You may not refuse stolen bitcoins, confisticate them instead

[CryptopreneurBrainboss]

Things should be built or handled in a way that makes it almost impossible to sell or exchange stolen bitcoins for goods and services, otherwise their receivers will have lots of issues exchanging the coins and questions to answer.

I don't believe in the idea of labelling Bitcoin as stolen or not because that's exactly what happened to the fiat currency system and today we're in the mess of centralization that brings about we calling certain money not suitable for acceptance then we began to centralize the currency. Of course I'm not in support of illegal activities being done using Bitcoin but we starting to put focus on where Bitcoin is coming from screams centralization as we begin to judge Bitcoins separately. Is just like exchanges asking for KYC for deposit and withdrawal to be made on their exchange but for their case is understandable since they're centralized services. Leave the job of the security agencies for them to do and just enjoy Bitcoin as a decentralized currency but also be aware of whom you're transacting with.

[CryptoHeadlineNews]

Things should be built or handled in a way that makes it almost impossible to sell or exchange stolen bitcoins for goods and services, otherwise their receivers will have lots of issues exchanging the coins and questions to answer. They could be arrested and investigated physically for holding stolen coins. Ofcourse, it they are not the thieves, they should be released but the coins could remain confisticated

Your suggestion is actually beautiful with lots of helpful insights that will help the community grow stronger, but having a community of users who can be able to identify a stolen Bitcoin, seize it and resent it to the owner, this can only be possible with a centralized entity like an exchange or a crypto gambling casino. Because it's also very possible that these stolen Bitcoin can be mixed while using a mixer, and we all know how mixers operate with strick regulations, and some operates without the use of KYC,  which means it can be clean and yet nobody knows who did it. So in a nutshell, what we should focus on is how to tighten our Bitcoin securities, rather than looking for which wallet a stolen coin was kept or not, because I'm sure there will always be a group of Bitcoin investigating team that will always love to handle such cases amicably.

[Cryptomultiplier]

Where is the centralization in the post.
<...>

Centralization comes into play when there would have to be a governing body or consortium to rule on disputed cases. Who gets to decide on the authenticity of identifying and tagging stolen coins? Take a hacking incident like the Coldcard case, where at least two people hold the exact same private key for a compromised wallet. Who decides who the real owner is? There you have it - centralization!

From there, government interference isn't just a possibility; it becomes guaranteed.

There are already centralized choke points like kyc requirements and AML which is monitored by government agencies and of which stands to be a blockage between stolen coins and conversion of it into spendable money in the real world and also, the reason why multi-sig exist, why hardware security modules and time locked recovery contracts exist, is for the sole reason of preventing cases like this from happening instead of trying to track these stolen coins after the deed has been done.

[Nothingtodo]

You directly hinted at censorship but is that actually possible? You may have put a few wallets under surveillance but if they are directly using mixers then how do you detect that. It is not as simple as we make it out to be. Those who are directly involved in hacking basically do their work in different ways. Maybe if the hacker has not transferred to any wallet then it may be possible to seize it but if they have transferred bitcoins to multiple innocent wallets then how do you seize it because not everyone was involved in the hacking.

[Alvin_talk]

* Having a community-approved platforms where people can permissionlessly join and help in identifying and tagging stolen bitcoins, or even to defend themselves when wrongly tagged or accused of theft.

There is no need for such community, let the government authorities handle such cases, I don't think it should be handled by an informal group of bitcoin users. Just like the Coldcard attack, the stolen coins has been transferred to a known btc address(es) by the attackers and everyone (including government agencies and blockchain analysts) is monitoring this said address(es), so whenever coins are moved from their and transferred to an exchange or identifiable services, it will be traced and linked to the attacker. So the creation of a new community to handle such issue will add little to no value and at thesame time defeat decentralisation which is the primary purpose of bitcoin in the first place.

[knuckey]

Good intentions do not always lead to good outcomes; in fact, implementing the OP's idea would create more chaos down the line. It would also violate the very essence of freedom, as people would become afraid to send or receive Bitcoin without a third party involved. Ultimately, the OP's idea would generate more disorder than security.

[NotATether]

So just use an exchange then. They are built for that purpose.

