Bitcoin is not a safe haven for criminals

[Accardo]

Recently, I went through the article about the biggest cryptocurrency fraud in history executed by a married couple.  Ilya Lichtenstein and Heather Morgan, husband, and wife, have been tracked down by the FBI for laundering 119,754 bitcoins from Bitfinex five years ago. After many attempts to rinse the money through chain hopping on numerous anonymity enhanced cryptocurrencies like monero. The FBI was able to apprehend them.

I want to know, what else does the government want to regulate the cryptocurrency blockchain for if the FBI can perform such a rigorous search on all the virtual accounts that have been created online by the couple? And found the private key linked to the wallet that received the funds, and they recovered over $3.5 billion and recorded it as the biggest seizure in the cryptocurrency niche.

“Criminals always leave tracks, and today’s case is a reminder that the FBI has the tools to follow the digital trail, wherever it may lead,” said FBI Deputy Director Paul M. Abbate.

I think the transaction the Government cannot track in the block-chain technology has not be made. FBI claim that they will endeavor to trace any fraudulent activity in the cryptocurreny network through their 21st century investigative technique. (I don't know what they mean by that)

we're able to uncover the source of even the most sophisticated schemes and bring justice to those who try to exploit the security of our financial infrastructure.

Read:
https://www.justice.gov/opa/pr/two-arrested-alleged-conspiracy-launder-45-billion-stolen-cryptocurrency

[MyIdeas]

Recently, I went through the article about the biggest cryptocurrency fraud in history executed by a married couple.  Ilya Lichtenstein and Heather Morgan, husband, and wife, have been tracked down by the FBI for laundering 119,754 bitcoins from Bitfinex five years ago. After many attempts to rinse the money through chain hopping on numerous anonymity enhanced cryptocurrencies like monero. The FBI was able to apprehend them.

I want to know, what else does the government want to regulate the cryptocurrency blockchain for if the FBI can perform such a rigorous search on all the virtual accounts that have been created online by the couple? And found the private key linked to the wallet that received the funds, and they recovered over $3.5 billion and recorded it as the biggest seizure in the cryptocurrency niche.

“Criminals always leave tracks, and today’s case is a reminder that the FBI has the tools to follow the digital trail, wherever it may lead,” said FBI Deputy Director Paul M. Abbate.

I think the transaction the Government cannot track in the block-chain technology has not be made. FBI claim that they will endeavor to trace any fraudulent activity in the cryptocurreny network through their 21st century investigative technique. (I don't know what they mean by that)

we're able to uncover the source of even the most sophisticated schemes and bring justice to those who try to exploit the security of our financial infrastructure.

Read:
https://www.justice.gov/opa/pr/two-arrested-alleged-conspiracy-launder-45-billion-stolen-cryptocurrency

After that success of FBI now the governments may change their mind for bitcoin. Now they cannot deny the fact that bitcoin is safe for fraud and if someone will do money laundering then they will be caught.

The bitcoin community is thankful to the FBI that they helped those who lost their money because of this hack. It will increase the courage of people who want to adopt bitcoin for their personal lives and for their businesses.

[BlackHatCoiner]

If I don't care on spending lots of UTXO in one shot, reusing addresses, mixing coins, coinjoining etc., that doesn't necessarily mean that Bitcoin is bad for criminals. Lots have been caught and it's generally not a good idea if you're going to do something really bad, but it depends from whom you want to hide. Is it your wife or your employer? They aren't going to find out much if you use Bitcoin. Is it the government? You're screwed.

However, I read that those two kept the private keys of the 119,754 BTC to a cloud server. I highly doubt they were cautious enough. Also, this doesn't make sense:

I think the transaction the Government cannot track in the block-chain technology has not be made.

[Accardo]

If I don't care on spending lots of UTXO in one shot, reusing addresses, mixing coins, coinjoining etc., that doesn't necessarily mean that Bitcoin is bad for criminals. Lots have been caught and it's generally not a good idea if you're going to do something really bad, but it depends from whom you want to hide. Is it your wife or your employer? They aren't going to find out much if you use Bitcoin. Is it the government? You're screwed.

