[2020-08-15] US Prosecutors Seize Bitcoin Allegedly Tied to AlQaeda, ISIS, Hamas

[bbc.reporter]

@Lucius, @Harlot. What are the exchanges approved by the government? In America, I speculate that one might be Coinbase. Therefore the best method to buy clean and no KYC bitcoins might be to buy them from someone who has bought them from Coinbase.

Is there a Coinbase user in the forum hehehe?

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[Betwrong]

Have the terrorist bitcoins seized by the American government become clean upon sequestration? I speculate that the future of public blockchain data is open for the government to label what is bad and not bad.

This might become a important issue, I reckon hehe.

Of course, the coins will become clean after being washed by a state agency - it sounds a bit paradoxical that state institutions legally wash the so-called dirty BTC and then return it to the system through auctions - although the history of these coins cannot be erased (unless they run through a coin mixer).

There is no doubt that this will be exactly the case, there will be a lot of seizure of cryptocurrencies which will then be returned to the system in this way. Is that good or bad? Well, I think it's still positive, because such coins still return to the system and are no longer marked as bad.

Silk Road total amount of seized BTC was over 170 000, after being washed they are back in the system and are probably part of many wallets - who knows, maybe some of us have them too

MTE. The coins can't be doubly bad, and the situation isn't that tangled as @bbc.reporter is saying. It's pretty simple actually. Unless the coins get dirty again, after the government auctions, they are going to be considered clean, obviously. Government can't just label something as "bad" or "not bad" without providing some proof.

[bbc.reporter]

@Betwrong. Agreed, ethically the government should not label any address as bad without proof, however, we cannot trust them to act ethically all of the time. They can assume or imply that your coins are dirty, declare it in public and tell exchanges to deny you.

In transparent blockchains, we can be considered guilty until we can prove our innocence by ourselves.

[Betwrong]

@Betwrong. Agreed, ethically the government should not label any address as bad without proof, however, we cannot trust them to act ethically all of the time. They can assume or imply that your coins are dirty, declare it in public and tell exchanges to deny you.

In transparent blockchains, we can be considered guilty until we can prove our innocence by ourselves.

In a V for Vendetta kind of state, we could. But, fortunately, there are few states like that left on Earth(with Belarus trying to stop being like that right now, but that's another topic). I really believe that in the world we are living, people are getting more and more freedoms, including financial ones, with time, and not the vise versa. Governments have to provide a really strong case for seizing someone's money.

[Lucius]

In a V for Vendetta kind of state, we could. But, fortunately, there are few states like that left on Earth(with Belarus trying to stop being like that right now, but that's another topic). I really believe that in the world we are living, people are getting more and more freedoms, including financial ones, with time, and not the vise versa. Governments have to provide a really strong case for seizing someone's money.

I would not agree that freedoms are actually increasing, especially financial ones were in many countries everything is already under the full control of Big Brother. The whole set of laws introduced by the Americans after the attack 9/11 actually allowed not only the USA to become a totally controlled state, but the pressure from the Americans on other countries is constantly increasing to do the same.

In the case of Bitcoin located on a crypto exchange, the authorities need only express suspicion of the illegality of these funds, and it is up to the client to prove the origin of the property. It is true that rarely will anyone check the history of their coins, so each of us can have some dirty coin because of which the authorities can always ask for seizure.

[bbc.reporter]

@Lucius. I reckon not only in America, in China, Russia, Israel, Singapore and many other countries can label your address as bad and would threat exchanges to have their licenses removed if they do not deny bad wallets.

It would also be easier for exchanges to deny or freeze users' accounts than face the problem.

[Betwrong]

@Lucius, @bbc.reporter, I appreciate your concerns, because being a regular citizen who's neither connected to the government nor working for its institutions, I myself can be affected in a bad way by such arbitrary actions of the authorities. And if people were silent all the time, or, like me, were saying that our governments are not that bad, no doubt the government would tighten the screws on us all, making our lives miserable. So, again, guys, thank you for your attitude!

I just think that at this point, in the "first world" countries, no BTCs were seized just because they were "dirty", ever. CMIIW, please.

