a9

How do we interpret this move? Does this mean they're moving towards something that increases their ETF passing abilities or just gives them the opportunity to nail more people?

I'd like to know how many cases have been built based on blockchain analysis. I have a sneaking feeling that much of it is utter bilge.

I don't think it has any relation with only ETF or nailing down more people. Rather SEC is looking to get holistic overview of the crypto marke to assess risk and identify opportunities.

Also it's normal to have sneaking feeling when a market regulator takes such step. I would feel the same if the market regulator of my country seeks help from blockchain analysis companies. But I am sure it's too early to comment on that.

Still I don't have much positive feeling about the ETFs approval. Its better not to have ETF in crypto market which are synthetic in nature as it will only increase the speculation game around the market. Not desirable at all!

[1Referee]

Im wondering if chainanalysis company thing found out about all the remaining Mt Goxed coins by now? as far as I can remember there were $millions worth of bitcoin in unknown addresses... or perhaps all the addresses are already know? but many of them sitting on wallets that they haven't been able to intercept.

I'm pretty certain they know way more than we do, but I think the main problem here is that the coins are very likely distributed amongst hundreds of thousands of other addresses, likely belonging to innocent people, so from there it's not really worth the time to dig into it any further.

Back then it was less of a problem to mix coins and have them be sent to exchanges left and right, and we shouldn't forget the BTC-E connection. It may very well be that a lot of BTC-E users have withdrawn these gox coins.

That fat fuck has had plenty of time to work out his theft, and if you combine that with the relative freedom he had back then due to the lack of KYC/AML requirements, a small chunk of these coins are probably sitting in one of your or mine wallets right now.

[gentlemand]

Im wondering if chainanalysis company thing found out about all the remaining Mt Goxed coins by now? as far as I can remember there were $millions worth of bitcoin in unknown addresses... or perhaps all the addresses are already know? but many of them sitting on wallets that they haven't been able to intercept.

Anyway this is why I was talking about the danger of sending mixed coins in an exchange. I did mix some coins as a test, now the doubt is, are one of these coins flagged by some hidden government list? this is the problem. Laws aren't clear on what would happen, but most likely you would end up in trouble, so im not willing to risk that just because I used some coins as a test on a mixer.

As time passes the idea of tainted coins is going to get more outlandish, not less. All of the big swinging dicks will have coins that could be considered tainted if you bothered to look hard enough. Every single one of us has tainted coins unless we mined them and didn't move them.

The one taint that will stick will be coins sent or received directly via a centralised service that breaks its terms and conditions. That happens right now with Coinbase and gambling for instance and you're free to go off and use them with other services that don't have the same terms. You'd get the same 'taint' if you made the same moves in USD.

I've spent plenty of BTC with Bitpay and others and sent BTC to exchanges that came direct from Chipmixer and Bitmixer campaign earnings.

You seem to be getting more uptight with every passing day. You need a crypto holiday.

Probably some of the darknet market arrests. I imagine government agencies and blockchain data companies will continue honing their surveillance abilities over time.

The most high profile ones I can think of came from a moron sending directly from his dark wallet to an exchange account with his ID fully attached. The other was the sheep marketplace guy who was running millions of Euros through his girlfriend's account and thinking he was clever.

Neither demanded a warehouse full of Crays to solve.

[elda34b]

The funny thing this, some mainstream media use this to hype that somehow it's a green light for ETF approval. I certainly can't believe most media at this point, they're either twisting facts or making facts out of nowhere.

[cellard]

Im wondering if chainanalysis company thing found out about all the remaining Mt Goxed coins by now? as far as I can remember there were $millions worth of bitcoin in unknown addresses... or perhaps all the addresses are already know? but many of them sitting on wallets that they haven't been able to intercept.

I'm pretty certain they know way more than we do, but I think the main problem here is that the coins are very likely distributed amongst hundreds of thousands of other addresses, likely belonging to innocent people, so from there it's not really worth the time to dig into it any further.

Back then it was less of a problem to mix coins and have them be sent to exchanges left and right, and we shouldn't forget the BTC-E connection. It may very well be that a lot of BTC-E users have withdrawn these gox coins.

That fat fuck has had plenty of time to work out his theft, and if you combine that with the relative freedom he had back then due to the lack of KYC/AML requirements, a small chunk of these coins are probably sitting in one of your or mine wallets right now.

