How to make money with bitcoin 0-confirmations spending, what are legal risks?

[josephanderson2020]

Hi,

  I have a friend who found a way to make money with 0-confirmations spending, I know is not ethical but it is working and I wonder what are the legal risks?

  He found several sites, that can be used to make money.

  One is a bitcoin mixer, that works with 0-confirmations.

  This mixer works like this: you give it a bitcoin address where to return the mixed coins. Then the mixer provides you with an address where you send the bitcoin to be mixed. After the bitcoin receives the bitcoin to be mixed, it sends you bitcoin from a different address, basically different bitcoins, so that the bitcoins links are lost.
  The bitcoin mixer has some sort of buffer or reserve of bitcoins from where it sends you.

  The thing is that the mixer is not configured properly, and it sends you bitcoins from his reserve as soon as it sees a 0-confirmation transaction from you to the address that it gave you to send bitcoin to be mixed. So it doesn't wait for your initial transaction to be confirmed 1 or more, it just sends you the amount it sees coming, less fee, as it thinks it will get those bitcoins.

   The catch is this: if you send it any bitcoin amount with a very small fee, ex 1 satoshi per byte, the mixer sees the transaction, sends you bitcoin to your output address, but it never receives your initial bitcoin because the transaction doesn't confirm, and gets back to your wallet in about 3 days or so after it gets dropped from the mem pool

   This is a great way to double bitcoin. Any amount can be sent to the mixer, the mixer sends back before it has confirmations of receiving, and then the initial transaction reverses because of the small fee.

   It is not ethical but is proven. I am not sharing the link of the bitcoin mixer, because I do not do advertising of it, nor I want to promote illegal ways of doing money.

   I am just asking, due to the nature of bitcoin, is very difficult to catch a person making bitcoin this way. But what are the legal risks if he gets caught?

   I am sure this glitch in configuration won't stay long. So I need to consider the legal risks fast before the thing gets properly configured

   My friend has sent it several times various amounts of bitcoins, and it always worked, getting bitcoin back twice.

Edit: zxqmje462zmm6as2 with onion at the end is the said mixer. Is a service on tor browser . I think normal version can be accessed if one puts  ws at the end

 I write the address to show is a very graphical ugly and simple bitcoin mixer,  so I assume the programmer or designer is laking skills, he didn't even got some profesional template embedded in it, which makes me think he is also lacking skills on configuration of bitcoin node server and other stuff...

[Lucius]

Your friend has found a hole in the system and is exploiting it to make a financial profit, and that is neither legal nor moral. What you're actually asking is whether someone can find people who do it or it can be done without sanctions - and it all depends on how good your friend is at covering his tracks. If someone is caught stealing, it doesn't matter how they did it - the punishment depends on the gravity of the crime and the law in force in a country.

He found several sites, that can be used to make money.

For all those who might want to take advantage of the services mentioned by OP, keep in mind that the whole story may not be true - do not use unverified sites because instead of double BTC you may be left without a deposit. Whoever made a mixer without protecting themselves from double-spend is far from a professional who knows what he is doing.

[baro77]

I guess that sadly many laws look at mixers more as crypto-money-washers than privacy tools.

That stated I guess it could be improbable to have  LEGAL consequences because it's improbable mixer owner will self-report its activity just to denounce you

But I would be personally worried about violent revenges if you do not hide your identity in a really effective way (which is soooo difficult in these days, especially if you haven't always cared about it, ideally since the beginning of times)

my2cents

[hugeblack]

Most of the services that accept transactions with zero confirmations require some conditions, such as high fees, and others, so do not think you are smart.
It may also be that the site is linked to some of the scammers who send those currencies to you to make the process of tracking them more difficult and thus the authorities will pursue you when trying to send money to a central platform.
Money is not generated this easily, so I advise your friend to find a job or invest.

[josephanderson2020]

For all those who might want to take advantage of the services mentioned by OP, keep in mind that the whole story may not be true - do not use unverified sites because instead of double BTC you may be left without a deposit. 

 Theoretically if you send with a very small fee, the funds will never arrive to the destination, the transaction will be reverted. So you can't be left without a deposit because the funds will arrive back, the worst you can have it blocked for a few days

 Am I wrong?

Whoever made a mixer without protecting themselves from double-spend is far from a professional who knows what he is doing.

 zxqmje462zmm6as2 with onion at the end is the said mixer. Is a service on tor browser . I think normal version can be accessed if one puts  ws at the end

 I write the address to show is a very graphical ugly and simple bitcoin mixer,  so I assume the programmer or designer is laking skills, he din't even got some profesional template embedded in it, which makes me think he is also lacking skills on configuration of bitcoin node server and other stuff...

  I tried it personally for a few transaction, and it worked, I got the bitcoins out from mixer before my payment confimed entering the mixer.

I guess that sadly many laws look at mixers more as crypto-money-washers than privacy tools.

That stated I guess it could be improbable to have  LEGAL consequences because it's improbable mixer owner will self-report its activity just to denounce you

  That sounds good.