[o_e_l_e_o]

I would not agree that freedoms are actually increasing, especially financial ones were in many countries everything is already under the full control of Big Brother. The whole set of laws introduced by the Americans after the attack 9/11 actually allowed not only the USA to become a totally controlled state, but the pressure from the Americans on other countries is constantly increasing to do the same.

If you think you are free then you haven't been paying attention. Even the things we know about are horrendous. The "EARN IT" bill allows the government to stick their noses in to encrypted data. The recently proposed "Lawful Access to Encrypted Data Act" will force companies to build backdoors in to all their software and allow the government to read all your encrypted data. The Snowden leaks and the NSA mass surveillance program is incredibly invasive, and is only the tip of the iceberg. Think of all the far worse things going on behind closed doors that we don't know about. We live in a surveillance state.

I just think that at this point, in the "first world" countries, no BTCs were seized just because they were "dirty", ever. CMIIW, please.

Not by the police/feds/government, as far as I am aware, but centralized exchanges seize coins and freeze accounts on a daily basis if they don't like where the coins have come from (and sometimes if they don't like where you've be sending other coins after you've withdrawn them).

[Lucius]

I would not agree that freedoms are actually increasing, especially financial ones were in many countries everything is already under the full control of Big Brother. The whole set of laws introduced by the Americans after the attack 9/11 actually allowed not only the USA to become a totally controlled state, but the pressure from the Americans on other countries is constantly increasing to do the same.

If you think you are free then you haven't been paying attention. Even the things we know about are horrendous.

I do not know from what you conclude that I think I am free, because on the contrary I think that all human freedoms are constantly diminishing in all countries, especially in the so-called great democracies of the Western world. In my country which is a member of the EU, for years there is absolute control of the tax administration over all bank accounts, every and the smallest transaction is visible to the authorities.

It is quite clear to me that we live in a totally spy society, all social networks, computers, mobile phones, cameras on the streets and shops are networked and monitor every person - and I am also aware that things are happening in the background far from the public eye, we only see what they want.


Betwrong&bbc.reporter, BTC blockchain is public, all the data is available to anyone to monitor and study as much as they want. Some call it the advantage that BTC has over the existing financial system, others might say that it is a weakness that the authorities will take advantage of if the need arises. Realistically, as one US congressman said, Bitcoin is still a small baby that can be very easily manipulated and does not pose a great danger. I have no doubt that things will become completely different if a small baby becomes too dangerous for those who rule the world.

[o_e_l_e_o]

I do not know from what you conclude that I think I am free

I wasn't referring to you personally; rather I was just speaking in generalities.

It is quite clear to me that we live in a totally spy society, all social networks, computers, mobile phones, cameras on the streets and shops are networked and monitor every person

Agreed. The only thing more worrying than how much corporations like Google and Facebook spy on your every move, photo, word, call, search, payment, etc., is just how little the general public seem to care that they don't have a shred of privacy left in their lives.

Thankfully, as time goes on, we are developing more and more ways to maintain and protect our privacy with bitcoin, and more and more people seem to be using them. DEXs are seeing more volume than ever before, and it was reported last week that they had more volume last week than in the entirety of last year. Mixers are more popular than ever, and things like CoinJoin and PayJoin continue to be developed.

[Lucius]

I wasn't referring to you personally; rather I was just speaking in generalities.

I assumed you were referring to something from my post because you quote me, no problem

~snip~

It is true that most do not care about privacy at all, as if they have consciously sacrificed it for the modern way of life - it is unbelievable that the growing invasion on privacy passes almost without any resistance. Good information for DEX, if this is accurate data then it is really an indication that users are increasingly turning to decentralized crypto exchanges which should mean that things are changing for the better.

In the event that a significant portion of the crypto market switches to DEX, do you think the authorities have an effective way to combat it in the sense that they require these services to take some action against their users? Specifically, if funds from terrorist organizations were transferred via DEX and also mixed via coinmixers, would that be something that would mean complete anonymity?

[o_e_l_e_o]

Good information for DEX, if this is accurate data then it is really an indication that users are increasingly turning to decentralized crypto exchanges which should mean that things are changing for the better.