However, I read that those two kept the private keys of the 119,754 BTC to a cloud server. I highly doubt they were cautious enough. Also, this doesn't make sense:

I think the transaction the Government cannot track in the block-chain technology has not be made.

I don't understand the aspect you translated the meaning of the phrase. But, I think once a transaction gets confirmed on the blockchain, and the ID is available for everyone to access the Government can trace the transaction through some FBI tools. If a fund is not moved they won't be a way for the Government to know that such a huge amount is been disseminated on different wallets such that it can be changed to fiat. I don't think any criminal will ever hodl bitcoin without changing it to fiat. That's what I meant by that.

[freedomgo]

Recently, I went through the article about the biggest cryptocurrency fraud in history executed by a married couple.  Ilya Lichtenstein and Heather Morgan, husband, and wife, have been tracked down by the FBI for laundering 119,754 bitcoins from Bitfinex five years ago. After many attempts to rinse the money through chain hopping on numerous anonymity enhanced cryptocurrencies like monero. The FBI was able to apprehend them.

I want to know, what else does the government want to regulate the cryptocurrency blockchain for if the FBI can perform such a rigorous search on all the virtual accounts that have been created online by the couple? And found the private key linked to the wallet that received the funds, and they recovered over $3.5 billion and recorded it as the biggest seizure in the cryptocurrency niche.

“Criminals always leave tracks, and today’s case is a reminder that the FBI has the tools to follow the digital trail, wherever it may lead,” said FBI Deputy Director Paul M. Abbate.

I think the transaction the Government cannot track in the block-chain technology has not be made. FBI claim that they will endeavor to trace any fraudulent activity in the cryptocurreny network through their 21st century investigative technique. (I don't know what they mean by that)

we're able to uncover the source of even the most sophisticated schemes and bring justice to those who try to exploit the security of our financial infrastructure.

Read:
https://www.justice.gov/opa/pr/two-arrested-alleged-conspiracy-launder-45-billion-stolen-cryptocurrency

After that success of FBI now the governments may change their mind for bitcoin. Now they cannot deny the fact that bitcoin is safe for fraud and if someone will do money laundering then they will be caught.

The bitcoin community is thankful to the FBI that they helped those who lost their money because of this hack. It will increase the courage of people who want to adopt bitcoin for their personal lives and for their businesses.

With bitcoin's transparency, it will always give a hard time for scammers and other criminal acts to succeed. They may enjoy the stolen money temporarily, but know that they will always be traced later on. That gives more advantage to use bitcoin as everything is transparent compared to fiat that is more dubious and questionable. That is why money fraudulence and laundering is rampant in fiat while in bitcoin its more controlled.

[stadus]

Recently, I went through the article about the biggest cryptocurrency fraud in history executed by a married couple.  Ilya Lichtenstein and Heather Morgan, husband, and wife, have been tracked down by the FBI for laundering 119,754 bitcoins from Bitfinex five years ago. After many attempts to rinse the money through chain hopping on numerous anonymity enhanced cryptocurrencies like monero. The FBI was able to apprehend them.

I want to know, what else does the government want to regulate the cryptocurrency blockchain for if the FBI can perform such a rigorous search on all the virtual accounts that have been created online by the couple? And found the private key linked to the wallet that received the funds, and they recovered over $3.5 billion and recorded it as the biggest seizure in the cryptocurrency niche.

“Criminals always leave tracks, and today’s case is a reminder that the FBI has the tools to follow the digital trail, wherever it may lead,” said FBI Deputy Director Paul M. Abbate.

I think the transaction the Government cannot track in the block-chain technology has not be made. FBI claim that they will endeavor to trace any fraudulent activity in the cryptocurreny network through their 21st century investigative technique. (I don't know what they mean by that)

we're able to uncover the source of even the most sophisticated schemes and bring justice to those who try to exploit the security of our financial infrastructure.

