'Frozen' Bitcoin Tied to Canadian Protests Lands at Coinbase, Crypto.Com

[bbc.reporter]

It appears that that these protestors should be given step by step instructions on what software they should be using and be guided on what other cryptocoins are available to perform safer and more anonymous transactions. They are only being a danger to themselves and they will only waste those donations.

In any case, if a protestor came in bitcointalk to ask everyone how to be more anonymous and how to avoid KYC, would you teach him?



The situation shows the limitations of a government’s ability to thwart transactions on decentralized systems – but also the limitations of those systems to circumvent such sanctions.

On Feb. 16, Canadian police ordered that all regulated financial firms stop facilitating transactions for 34 wallets associated with the protestors (30 were bitcoin wallets and the rest held other cryptocurrencies). The police sent a letter to a number of banks and crypto exchanges, Canada’s The Globe and Mail reported, but didn’t specify which ones received the warning.

That night, at least some of the funds were distributed among unidentified parties and later sent to centralized exchanges Coinbase and Crypto.com, blockchain data shows. An address connected to the Tallycoin fundraising address, which the truckers had used to accumulate funds, sent 14.28 BTC to 101 addresses in even fractions of 0.14 BTC each.

On Feb. 17, in a separate legal fight brought by locals affected by the protest, the Ontario Superior Court of Justice ordered that nine crypto platforms freeze accounts associated with 120 cryptocurrency addresses belonging to the movement. This means that if those platforms received funds from the listed addresses they should prevent any further movement of them. The list of addresses was provided via a Mareva injunction – a form of court-provided asset freezing.

The sending address for the Feb. 16 transaction was mentioned in the Mareva injunction, but not in the earlier list from the Canadian police.

On Feb. 17 and 18, four of the addresses on the Mareva injunction list sent 0.14 each BTC to Coinbase (1, 2) and Crypto.com (1, 2), either directly or via several intermediary addresses, according to data from the Crystal Blockchain analytics system. (Crystal confirmed CoinDesk’s findings.). It’s unclear whether users managed to sell the funds for fiat at these platforms.

Coinbase’s director of global policy communications, Ian Plunkett, said the firm has “nothing to share on specific transactions and accounts for obvious reasons,” and referred CoinDesk to a blog post by the exchange’s CEO, Brian Armstrong, on its rules for removing user accounts.

Read in full https://www.coindesk.com/layer2/2022/02/22/frozen-bitcoin-tied-to-canadian-protests-lands-at-coinbase-cryptocom/

[franky1]

i posted about some of that before on the 17th

9 hours ago. the 'unknown multisig keyholders'
consolidated 14.679btc to this address:
bc1q42t9dhpgc6du9pjmdkvxvmke82fl34jadqaxtq

then 10 minutes later split it up into 101 addresses.. where
it moved
100 addresses of amounts of 0.004
            ~7 addresses of 0.004 were (since spent)
            93 addresses of amounts of 0.004(remain unspent at time of post)
14.279 remaining which which went to:
bc1qa04luw7uqfurrcu4qjsc8nvlg9eddu5ye4p447

it then 10 minutes later
bc1qa04luw7uqfurrcu4qjsc8nvlg9eddu5ye4p447
split up into 101 addresses.. where
1 address of 0.279
bc1qflmltfkkyjd07x6cjq7l62a3wc23z8nntav4zp
100 addresses of amounts of 0.14
where by
~7 of the 100 addresses of 0.14 and the ~7 of the previous splits of 0.004 in last paragraph consolidated into little groups
examples like:
3NNYf4XvBufLNrWMaA19V6pxG3WqSvP68K - 0.144
which appears to be coinbase deposit address

then half a dozen 0.144 - unspent(as time of posting)
bc1qjd9245dv0jzfqu0z9f2kxsltj5hjfzc3a7wwzc
bc1qmxpqdlfe4fmdge9yasxwt4ujuj288mnzwcp8rr
bc1qs63v2vznlx0fq9te2jq85ft0wrnx0hplluhmje
bc1qxagk2r5xzszz528e5l6dvmptca6c09pk6ckukq
bc1qjd9245dv0jzfqu0z9f2kxsltj5hjfzc3a7wwzc
bc1qfjns4tjz39leydh4urtlc8fx7z69mxumdmz9q7
bc1qqw8mvxncl7uhehfw97er93k4zchhkvd87swk97