But anyone has some links with data? example:

% of coins under control of feds
% of coins not under control of feds, but intercepted via chainanalysis and known to belong from the mtgox pot, but not know who's the owner of the private keys currently
% of remaining coins which is to be estimated from the previous %'s above

then we could have an idea of how effective chainanalysis has been

I will try to look at the (known) numbers myself later I just don't have time for this right now.

Im wondering if chainanalysis company thing found out about all the remaining Mt Goxed coins by now? as far as I can remember there were $millions worth of bitcoin in unknown addresses... or perhaps all the addresses are already know? but many of them sitting on wallets that they haven't been able to intercept.

Anyway this is why I was talking about the danger of sending mixed coins in an exchange. I did mix some coins as a test, now the doubt is, are one of these coins flagged by some hidden government list? this is the problem. Laws aren't clear on what would happen, but most likely you would end up in trouble, so im not willing to risk that just because I used some coins as a test on a mixer.

As time passes the idea of tainted coins is going to get more outlandish, not less. All of the big swinging dicks will have coins that could be considered tainted if you bothered to look hard enough. Every single one of us has tainted coins unless we mined them and didn't move them.

The one taint that will stick will be coins sent or received directly via a centralised service that breaks its terms and conditions. That happens right now with Coinbase and gambling for instance and you're free to go off and use them with other services that don't have the same terms. You'd get the same 'taint' if you made the same moves in USD.

I've spent plenty of BTC with Bitpay and others and sent BTC to exchanges that came direct from Chipmixer and Bitmixer campaign earnings.

You seem to be getting more uptight with every passing day. You need a crypto holiday.

Probably some of the darknet market arrests. I imagine government agencies and blockchain data companies will continue honing their surveillance abilities over time.

The most high profile ones I can think of came from a moron sending directly from his dark wallet to an exchange account with his ID fully attached. The other was the sheep marketplace guy who was running millions of Euros through his girlfriend's account and thinking he was clever.

Neither demanded a warehouse full of Crays to solve.

 
We probably own coins which have belong to criminal activity in the past. This is not a problem in principle. When it becomes a problem is when a government knows for a fact or at least the address is on one of their "lists", then you deposit this on an exchange linked to your real identity, then it's when the problem starts since you could risk a potential audit, and who knows how much it would escalate, they may demand further proof, disclosure of your wallet, whatever else they may come up with.

An example of how an attacker/troll could incriminate someone is sending money to one of the 2 banned addresses by the US government (which have a fine of up to $250,000 per transaction) and within the same transaction send money to one of your addresses. De facto you've now have received money by a criminal. You now send this money into an exchange linked to your name and the rest is history.

I may need a cryptoholiday, but again, never underestimate the clusterfuck of laws that are being made right now about this, and/or interpretation of current laws in order to make situations like these fit in within these existing laws.

[squatter]

An example of how an attacker/troll could incriminate someone is sending money to one of the 2 banned addresses by the US government (which have a fine of up to $250,000 per transaction) and within the same transaction send money to one of your addresses. De facto you've now have received money by a criminal. You now send this money into an exchange linked to your name and the rest is history.

If someone sent coins to both you and the designated addresses, you weren't transacting with the sanctioned individuals and your coins didn't come from them. If you receive coins from the designated addresses, you're obligated to freeze the funds and contact the Treasury Department within 10 days. That's all.

If you've looked into how unlikely address collisions in Bitcoin are, then you know this scenario is ridiculously unlikely. No terrorists are going to troll you by sending real money to your wallet. Worrying about this is ridiculous.

[Theb]

The SEC is seeking information for potential sources to support the goal of acquiring data for the most widely used blockchain ledgers, including the universe of available information and transaction details.

I haven't read the pdf included but I think just by reading this bit on the preface the order is not mainly related to the ETFs but data gathering in general for digital assets. Just like what the introduction has mentioned its about market research and with it being posted in the Federal Business Opportunities' website it may just be related to the availability of companies who has the capability to offer market data they needed for the government contracts they will be offering in the future.

[cellard]

An example of how an attacker/troll could incriminate someone is sending money to one of the 2 banned addresses by the US government (which have a fine of up to $250,000 per transaction) and within the same transaction send money to one of your addresses. De facto you've now have received money by a criminal. You now send this money into an exchange linked to your name and the rest is history.