Much of the volume will presumably be coming from DeFi altcoins being traded for Bitcoin or Ethereum due to the general bull trend, but it is encouraging nonetheless that people are using these services more. The more interest there is in DEXs on the whole then the more development and competition we will see in the DEX space, which is only a good thing.

In the event that a significant portion of the crypto market switches to DEX, do you think the authorities have an effective way to combat it in the sense that they require these services to take some action against their users?

I'm sure the authorities will try. Many DEXs still have a lot of centralized components to them - trading platforms, servers, owners, etc. - so although you don't have to deposit your coins to a centralized wallet to be able to use them, there are still centralized components which authorities can act against, take down, sanction, and so on. Probably the best option for avoiding this at the moment is Bisq, as its structure is not unlike that of bitcoin itself. Although there are obviously core developers and websites, the trading platform software is ran peer to peer over Tor, and therefore very difficult for it to be shutdown

Specifically, if funds from terrorist organizations were transferred via DEX and also mixed via coinmixers, would that be something that would mean complete anonymity?

I'm not convinced there is such a thing as "complete anonymity", just as there is not such a thing as "complete security". Each additional step that you use - mixing, coinjoining, DEXs - makes it exponentially more difficult to deanonymize you (provided you are careful to not leak your data in other ways), but a sufficiently powerful and determined adversary could still manage.

[coolcoinz]

@Lucius, @Harlot. What are the exchanges approved by the government? In America, I speculate that one might be Coinbase. Therefore the best method to buy clean and no KYC bitcoins might be to buy them from someone who has bought them from Coinbase.

Is there a Coinbase user in the forum hehehe?

Gemini holds a NY state license so we can say it's approved by the government, although no Bitcoin exchange is really approved by the "agencies" as their attitude can change at any moment. You never know when people in suits appear on your doorstep.
Even though there are approved exchanges it's impossible for them to keep track of every coin that passes through their wallets. I bet there are "dirty" coins going through Gemini and Coinbase as well.

[bbc.reporter]

I would not agree that freedoms are actually increasing, especially financial ones were in many countries everything is already under the full control of Big Brother. The whole set of laws introduced by the Americans after the attack 9/11 actually allowed not only the USA to become a totally controlled state, but the pressure from the Americans on other countries is constantly increasing to do the same.

If you think you are free then you haven't been paying attention. Even the things we know about are horrendous.

I do not know from what you conclude that I think I am free, because on the contrary I think that all human freedoms are constantly diminishing in all countries, especially in the so-called great democracies of the Western world. In my country which is a member of the EU, for years there is absolute control of the tax administration over all bank accounts, every and the smallest transaction is visible to the authorities.

It is quite clear to me that we live in a totally spy society, all social networks, computers, mobile phones, cameras on the streets and shops are networked and monitor every person - and I am also aware that things are happening in the background far from the public eye, we only see what they want.


Betwrong&bbc.reporter, BTC blockchain is public, all the data is available to anyone to monitor and study as much as they want. Some call it the advantage that BTC has over the existing financial system, others might say that it is a weakness that the authorities will take advantage of if the need arises. Realistically, as one US congressman said, Bitcoin is still a small baby that can be very easily manipulated and does not pose a great danger. I have no doubt that things will become completely different if a small baby becomes too dangerous for those who rule the world.

However, clearly bitcoin's data transparency is more of a disadvantage than an advantage. It will create a scenario where coins are not valued the same. This is also why we have mixers and the argument that everyone should mix their coins regularly to create a big, indistinguishable, anonymous pool of transactions.

[Betwrong]

~
However, clearly bitcoin's data transparency is more of a disadvantage than an advantage. It will create a scenario where coins are not valued the same. This is also why we have mixers and the argument that everyone should mix their coins regularly to create a big, indistinguishable, anonymous pool of transactions.

This is not that clear, imo. In the long term, when there will be no authoritarian regimes with their ridiculous laws, transparency will be a bad thing only for terrorists, fraudsters and other outlaws. Normal citizens will not suffer from it at all. Since I'm an optimist and I believe that those good times are approaching, I think Bitcoin, with its transparency, is perfect money for the future world.

[o_e_l_e_o]

transparency will be a bad thing only for terrorists, fraudsters and other outlaws. Normal citizens will not suffer from it at all.

Completely disagree.