[ZAINmalik75]

It's not going to work, you will need full centralisation control to make this work and also what about those Bitcoin that walked through mixers successfully after been stolen?

There is no way those people will have a stamp on them as stolen anymore, many people like you who want to avoid stolen Bitcoin might have spent stolen Bitcoin without even knowing it.

This is the work of mixer, once a bad actor successfully washed the Bitcoin trough multiple mixers there is nothing stopping that Bitcoin from coming back into the market as clean Bitcoin again.

Does that indirectly means that the authorities aren't actually wrong for being against mixers? Because imagine if mixing of bitcoins weren't a thing, bitcoins that are stolen just like the recent case could have been marked suspicious or malicious, and then the one who stole them wouldn't be able to sell them easily because the coins would be marked in the blockchain. However, even then, decentralized exchanges would allow this thing because in platforms where users can do decentralized p2p trades, the receivers might not check in the blockchain whether the coins they received are malicious or involved in something.

So basically, it is true that for something like this to work, complete centralization is required, there should be no privacy, no decentralization, nothing of that sort, and every coin must pass through centralized platforms and exchanges to actually get caught for being malicious from the first hands and not from those who bought them somewhere and then are framed for being the thieves themselves which would be wrong, obviously.

[macson]

I really do not support criminal acts related to Bitcoin, but I am also against anything that attempts to make this system more centralized. You might say that your idea is a platform where the system is decentralized, but it still remains that you are building something that could potentially have tight control over a system, which contradicts the decentralization brought by Bitcoin. I understand that the idea you are referring to might bring certain benefits, but it is still not suitable to be applied to Bitcoin.

[Faisal2202]

Your suggesting leans heavily towards censorship and centralisation which is against how bitcoin operates. Unofficially the community kicks against scams, when any comes public such address is put on public watch and its difficult to move it without being tracked as in yhrbcurrent coldcard case, but if we want to create a system that enforces this, you lose a key component of bitcoin and it's prone to be abused.

Where is the centralization in the post. The word "platform" doesn't necessarily mean centralization, but even if centralized, main thing like data could be decentralized, so that If a platform ceases to exist the data can be moved to another platform.......

Sorry ucy, if I am not understanding it correctly but are you trying to compare the double spending with the censorship resistance of Bitcoin? The rules of Bitcoin consensus don't see if the funds are stolen or not, if the Coldcard hacker's wallet makes a transaction the blockchain will not stop it, but if he tries to double spend then the blockchain will stop it from happening, and you know the reason. I also understand upgrade00's point, we don't want no centralization in it and you are right that we can make it work but would love to hear exactly how?

I was reading a case of a person who lost 12 ETH in Ghost Swap, the last time I checked he was getting no useful response from the team. They held the coins, they had their own team, the team you are talking about, but in your case you said we can manage it to be decentralized? But in their case it was not, now they were making excuses and might not have given him the funds back even though the owner clarified the funds belong to him, he owns them, still after that he is suffering. They are abusing the very system that you are suggesting (yours says it shoudl ahve decentralized communities but how)

[lombok]

Your suggestion is actually beautiful with lots of helpful insights that will help the community grow stronger, but having a community of users who can be able to identify a stolen Bitcoin, seize it and resent it to the owner, this can only be possible with a centralized entity like an exchange or a crypto gambling casino. Because it's also very possible that these stolen Bitcoin can be mixed while using a mixer, and we all know how mixers operate with strick regulations, and some operates without the use of KYC,  which means it can be clean and yet nobody knows who did it. So in a nutshell, what we should focus on is how to tighten our Bitcoin securities, rather than looking for which wallet a stolen coin was kept or not, because I'm sure there will always be a group of Bitcoin investigating team that will always love to handle such cases amicably.

The main aim of preventing crypto related crime should be on making personal wallets more secure instead of locating the funds once they have been stolen. The irreversibility of transactions, combined with the privacy obfuscating use of privacy intermediaries, makes independent recovery of assets very challenging. Delegation of investigative capabilities to law enforcement system and centralized data exchange is feasible solution but the most effective protective mechanism will be the prevention of leakage of access key privacies.