Read:
https://www.justice.gov/opa/pr/two-arrested-alleged-conspiracy-launder-45-billion-stolen-cryptocurrency

After that success of FBI now the governments may change their mind for bitcoin. Now they cannot deny the fact that bitcoin is safe for fraud and if someone will do money laundering then they will be caught.

The bitcoin community is thankful to the FBI that they helped those who lost their money because of this hack. It will increase the courage of people who want to adopt bitcoin for their personal lives and for their businesses.

With bitcoin's transparency, it will always give a hard time for scammers and other criminal acts to succeed. They may enjoy the stolen money temporarily, but know that they will always be traced later on. That gives more advantage to use bitcoin as everything is transparent compared to fiat that is more dubious and questionable. That is why money fraudulence and laundering is rampant in fiat while in bitcoin its more controlled.

With all these advantages about bitcoin, i don't see enough reason why the government is still hesitant to accept bitcoin knowing all its transactions are transparent and so you can't see any illegalities from it. Best proof is that FBI has managed to traced whatever fraudulence that happened to it. That is, if the government can also be transparent in all their transactions, so there is no valid reason that bitcoin cannot be accepted as a currency.

[tippytoes]

With all these advantages about bitcoin, i don't see enough reason why the government is still hesitant to accept bitcoin knowing all its transactions are transparent and so you can't see any illegalities from it. Best proof is that FBI has managed to traced whatever fraudulence that happened to it. That is, if the government can also be transparent in all their transactions, so there is no valid reason that bitcoin cannot be accepted as a currency.

The government is still hesitant not because of transparency but because it is decentralized and they could never get a hold of the whole picture of all the btc transactions. I believe that's one major reason. But when we talk about transparency purposes, btc is actually a good currency as the people will now see where the money goes. For example, government projects with known btc address/es, the public can now trace where the funds are going, thus, lessening the bribery part. That is, if the government will utilize the btc option.

And also, if these fraudsters know how to manage their btc to remain anonymous, they actually can. This is why there are mixers. But I guess, these two made a mistake.

[Mahanton]

If I don't care on spending lots of UTXO in one shot, reusing addresses, mixing coins, coinjoining etc., that doesn't necessarily mean that Bitcoin is bad for criminals. Lots have been caught and it's generally not a good idea if you're going to do something really bad, but it depends from whom you want to hide. Is it your wife or your employer? They aren't going to find out much if you use Bitcoin. Is it the government? You're screwed.

However, I read that those two kept the private keys of the 119,754 BTC to a cloud server. I highly doubt they were cautious enough. Also, this doesn't make sense:

I think the transaction the Government cannot track in the block-chain technology has not be made.

Just wondering on why they havent done lots of ways on mixing out those coins so that they wouldnt able to be traced up considering that there are several ways on mixing your coins
without being caught but well its just right that they are just dumb enough on having no consideration on making  those things and thats the reason on why theyve been traced up.

[franky1]

I don't understand the aspect you translated the meaning of the phrase. But, I think once a transaction gets confirmed on the blockchain, and the ID is available for everyone to access the Government can trace the transaction through some FBI tools. If a fund is not moved they won't be a way for the Government to know that such a huge amount is been disseminated on different wallets such that it can be changed to fiat. I don't think any criminal will ever hodl bitcoin without changing it to fiat. That's what I meant by that.

they were not caught because of any ID on the transaction/blockchain.

they instead gave away their ID on an exchange. .. and deposited coins into the exchange. where the exchange connected the two pieces of information. and the exchange reported them for suspicious activity

so yea, if you are converting to fiat. that part is the fatal flaw which can identify you being linked to crypto.

because any business offering fiat exchange services has to abide by fiat exchange regulation.. no matter what asset/currency is being exchanged for fiat

[Fundamentals Of]

Was it possible for them to have avoided getting caught? I think so. The reason why they're caught is more of their own faults rather than the capabilities of the FBI to track them down. Of course it is very hard to be extremely careful every step of the way. It might even be next to impossible to avoid committing an act of negligence or carelessness forever. It is hard not to commit a mistake and leave a trace. But it could be done.