If someone sent coins to both you and the designated addresses, you weren't transacting with the sanctioned individuals and your coins didn't come from them. If you receive coins from the designated addresses, you're obligated to freeze the funds and contact the Treasury Department within 10 days. That's all.

If you've looked into how unlikely address collisions in Bitcoin are, then you know this scenario is ridiculously unlikely. No terrorists are going to troll you by sending real money to your wallet. Worrying about this is ridiculous.

Im just putting an example in how laws could be interpreted now or in the future. The main point here is owning coins that are flagged after mixing the coins, or after withdrawing from an exchange or whatnot, the point is, jurisdictions still don't know how to interpret all that data. Cold storage is considered as running a ponzi scheme in some jurisdictions. It's really bad.

So points to clarify:

1) Loss of transaction history through dead exchanges, or through just not saving said history because reasons (for instance Livecoin deleting it)
2) Coins that I mixed to learn how a mixer works
3) Coins coming from sig campaigns

Basically anything that doesn't come from Coinbase with a receipt (or any other known exchange) poses a certain risk. I still haven't heard many people cashing out relevant amounts with these situations to know how it went and I need that.

[figmentofmyass]

Basically anything that doesn't come from Coinbase with a receipt (or any other known exchange) poses a certain risk. I still haven't heard many people cashing out relevant amounts with these situations to know how it went and I need that.

i don't see how that's gonna provide anything conclusive. you shouldn't be taking queues from one or two randoms on the internet who probably aren't even in your jurisdiction anyway. smart people who are cashing out significant amounts won't post the details here, i assure you.

the fact that the best funded tax authority in the world (the IRS) has to subpoena coinbase to catch tax evaders should tell you something. if you're paying your taxes properly and you're still paranoid like this then you might as well send your coins to a burn address and be done with it already.....

[gentlemand]

the fact that the best funded tax authority in the world (the IRS) has to subpoena coinbase to catch tax evaders should tell you something. if you're paying your taxes properly and you're still paranoid like this then you might as well send your coins to a burn address and be done with it already.....

I think we need to permanently steer him away from this subject before an aneurysm lets go in an explosive manner. It's blocking reason from entering the mind as it is.

[cellard]

Basically anything that doesn't come from Coinbase with a receipt (or any other known exchange) poses a certain risk. I still haven't heard many people cashing out relevant amounts with these situations to know how it went and I need that.

i don't see how that's gonna provide anything conclusive. you shouldn't be taking queues from one or two randoms on the internet who probably aren't even in your jurisdiction anyway. smart people who are cashing out significant amounts won't post the details here, i assure you.

the fact that the best funded tax authority in the world (the IRS) has to subpoena coinbase to catch tax evaders should tell you something. if you're paying your taxes properly and you're still paranoid like this then you might as well send your coins to a burn address and be done with it already.....

the fact that the best funded tax authority in the world (the IRS) has to subpoena coinbase to catch tax evaders should tell you something. if you're paying your taxes properly and you're still paranoid like this then you might as well send your coins to a burn address and be done with it already.....

I think we need to permanently steer him away from this subject before an aneurysm lets go in an explosive manner. It's blocking reason from entering the mind as it is.

You are underrating the problem that having the wrong utxo's could deliver. For instance, there's people getting their funds blocked on Gemini because they have a bunch of addresses in a blacklist. I know a guy that sent some coins he made off a gambling website, and they knew it came from said website. I think they will only get worse in this regard, and at some point they will demand history of your tx's to prove the origin.

I recommend you to watch this with actual lawyers:

https://www.youtube.com/watch?v=jYCiRUBfHR4

The conclusion is.. try not to fuck around too much with your utxos if you want to sell a relevant amount that could raise alarms on the exchange/bank/whatever. Typically under $10,000 to not break any international laws.

I am waiting for people to report their experience selling coins which don't have a "coinbase purchase ticket" and of decent amounts not chump change, for instance sig campaign earnings, some people has made 50+ BTC off doing that through the years specially on the early campaigns. How did it go for the people that sold these coins, what were they requested to show as proof of legit origins and so on.