You are essentially making the "nothing to hide" argument - if you aren't doing anything shady or immoral, then you have nothing to hide, and therefore you have nothing to fear from the government/feds/big brother sticking their noses in to your business and monitoring all you transactions. Only criminals/scammers/terrorists/etc. who are doing illegal things have something to fear.

Privacy is a fundamental human right. Without it, "normal citizens" as you put it suffer greatly. They simply become subjects of their government, willing to roll over and do whatever they are told to. Privacy must be protected.

I don't need to spend a lot of time dismantling the "nothing to hide" argument, because it is already widely discredited. I will share one of my favorite quotes on the topic though:

The old cliché is often mocked though basically true: there’s no reason to worry about surveillance if you have nothing to hide. That mindset creates the incentive to be as compliant and inconspicuous as possible: those who think that way decide it’s in their best interests to provide authorities with as little reason as possible to care about them. That’s accomplished by never stepping out of line. Those willing to live their lives that way will be indifferent to the loss of privacy because they feel that they lose nothing from it. Above all else, that’s what a Surveillance State does: it breeds fear of doing anything out of the ordinary by creating a class of meek citizens who know they are being constantly watched.

[bbc.reporter]

~
However, clearly bitcoin's data transparency is more of a disadvantage than an advantage. It will create a scenario where coins are not valued the same. This is also why we have mixers and the argument that everyone should mix their coins regularly to create a big, indistinguishable, anonymous pool of transactions.

This is not that clear, imo. In the long term, when there will be no authoritarian regimes with their ridiculous laws, transparency will be a bad thing only for terrorists, fraudsters and other outlaws. Normal citizens will not suffer from it at all. Since I'm an optimist and I believe that those good times are approaching, I think Bitcoin, with its transparency, is perfect money for the future world.

I am not thinking about this from a good user and a evil user attitude. I am thinking about this from the attitude that blockchain data transparency might have an undesirable effect on bitcoin's fungibility and acceptance and its value.
 

[o_e_l_e_o]

I am thinking about this from the attitude that blockchain data transparency might have an undesirable effect on bitcoin's fungibility and acceptance and its value.

This already happens, with centralized exchanges choosing to seize coins and freeze accounts if you deposit or withdraw directly to a casino, sportsbook, darknet market, coinjoin, and so on.

It's an untenable position for a couple of reasons. First of all, the majority of bitcoin in circulation have, at some point, passed through one of these "undesirable" services. Centralized exchanges cannot ban them all since they would rapidly go out of business. So how far back do they look? 5 transactions? 10? 20? So if you bounce your bitcoin around for n+1 transactions then suddenly they become "clean" again? It makes no sense. This is only going to get worse as time goes on, with more people using bitcoin and fewer bitcoin entering circulation means pretty much every bitcoin which isn't in a long term hold will become "tainted" in one way or another.

Secondly, people are getting fed up of this kind of behavior. The number of DEXs and the volume they are handling is steadily growing. Mixer use is increasing. Coinjoin is becoming mainstream. It is becoming more and more difficult to track "tainted" bitcoin if you are intent on obfuscating them. Again, centralized mixers cannot ban every coin which has ever been through one of these services.

The community should do its part and stop supporting centralized services which dictate what you are and are not allowed to do with your own money.

[bbc.reporter]

@o_e_l_e_o. How far do they look? It might become longer and farther as blockchain analytics improve hehehe.

Also, if the government can pressure a centralized exchange or a bank and order them to deny you of their service, this is similar to censorship. This only shows one of the weaknesses of a transparent blockchain.

[o_e_l_e_o]

It might become longer and farther as blockchain analytics improve hehehe.

True, but the longer and farther back they look then the more and more bitcoin will be deemed "tainted". If they decide to look back far enough, then pretty much every bitcoin in circulation will be "tainted" and they would have to shut down because of lack of customers. Whatever cut off they use will be completely arbitrary and therefore meaningless.

Also, if the government can pressure a centralized exchange or a bank and order them to deny you of their service, this is similar to censorship. This only shows one of the weaknesses of a transparent blockchain.

It's absolutely censorship, but it only shows the weakness of using centralized services. There is nothing a government can do to stop me trading on Bisq, for example.