[mia_houston]

The news of the arrest was quite shocking, how could it not be, after 6 years the FBI finally caught the couple, even though the FBI took a long time to uncover the real culprit in the theft but we should appreciate the FBI's performance so far, I also think every crime what was done, of course, only took time to be revealed by the police, just like what the couple did even though they had been doing the theft for years but still they left a trail that got them caught today, reportedly they will probably be sentenced to a minimum prison sentence of 20 years, and also m conspiracy to deceive the state with a prison sentence of five.

[lovesmayfamilis]

I also agree that the couple did not do anything to make it difficult for the police to detect them. The FBI is right that sooner or later scammers make mistakes. And each solved crime becomes "work on mistakes" for other swindlers. Experienced scammers, I think, draw conclusions. The police probably shouldn't talk about what they're doing to track down and detect scammers. By showing all the details of the search in this story, the police only exacerbate further disclosures.

[Poker Player]

I also agree that the couple did not do anything to make it difficult for the police to detect them.

Me too. And that doesn't mean that Bitcoin is not a safe haven for criminals. It can be a safe haven for everybody, depending on how you use it, bitcoin is a tool.

This case reminds me of what we have repeatedly talked about in the legal section. The case that the OP comments would be the case of some stolen Bitcoins but even if they are Bitcoin of legal origin, if you can not clearly justify the origin, because maybe you bought them P2P and passed them through mixers for privacy, you better not let the ball get too big and go spending them little by little or always declare them before they become a large amount.

This couple got caught because trying to launder large amounts of money without leaving a trace is extremely difficult.

[witcher_sense]

I also agree that the couple did not do anything to make it difficult for the police to detect them. The FBI is right that sooner or later scammers make mistakes. And each solved crime becomes "work on mistakes" for other swindlers. Experienced scammers, I think, draw conclusions. The police probably shouldn't talk about what they're doing to track down and detect scammers. By showing all the details of the search in this story, the police only exacerbate further disclosures.

We only heard of criminals that have been caught, but how many criminals are there who never tried to cash out what they stole and who never tried bad privacy practices when sending their transactions? It seems that the couple that is accused of money laundering has never heard about good bitcoin mixers, the dangers of KYC, the risks of using centralized exchanges, coin control, labeling, CoinJoin, Whirlpool, and other things that good money launderers must know about to launder money more successfully. If, for example, some expert in blockchain analysis wanted to launder dirty bitcoins from a centralized exchange, is there a chance that he would have left so many traces that would clearly indicate his involvement in the crime and his identity? I think it would be a lot harder to track where stolen funds are. Bitcoin is not a safe haven for criminals because it is still a transparent public ledger accessible for everyone, but bitcoin is even less safe for stupid criminals that have zero understanding of how the blockchain works.

[ethereumhunter]

It is how we use bitcoin. If we have a large amount of bitcoin, we need to know how to spend our bitcoin and not spend a large amount to make a transaction. That can get attention from the local banks, investigators or some regulators to check your account.

As long as we can use bitcoin as it should be, we can stay safe and won't attract their attention. But if there are people who use bitcoin in large quantities, surely they have considered what they should do.

[bittraffic]

It is how we use bitcoin. If we have a large amount of bitcoin, we need to know how to spend our bitcoin and not spend a large amount to make a transaction. That can get attention from the local banks, investigators or some regulators to check your account.

As long as we can use bitcoin as it should be, we can stay safe and won't attract their attention. But if there are people who use bitcoin in large quantities, surely they have considered what they should do.

This is very true. The local banks today in my country don't allow us to withdraw more than 0.2BTC a day. This is even bigger than some other countries. If we do withdraw 0.2BTC, the banks are going to ask where the funds come from. I heard they will ask many questions and advise the person of online fraud. FBI isn't even needed when it comes to withdrawing big amounts of money, the banks will raise eyebrows already.

Tracking experienced hackers will be difficult for FBI but for this couple, I think only bankers and databases will be enough.