leaving 13btc unspent in ~ in 93 addresses of 0.14 and 93 addresses of 0.004

seemed its this
https://www.blockchain.com/btc/address/bc1qmxpqdlfe4fmdge9yasxwt4ujuj288mnzwcp8rr
and
https://www.blockchain.com/btc/address/bc1qqw8mvxncl7uhehfw97er93k4zchhkvd87swk97
moved on the 22nd

also on the 20th
https://www.blockchain.com/btc/address/bc1q070ahaljg4fwewr3jz6c3p2tgygw3verxsv90s

also moved on the 21st
https://www.blockchain.com/btc/address/bc1q2vq9sw54nkkzu84umrux04lwxav6ctxmzgx0rg

infact.. on the 17th. only 7 out of 100 allotments of the 0.14 allotments moved..
infact.. on the 17th. only 7 out of 100 allotments of the 0.004 allotments moved..

now its 31.. out of 100 allotments of 0.14 moved..
now its 32.. out of 100 allotments of 0.004 moved..
meaning 49 out of 200 allotments moved after the 17th


seems the fund raiser multisig keyholders are moving funds.. .. and no its not individual 'truckers' .

[Kakmakr]

It just shows us how bad these third party services are...and that they are no different to any other regulated financial organization. We saw the same thing happening when people bypassed the Fiat financial system to do transactions on the website, Backpage.com and also recently with PornHub.com.

The regulated (centralized) financial system is as toxic to Crypto currencies ...than any government can be. These governments use the Fiat financial system to force their agenda.

The average Crypto user do not know how to keep their transactions pseudo anonymous and they use regulated (centralized) services, because it is the on-ramp/off-ramp to the Fiat system. 

[wilkine]

If a protestor came to me and ask how to be more anonymous, I think I will share with him information.
He's trying to protect his assets and defend financial freedom, why not help him?

[PrivacyG]

In any case, if a protestor came in bitcointalk to ask everyone how to be more anonymous and how to avoid KYC, would you teach him?

Of course I would and I am certain that many of the best members here would do the same.  This is a situation where Bitcoin couldn't be more helpful with the Canadian government cracking down on every thing related to the protestors in such a fascist way.

It is definitely a shame that a lot of Cryptocurrency newbies believe Bitcoin gives you default privacy and anonymity.  What is the chance they sold the Bitcoin over the counter and the coins were under ownership of someone else already when they arrived on Coinbase or Crypto.com?

-
Regards,
PrivacyG

[rdbase]

My question would be:
Which service is worst? crypto.com or coinbase

Because if a government from another country comes to a U.S based company like coinbase or an outside entity such as crypto.com (not certain where they operate out of.. Hong Kong?) and demand them to give up the identities of it's customer base, then this would be a breach of some sort of law.
Now I know the IRS can and has does this to coinbase in the past but this is an outsider such as the Canadian government who is basically policing outside their jurisdiction.
And to me that is acting out of their own boundaries.

[Lucius]

Anyone behind the idea of raising funds in this way is obviously not aware that he had to completely bypass CEX in order for the whole thing to succeed to some extent. But there is still the problem of how some protesters will convert crypto -> fiat, especially if fiat withdraws to its bank account - which may mean that the bank may freeze that account.

This has already been discussed in another thread, the only solution is that there are more vendors that accept BTC directly, and then the thing would be pretty simple. Donors send BTC to a dedicated non-custodial crypto wallet, and then the guardian forwards donations to non-custodial crypto wallets of protesters who use these funds to pay directly for what they need. That means throwing banks and CEX out of the equation completely.

[tbct_mt2]

If they have a company which has license and under regulation of government, what can they do? what they should do? for the sake of their company benefit?

Obey government request and keep their company operates as nothing happen, or face with serious treatments from government. I am sorry for anyone lose money on centralized exchanges for any reason but they did not learn the lesson which is said repeatedly

Not your keys, not your coins

Centralized exchanges provide you a wallet but you don't have private keys or mnemonic seeds. In bad days, shit happens.