But I would be personally worried about violent revenges if you do not hide your identity in a really effective way (which is soooo difficult in these days, especially if you haven't always cared about it, ideally since the beginning of times)

my2cents

  As the owner of the mixer seems to lack skills to properly configure the mixer, I doub't he is having skills to trace me. I plan to mix the coins elsewhere after I get it.

[avikz]

Lol! You understand that you are doing something unethically and you still keep on doing it and getting worried about legal consequences? The legal consequences would convict you as a cheater and a thief, but only if they can catch you!

I am sure the owner of the mixer will eventually fix the loophole once he notices his financial loss! So whatever you guys are doing, are short lived!

I think, you must have received few PMs already asking about the address of the mixer!

[josephanderson2020]

Lol! You understand that you are doing something unethically and you still keep on doing it and getting worried about legal consequences? The legal consequences would convict you as a cheater and a thief, but only if they can catch you!

I am sure the owner of the mixer will eventually fix the loophole once he notices his financial loss! So whatever you guys are doing, are short lived!

I think, you must have received few PMs already asking about the address of the mixer!

  Yes, I received a few PMs already, and I gave it. I also mentioned here in the thread in an edit, so save myself from lots of PMs.

  To anyone: use it on your own risk. It will work for a short time until the admin will fix the loophole. And as avikz said, he will fix it as soon as he finds his financial loses.

[Fesatmas]

it is quite troublesome, when your friend has gotten the change even for the second time, while you are not the same because of the configuration error. I guess could you please share a link that we can investigate so that we can really confirm this. 50:50 possibility there is still an element of fraud, but with 50% of your friends have provided evidence. we need to find out first.

[sheenshane]

 As the owner of the mixer seems to lack skills to properly configure the mixer, I doub't he is having skills to trace me. I plan to mix the coins elsewhere after I get it.

There might a chance that could they trace you if they figure out a massive loss of their profit because of the loopholes you've said.  There's an agency that can able to trace and track down Bitcoin transactions or any transactions related to the blockchain (chainalysis.com).  But I think if that is worth it for them to recover their loss and pay for that cost.  

It seems this case belonged to cybercriminals and I think your friend might be at risk because that is illegal, they might call him a theft or hacker.

However, it is impossible if the owner of the mixer service won't be noticed about this.  I don't know how their business work but I think they had a full audit, might be weekly or monthly.

[tranthidung]

I have a friend who found a way to make money with 0-confirmations spending, I know is not ethical but it is working and I wonder what are the legal risks?

Your friend is a scammer and if you follow him/her, you are a scammer too. It's bad.

Fortunately,if you skip that mixer, I don't believe you can find too many victims for the scam method with 0-confirmation transaction. Good luck.

Theoretically if you send with a very small fee, the funds will never arrive to the destination, the transaction will be reverted. So you can't be left without a deposit because the funds will arrive back, the worst you can have it blocked for a few days

One node might drop your too low-fee transaction from its mempool after 14 days or 336 hours but your waiting transaction can be added to other nodes and can be confirmed later.

It is described in Bitcoin Core 0.20.0 Release Notes, #18172 Transaction expiry from mempool (0xB10C)

This adds the functional test mempool_expiry.py covering mempool transaction expiry. Both the default DEFAULT_MEMPOOL_EXPIRY of 336 hours (two weeks, set in #9312) and the user definable mempool expiry via the -mempoolexpiry=<n> command line option are tested. The test checks that descendants of expired transactions are removed as well.

Notes for reviewers

LimitMempoolSize() (which is the only caller of CTxMemPool::Expire()) is only called when a transaction is added to the mempool. In order to test expiry of a transaction-that-should-expire, the mocktime is set and a random transaction is broadcast to trigger LimitMempoolSize(). The transaction-that-should-expire is then checked for expiry. LMK if there is another way, but I don't think there is.

https://bitcoin.org/en/release/v0.20.0#tests-and-qa
https://github.com/bitcoin/bitcoin/pull/18172

[dothebeats]

This is trying to game the system, and that's why there aren't much platforms that offer 0-confirmation transactions on their end before a sale or a purchase is made. Also, should you ever find one (like what your buddy told you), there would be some pre-checks that would happen before a sale is confirmed even without confirmations on the blockchain. That mixer surely imposes something on their end, as it basically is a free money site if they don't implement some safeguarding for themselves. Anyways, with legal repercussions or not, I highly suggest that you do not try this, as this clearly is unethical and not an approved way of making money.

[o_e_l_e_o]

For all those who might want to take advantage of the services mentioned by OP, keep in mind that the whole story may not be true

Exactly. A brand new account suggesting a mixer that no one has ever heard of before? This screams of a scam to me.

I suspect anyone who tries to get greedy and use this "doubler" will find whatever funds they send immediately included in a CPFP with a very high fee.

[josephanderson2020]

I suspect anyone who tries to get greedy and use this "doubler" will find whatever funds they send immediately included in a CPFP with a very high fee.

  I tried the mixer myself, with a small amount and it works.

  I am afraid of sending in a big amount.