[Betwrong]

After the execution of court-authorized search warrants of online accounts controlled by Lichtenstein and Morgan, special agents obtained access to files within an online account controlled by Lichtenstein. Those files contained the private keys required to access the digital wallet that directly received the funds stolen from Bitfinex, and allowed special agents to lawfully seize and recover more than 94,000 bitcoin that had been stolen from Bitfinex. The recovered bitcoin was valued at over $3.6 billion at the time of seizure.

I'm wondering how much of that will go to the victims of the Bitfinex hack? I mean, it looks like the victims are not going to lose anything dollar wise, right? We can see that 75% of the stolen money were recovered, and in 2016 BTC was below $1,000, so I would say the robbed Bitfinex users have benefited from all of this at the end. And that's a very good news for Bitcoin investors, current and potential, overall. I think when they will process what's happened, Bitcoin price will go up because of the new demand.

[peter0425]

It is how we use bitcoin. If we have a large amount of bitcoin, we need to know how to spend our bitcoin and not spend a large amount to make a transaction. That can get attention from the local banks, investigators or some regulators to check your account.

if your funds is clear and safe , meaning not coming from questionable transaction i think there is no need to be mandated to take small faction , instead you can use the limit given by exchange .
it is far different from your topic to what OP is telling us.

As long as we can use bitcoin as it should be, we can stay safe and won't attract their attention. But if there are people who use bitcoin in large quantities, surely they have considered what they should do.

Businesses that invested in crypto has no issue at all because all of their transactions are legit and worth trusting.
but if you are in Illegal matter then this is not what we can explain here.

[Marykeller]

I don't understand the aspect you translated the meaning of the phrase. But, I think once a transaction gets confirmed on the blockchain, and the ID is available for everyone to access the Government can trace the transaction through some FBI tools. If a fund is not moved they won't be a way for the Government to know that such a huge amount is been disseminated on different wallets such that it can be changed to fiat. I don't think any criminal will ever hodl bitcoin without changing it to fiat. That's what I meant by that.

they were not caught because of any ID on the transaction/blockchain.

they instead gave away their ID on an exchange. .. and deposited coins into the exchange. where the exchange connected the two pieces of information. and the exchange reported them for suspicious activity

so yea, if you are converting to fiat. that part is the fatal flaw which can identify you being linked to crypto.

because any business offering fiat exchange services have to abide by fiat exchange regulation.. no matter what asset/currency is being exchanged for fiat

So true. If they didn't give out their identity to an exchange, they won't have been caught.
Scammers are now using bitcoin as an escape route not to be traced.
This is a job well done by the FBI. This kind of news will put fear into scammers when they fully know that can hide for so long from the FBI, that one day the FBI will catch up with them.
If the FBI continue grabbing this fraudster it help to curtail the number of scammers in crypto.

[Lucius]

We only heard of criminals that have been caught, but how many criminals are there who never tried to cash out what they stole and who never tried bad privacy practices when sending their transactions?

Criminals can also be divided into intelligent and non-intelligent, and the former know how to hide their tracks and stay under the radar. If you steal a lot of money, the authorities will have a much greater interest in finding you and will spend significant resources on it, but in case someone hacks 50 or 100 BTC, does anyone think that the FBI would deal with this case?

It seems that the couple that is accused of money laundering has never heard about good bitcoin mixers, the dangers of KYC, the risks of using centralized exchanges, coin control, labeling, CoinJoin, Whirlpool, and other things that good money launderers must know about to launder money more successfully.

An articles on the subject these days claims that part of the transactions went through the Wasabi wallet, but the couple did a lot of other nonsense that made it easier to detect them, because as we see they lived very luxuriously and were exposed in public. In addition, mixers are not something that guarantees 100% anonymity, an interesting study was published a few years ago on the forum.


@Accardo, please reduce the image to a size appropriate for the forum - and everyone else refrains from quoting such large images unnecessarily - there are people who have limited internet traffic, and maybe even very slow internet which makes it difficult for them to browse the forum.