[squatter]

You are underrating the problem that having the wrong utxo's could deliver. For instance, there's people getting their funds blocked on Gemini because they have a bunch of addresses in a blacklist. I know a guy that sent some coins he made off a gambling website, and they knew it came from said website. I think they will only get worse in this regard, and at some point they will demand history of your tx's to prove the origin.

I'm not sure about Gemini specifically, but they're probably just enforcing TOS against using their services for gambling. Coinbase does this, and I believe the legal rationale is to avoid direct money transmission to/from gambling sites to comply with the Unlawful Internet Gambling Enforcement Act and the Federal Wire Act.

[buwaytress]

You are underrating the problem that having the wrong utxo's could deliver. For instance, there's people getting their funds blocked on Gemini because they have a bunch of addresses in a blacklist. I know a guy that sent some coins he made off a gambling website, and they knew it came from said website. I think they will only get worse in this regard, and at some point they will demand history of your tx's to prove the origin.

I'm not sure about Gemini specifically, but they're probably just enforcing TOS against using their services for gambling. Coinbase does this, and I believe the legal rationale is to avoid direct money transmission to/from gambling sites to comply with the Unlawful Internet Gambling Enforcement Act and the Federal Wire Act.

And then, once the latest (5th) Anti Money Laundering Directive comes fully into force for the EU at the end of this year, there's even some talk that money transmission to and from or even originating from or forming part of trails going towards sanctioned addresses (I believe US has sanctioned at least 2 now) triggering some form of alert. Whether or not this results in account blocking remains to be seen, but people I'm talking to say that companies/FIs wanting to derisk will probably just take the shortest route towards compliance.

[cellard]

You are underrating the problem that having the wrong utxo's could deliver. For instance, there's people getting their funds blocked on Gemini because they have a bunch of addresses in a blacklist. I know a guy that sent some coins he made off a gambling website, and they knew it came from said website. I think they will only get worse in this regard, and at some point they will demand history of your tx's to prove the origin.

I'm not sure about Gemini specifically, but they're probably just enforcing TOS against using their services for gambling. Coinbase does this, and I believe the legal rationale is to avoid direct money transmission to/from gambling sites to comply with the Unlawful Internet Gambling Enforcement Act and the Federal Wire Act.

And then, once the latest (5th) Anti Money Laundering Directive comes fully into force for the EU at the end of this year, there's even some talk that money transmission to and from or even originating from or forming part of trails going towards sanctioned addresses (I believe US has sanctioned at least 2 now) triggering some form of alert. Whether or not this results in account blocking remains to be seen, but people I'm talking to say that companies/FIs wanting to derisk will probably just take the shortest route towards compliance.

Indeed, there's 2 officially banned Bitcoin addresses in USA, but that's nothing, you don't really know which addresses each exchanges have on their blacklisted lists.

I would for starters avoid Gemini at all costs since they comply with the BitLicense, the rest is a gamble.

But the real problems will come when governments start passing laws on how their interpret utxo's. It's just nuts how bad it could get if they pass stupid laws involving tracing back addresses, and if they find something on their database and you happen to deposit the coins which contain these coins on the trace, you would be in trouble since they are attached to your real identity... all these things are being discussed right by lawyers and so on. This is why I was asking about experience when selling coins which don't have a clear origin (basically bought in exchanges with your real name)

[buwaytress]

Indeed, there's 2 officially banned Bitcoin addresses in USA, but that's nothing, you don't really know which addresses each exchanges have on their blacklisted lists.

I would for starters avoid Gemini at all costs since they comply with the BitLicense, the rest is a gamble.

But the real problems will come when governments start passing laws on how their interpret utxo's. It's just nuts how bad it could get if they pass stupid laws involving tracing back addresses, and if they find something on their database and you happen to deposit the coins which contain these coins on the trace, you would be in trouble since they are attached to your real identity... all these things are being discussed right by lawyers and so on. This is why I was asking about experience when selling coins which don't have a clear origin (basically bought in exchanges with your real name)

I actually wondered before if freshly minted coins would one day be worth a bit more if that ever happened (utxo interpretations, their attack on fungibility), ensuring miners get a hike on income. This would go completely contrary to the past, where older coins actually gained priority.

But I think for as long as users like us deliberately accept and use coins, and steer away from such exchanges or compliance, then we starve them off business anyway.