[hatshepsut93]

Whenever someone says they found a vulnerable site that can be exploited for profit and leave a link to such site, it's pretty much always just a scam. There's a very popular scam when scammers message people telling they found a bug in a casino and ask people to deposit money so they would share their profit with them. This is just a variation of this scam.

If there was a legitimate bug, the person who found it would either exploit it themselves if they are a blackhat, or responsibly disclose it to owners if they are a white hat. The only ones who create topics on public forums are scammers. As Bitcoin prices go up, scammers become more active and creative.

[josephanderson2020]

  Several users send me PMs ask not to disclose the site publicy, but only to give the address to them to test, with the suggestion that the more people use it to make money the faster the admin of the site will fix the glitch .

  I guess those users only want to exploit it themselves.

  It is resonable that all people want this address hidden, only for them to know and to exploit. The more use it the faster it will be fixed.

  Those calling it a scam, do just that, try to scare away people from using it, so that it last longer.

[eaLiTy]

Several users send me PMs ask not to disclose the site publicy, but only to give the address to them to test, with the suggestion that the more people use it to make money the faster the admin of the site will fix the glitch .

I cannot understand why the admin does not understand the basic and even if some have scammed the site by double spending do you think the admin will not understand what is going on  . When i first saw this topic you did not mention the site and hence i did not respond as no one in the right sense will provide a mixing service with zero confirmation and since you updated the site i wont be surprised if you own the site .

[stompix]

For all those who might want to take advantage of the services mentioned by OP, keep in mind that the whole story may not be true

Exactly. A brand new account suggesting a mixer that no one has ever heard of before? This screams of a scam to me.
I suspect anyone who tries to get greedy and use this "doubler" will find whatever funds they send immediately included in a CPFP with a very high fee.

So It was not just me, the moment I saw he shared the link I started to get suspicious

Newbie account, a way to make money with ease, a somewhat believable story, I'm also willing to bet that whoever tries that mixer will see no coins coming to him. The whole thing is raising so many damn flags and I know people tend to believe stories when they have the edge, like the scam with the guy that gives you the login to an account with 10BTC and asks you to give him his share after you unlocked them. This gives the victim a false sense of security just like this transaction, that can get confirmed in the next block if the scammer wants so.

If there was a legitimate bug, the person who found it would either exploit it themselves if they are a blackhat, or responsibly disclose it to owners if they are a white hat.

But then why do people who have found a way to guess every lottery number instead of going for the hundreds of millions in the
jackpot are working so much to sell 200 copies at 10$ a piece? 
Maybe the OP just wants to share the wealth with us.

How about this OP, we make a deal, you do all this bla bla hocus pocus in my name, you mix 1BTC, and since I'm such a generous person I'll let you have half of it for doing the work and the tip on how to make money, so please send me 0.5BTC 

[Foxpup]

Since others have explained why this is probably a scam, I'll just address the question in the title, which nobody has actually answered directly. While exactly which crime(s) this is will vary depending on your jurisdiction, as a general rule, making a payment with the intention of later reversing it is fraud, and obtaining property (including bitcoins) by means of fraud is additionally theft. The legal risks of committing fraud and theft also vary by jurisdiction, but you can generally expect that if you get caught (and don't think you can't be - neither Tor nor Bitcoin are as anonymous as is generally believed, especially if you're careless), you could be facing several years in jail.

Note that it's a common scam tactic to implicate the victim in a crime, to discourage them from telling anyone (especially the police) once they realise they've been scammed.

[Wexnident]

I suspect anyone who tries to get greedy and use this "doubler" will find whatever funds they send immediately included in a CPFP with a very high fee.

  I tried the mixer myself, with a small amount and it works.

  I am afraid of sending in a big amount.

Here's the thing, even if you did say "I tried it myself, it's legit", you do know it's all a load of bull in our eyes right? You do realize you look like an idiot right now, right? Who in the bloody hell would believe such a thing, especially by a newly created account? Not to mention you, even well-trusted accounts who would post such things would be scrutinized a lot before a lot of people say it is legit. It's not that we don't believe you, but yes, we actually don't!. We're in the bloody internet, who would believe the word of one person after saying "I tried it myself, it works!"?

Well, to answer the question of legal risks just for the sake of it, there isn't "much" of legality since it's crypto, not yet at least, so it's hard to identify even if there is one or not. Just don't bloody do it if you're worried like that. It's like a killer questioning whether it's right or wrong to kill.

[Darker45]

1. I cannot imagine this to be true. I mean, the developer behind this was brilliant enough to be able to create a mixer and foolish enough to send BTC to a different address while the incoming BTC from the customer has not yet reached even a single confirmation? How ironic is that? And he/she hasn't realized it yet?

2. You are one big hypocrite in saying this is not ethical and yet posted it for the sake of others to exploit; initially not sharing the link, not wanting to advertise, not wanting to promote illegal ways of doing money, and yet responded to PMs of likely scammers and opportunists, and hopes that this will last longer.

3. The legal risk is founded on the fact that all of you who are taking advantage of this, provided this is true and not a scam advertising-- which is more likely-- are all thieves.