[bitmover]

Anyone behind the idea of raising funds in this way is obviously not aware that he had to completely bypass CEX in order for the whole thing to succeed to some extent. But there is still the problem of how some protesters will convert crypto -> fiat, especially if fiat withdraws to its bank account - which may mean that the bank may freeze that account.

This has already been discussed in another thread, the only solution is that there are more vendors that accept BTC directly, and then the thing would be pretty simple. Donors send BTC to a dedicated non-custodial crypto wallet, and then the guardian forwards donations to non-custodial crypto wallets of protesters who use these funds to pay directly for what they need. That means throwing banks and CEX out of the equation completely.

all centralized exchanges will be forced to  freeze accounts if authorities demand, and crypto.com is no exception. look at what kraken ceo said few days ago

https://twitter.com/jespow/status/1494462097161220104

however, those protestors could just use a mixer. the funds would become clean and they would use it in any exchange

[DaveF]

People tend to think it mattes since they are "USA" based.

Just about every country in the world has rules for businesses that deal with their citizens. You move fiat money or BTC or any thing else you have to deal with regulations.
If at any time you want to convert to cash you are probably going to have to deal with a local bank in that country. If say Coinbase said, "nope not going to do what you want" the Canadian government probably would then just go to the Canadian banks and stop them from dealing with Coinbase.  That just hurts other users.

There were more then enough ways to get around it. But if they did that then the people who were "helping" the truckers would not get all this free PR and not get to keep 75% of the donations to line their own pockets.

-Dave

[boyptc]

Someone should tell them how to use wasabi wallet and coinjoin and as well as chipmixer for mixing those donations and pay a minimal fee which isn't really that much.

They don't have to send it immediately it to the centralized exchanges, they would really be tracked by those people assigned to traced those donations.

But the problem is if they're about to encash it, they should do better than what they did and ask a help to a reliable person that's not associated with the protest.

[so98nn]

This is a lesson for us. We should be taking great notes from this as not to use any exchanger or service which can expose us to the final destination and vice versa. Just how easily the police tracked it by sending few notices to the banks and back tracing the whole coin trigonometry.

Best to avoid this and use private wallet on your mobile phone, desktop or hardware wallets to both send and receive and cold store the same. It’s mind wobbling to see how it’s not all anonymous or even pseudo anonymous.

[stompix]

My question would be:
Which service is worst? crypto.com or coinbase

Because if a government from another country comes to a U.S based company like coinbase or an outside entity such as crypto.com (not certain where they operate out of.. Hong Kong?) and demand them to give up the identities of it's customer base, then this would be a breach of some sort of law.

No, there is no break of the law.
As long as any business is registered and is doing business in that country it must follow the law and the orders of authorities, if it weren't like that all companies would move their headquarters to some made-up nation, and then good luck trying to sue any of them or get any refund or claim.
Just think for a moment, is a bank licensed in Mexico would freeze all Canadian citizens' money that would mean Canada's government has no right to address this issue, just because they are in another jurisdiction?

When you try to avoid some rules or fines or investigations by an authority, a registered and regulated business is the last one you should use.

In any case, if a protestor came in bitcointalk to ask everyone how to be more anonymous and how to avoid KYC, would you teach him?

First and obvious, mix those coins, and more importantly don't wait for the whole sum, mix them as soon as it's over a random value.
Don't send those outputs to exchanges, and don't use your damn name for that as they already probably have you on your blacklist, donate chunks of the mixed coins directly to protesters, they could then each deal with dex or face to face deal to get cash.
Or, after you mix those coins, use LN to send coins to each member.

Splitting the coins into 100 addresses and then sending them to Coibase or cryptocom...why did they even bother splitting them?





 

[BlackHatCoiner]

The situation shows the limitations of a government’s ability to thwart transactions on decentralized systems – but also the limitations of those systems to circumvent such sanctions.

But, this isn't a limitation of the system. It's just a human error during the use of such system; in other words, it's a misuse. Governments can't censor Bitcoin transactions just like they can't censor cash. However, the moment I deposit those in a bank, that very moment I hand over my custody. I don't control them anymore.

Decentralized systems remain decentralized. When there's centralization involved, third parties can meddle. Avoid exchanges that are forced to censor your money. Exchange, decentralized.