[EL MOHA]

Does that indirectly means that the authorities aren't actually wrong for being against mixers? Because imagine if mixing of bitcoins weren't a thing, bitcoins that are stolen just like the recent case could have been marked suspicious or malicious, and then the one who stole them wouldn't be able to sell them easily because the coins would be marked in the blockchain. However, even then, decentralized exchanges would allow this thing because in platforms where users can do decentralized p2p trades, the receivers might not check in the blockchain whether the coins they received are malicious or involved in something.

You can say that it’s a double edged sword, mixers are very much a privacy oriented platforms such that it hides the route of the transaction, if you say the authority are right that the users might include those trying to cover up their crimes in bitcoin then I agree that they are, but this is not the perception of the government, rather what the government sees is that any person who actually sorts after privacy is a criminal looking to hide behind privacy, which is totally wrong.

There is nothing like a tainted coin rather than the address it’s coming from is marked and this is only what platforms that marks some coins stolen do, OP suggestion seriously centers around centralization to me, because there would be people who would have to decide whether a coin is tainted or not

[BitBakerr1]

Good intentions do not always lead to good outcomes; in fact, implementing the OP's idea would create more chaos down the line. It would also violate the very essence of freedom, as people would become afraid to send or receive Bitcoin without a third party involved. Ultimately, the OP's idea would generate more disorder than security.

You are absolutely correct, if what the OP said is implemented a lot of people will stop using bitcoin, because people will not be comfortable anymore since your bitcoin can be tagged as being stolen and then you lose your bitcoin.
One of the reasons why people are very interested in bitcoin is because of the freedom that it offers, if the freedom is not there anymore, people will move onto the next option and I believe that will be the end of bitcoin.
I think things should be left the way it is right now. Everyone should just be careful.

[X-ray]

This won't be so great when you realized there are tons of legal implication that will befall you once you are in custody of those "tainted" money.

Holding "tainted" money in your custody as a business can get you considered as money transmitter and it might expose you to direct liability exposure.

It's not as simple as confiscate it and send elsewhere if you understand about the legal aspect.

* Exchangers, wallets, escrows, multisig, smart-contracts, etc should have inbuilt detection system to help detect, warn and possibly confisticate coins with overwhelming/incontrovertible proofs of involvement in the crime 

Exchanges have been integrating blockchain-analysis tool for so long as part of their risk assessment and implementing it elsewhere to a place that was supposedly decentralized is going too far isn't it?

You need to understand that blockchain-analysis tool isn't always accurate and the false positive rate is pretty high. The coin that is considered "tainted" might not be all that.

[yhiaali3]

I think this method will complicate things a lot, because basically how can it be proven that the reported Bitcoins are actually stolen? Transactions are made from wallet to wallet and no one can prove that these coins were transferred by theft or legally unless someone claims that their wallet was stolen.

Even when someone claims their wallet was stolen, what proves that they are actually telling the truth and that the transaction was not with their consent? I think this will only complicate matters further and lead us into endless labyrinths.

[OcTradism]

I think this method will complicate things a lot, because basically how can it be proven that the reported Bitcoins are actually stolen? Transactions are made from wallet to wallet and no one can prove that these coins were transferred by theft or legally unless someone claims that their wallet was stolen.

Even when someone claims their wallet was stolen, what proves that they are actually telling the truth and that the transaction was not with their consent? I think this will only complicate matters further and lead us into endless labyrinths.

There are on-chain analysis and traces to do that but how far it can do will depend on how hackers move their stolen coins. Exchanges can build up their own tools or have contracts with on-chain analytic companies to do that.

By principles, it was explained by Andreas Antonopoulos in this video.
Bitcoin Q&A: Blacklists, Taint, and Wallet Fingerprinting.

Bots can give false positive findings about tainted coins too.

If people are curious, they can check here.
https://chainabuse.com/

[Peanutswar]

In that case it seems that you need a mass report to the blockchain explorers if you wanted to let them make a note to flag the address so this you will get notice if ever you wanted to transact with them this will make sure that your coin are clean. But regarding with the matter of confiscation you dont have a rights because you are not a decentralized platform so you dont have a full control with their bitcoins but thats not we are meant in the crypto space. We want decentralized so if you really wanted to push that only flags from the explorers all you can do and check the risk level of the address with the AML Checker.