[franky1]

The situation shows the limitations of a government’s ability to thwart transactions on decentralized systems – but also the limitations of those systems to circumvent such sanctions.

But, this isn't a limitation of the system. It's just a human error during the use of such system; in other words, it's a misuse. Governments can't censor Bitcoin transactions just like they can't censor cash. However, the moment I deposit those in a bank, that very moment I hand over my custody.

no one can brute force the network to take coins out off the blockchain.
but people can break down a door or make a human/business comply via threats.
and if a regulated/licenced business. all it takes is an email displaying good reason to comply

you do realise that border patrol can censor your cash right.
they do border checks and seize any large rolls of banknotes
they can s.w.a.t someone's house and check under the mattresses..
do you even realise how much cash in bank notes has been seized in just the last 10 years. found in cars/houses.. not banks

heck if you know enough about a scammer, you too can go to court and get a court order to stop a scammer. and you dont even need to be a government agent to do it

this court order drama started off by some 20(something) woman complaining to the courts. .. not due to any politician making a claim. just a woman in ottowa and then a bunch of private business owners looking for a compensation day

that very moment I hand over my custody. I don't control them anymore.

and thats exactly what the fund organisers should have done.
by this i mean. they should have talked to the truckers from the 28th of january. EVERYDAY after to check how they are and ask what they need. and when funds arrive. PAY THE TRUCKERS. then its no longer in fundraisers control. and not in their custody, thus no their responsibility.
instead they hel onto the coins after the 14th and publicly announced intension and how it would take days to even talk to truckers and days to then pay them.. that was another fatal flaw

[bittraffic]

Hard to by pass these centralized entity since they need to trade the coins to fiat. They should have found someone locally thats been in this trade for years. Pretty sure that someone would know what to do like mixing before they try sending to coinbase. Sad to see them fail in the end.

If they go in the forum, just about anyone will reply to them of what to do.
Would it be enough to just send the coins to a dex, trade it with Doge or Eth then send to Chivo or the likes of it to cash out?

[yazher]

If a protestor came to me and ask how to be more anonymous, I think I will share with him information.
He's trying to protect his assets and defend financial freedom, why not help him?

I cannot help him with that rather I'll just guide him to some of the tutorials here which he will have the full decision whether he follows it or not. As for me, I just wanted them to learn from their own mistake and become strong next time so that they can help others as well. It seems like we cannot assure the other services for anonymity because they can be easily tracked, we need a higher and more secure way of doing transaction so that we cannot be monitored for our own safety as well.

[Lucius]

however, those protestors could just use a mixer. the funds would become clean and they would use it in any exchange

Sure they could have tried, but don't think that big crypto exchanges don't already have enough experience with detecting BTC that went through one of the mixers. Although such coins provide a certain amount of anonymity, it is very easy to determine that they come from sources that some call the risk management category. Of course such things depend on a case-by-case basis, but sometimes you need to be a little more intelligent and switch mixed coins a few more times between a few addresses to make it harder for those involved in such analyzes to research.

Binance Singapore faced a lot of flak recently when it blocked a user’s withdrawal. The exchange cited that the transaction was suspended because it originated from CoinJoin, and it is classified under the ‘risk management’ category.

[fiulpro]

Probelm is:
Third party services are also regulated by the government in most places therefore at the end of the day they cannot any claims of Bitcoins being super anonymous because at the end of the day the most it can be is pseudo anonymous. Which might work and might not but they would have to use the mixing services and also at the same time they would have to buy the coins which is best if done from p2p because again using a third party application might not be their best option. If a person comes here asking how to do it I do think the best way is to let them explore the forum themselves and go through the posts. I do think that there might be some people already familiar with the bitcoins.

[BlackHatCoiner]

you do realise that border patrol can censor your cash right.

What they can do is not the same with what they're capable of doing. There's a difference between having your money taken due to border patrol and due to seizure from the bank; you're responsible for the former, but not for the latter.

do you even realise how much cash in bank notes has been seized in just the last 10 years. found in cars/houses.. not banks

I honestly don't care how much cash is been seized during the last decade. There countless of factors that affect the final outcome which make the comparison problematic.