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Author Topic: Loosely Managed Digital Currency Could Be Avenue for Crime That's Hard to Block  (Read 9704 times)
xf2_org
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April 16, 2011, 06:12:03 PM
 #21

Where did this article come from?

A full and complete byline was included with the article.

MoneyLaundering.com keeps its articles behind a paywall, so special permission was needed to post it here.  You can see the article right now on the front page of MoneyLaundering.com, in the right-hand column ("News").

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April 16, 2011, 06:40:17 PM
 #22

Where did this article come from?

A full and complete byline was included with the article.

MoneyLaundering.com keeps its articles behind a paywall, so special permission was needed to post it here.  You can see the article right now on the front page of MoneyLaundering.com, in the right-hand column ("News").

Yes, but the URL for the article was not included.

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April 16, 2011, 06:42:55 PM
 #23

Eh...this isn't the worst news in the world. Sounds like an eye is being kept on it, is all.

On a side note, while I can certainly understand freedom and openness and a sustainable currency, pissing off the US Government is not high on my to-do list. At least not blatantly pissing them off. Wink

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April 16, 2011, 06:43:56 PM
 #24

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Still, court orders may be served to bitcoin exchanges, users and other operators, ordering them to "ban" specific bitcoins if needed, he said.

This is a really bad thing for the overall bitcoin legitimate economy, not so much for the money launderers.

If the exchanger is in possession of a badcoin, looks like they'll have to eat it. If the legitimate user is in possession of a badcoin, they'll eat it. And while exchangers can put a price on the risk (or remain informed of newly-outlawed badcoins via a centralized list or somesuch), end user's won't be expecting that to happen - why would they? They're legitimate and law-abiding, it's the equivalent of a police officer running up to you on the street, demanding a $100 bill from your wallet on pain of arrest, stamping BEARER SPENDS BLOOD MONEY - BEWARE on it, handing it back and saying, well, good luck with that.

Money launderers are still functioning. Unless the enforcement will can be found that will cover dozens of countries and hundreds (thousands?) of exchangers to grapple with badcoins, they'll just move them to jurisdictions where such laws don't apply. And there they will re-enter circulation until they eventually end up with an exchanger or user who is unwilling to break the law.

I wonder if there's a way around this mess.
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April 16, 2011, 06:57:21 PM
 #25

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Still, court orders may be served to bitcoin exchanges, users and other operators, ordering them to "ban" specific bitcoins if needed, he said.

This is a really bad thing for the overall bitcoin legitimate economy, not so much for the money launderers.

I'm not sure it is really possible to ban a bitcoin address, at least not in any practicle way.

Say I own a "bad" bitcoin address with 100 BTC on it.


If my bitcoin software tries to use it in a transaction to a currency exchange or anything alike, then police will be called and I'll go to jail, or the transaction will be refused.

I think the best solution for me is just to transfer it to several other bitcoin address, mix bitcoins in those address with "legitimate" bitcoins, do this again and again, and finally merge everything in a brand new address (or just leave everything in many different addresses, doesn't matter).

Basically, it's what the bitcoin launderer service do, I think it is pretty much efficient enough, and I doubt anyone can do anything to prevent anyone from doing this.
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April 16, 2011, 09:07:39 PM
 #26


It is not legally "money laundering" as Bitcoin is not legally recognised as money but virtual commodity tokens. How can it be?

They are in a chicken and egg until they decide to go whole hog and declare Bitcoin as a bonafide currency, by which point it will be too late.

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April 16, 2011, 09:11:06 PM
 #27


It is not legally "money laundering" as Bitcoin is not legally recognised as money but virtual commodity tokens. How can it be?

They are in a chicken and egg until they decide to go whole hog and declare Bitcoin as a bonafide currency, by which point it will be too late.

Good point.
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April 16, 2011, 09:56:51 PM
 #28

He may be referring to interaction with exchanges, not so much Bitcoin itself. Though this is not made entirely clear in the article, particularly since he used the misnomer 'Bitcoin account'.


Honnestly I do think a bitcoin address can correctly be called "bitcoin account", although it is a bit misleading.



But really, a bitcoin address is technically precisely this:  an account in the block chain.
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April 16, 2011, 11:07:37 PM
 #29

All,

Thanks for reading. I wrote this article, I worked hard to give it balance, citing three Bitcoin sources, and including Satoshi Nakamoto's take on the current global system of payments posted in a respected blog a couple of years back:

“The root problem with conventional currency is all the trust that's required to make it work,” Nakamoto wrote in a February 2009 blog on P2P Foundation. “The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.”

Jeff Garzik's analysis:

“Like cash, Bitcoin can be used for good, and it can be used for evil,” according to Jeff Garzik, a Bitcoin developer and creator of www.BitcoinWatch.com, a Web site that follows Bitcoin’s financial trends. Since transactions are public, and thus traceable, the currency is “slightly less anonymous” than cash, he said.

I think Nakamoto's and Garzik's statement here reflects a lot of what I'm reading in this forum. From an EconTalk article I also cited Gavin Andresen's explanation on how Bitcoin's network of users polices the payment system.

My point is that our publication does not take sides. We frequently break stories on the criminal behavior of banks, as well as U.S. law enforcement's eavesdropping on Swift financial messaging; laundering of dollars flowing from drug cartels (Wachovia) and the stashing of funds pilfered by corrupt Afghan leaders from their own central bank in Kabul (hundreds of millions of stolen funds stashed by two major U.S. banks headquartered in New York).

It's safe to say that my editors and myself, as well as all of my sources, were floored by the novelty of this invention, which I liken to something out of a Phillip K. Dick novel. That being said, I reported what many knowledgeable sources said were money laundering vulnerabilities.

Thanks,
Colby
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April 16, 2011, 11:33:50 PM
 #30

and including Satoshi Nakamoto's take on the current global system of payments posted in a respected blog a couple of years back:

“The root problem with conventional currency is all the trust that's required to make it work,” Nakamoto wrote in a February 2009 blog on P2P Foundation. “The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.”

It is indeed one of the best quote from Satoshi.  I personnaly think you should have quoted it more extensively.

In particular, I whish you had quoted this part:

Quote from: 'Satoshi'
Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve.

It would have been fun to think about banksters reading this.
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April 17, 2011, 12:15:53 AM
 #31


It's safe to say that my editors and myself, as well as all of my sources, were floored by the novelty of this invention, which I liken to something out of a Phillip K. Dick novel. That being said, I reported what many knowledgeable sources said were money laundering vulnerabilities.

Yes, but which Dick novel?  If it was The Man in the High Castle someone would need to write some code to toss bitcoins and generate an I Ching hexagram from the result.  If it was Do Androids Dream of Electric Sheep? one of us would be asking you what a tortoise is.1


1 = Yes, I know that scene was only in the film.

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April 17, 2011, 12:54:15 AM
 #32

Where did this article come from?

There is a link at the very top  Huh

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marcus_of_augustus
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April 17, 2011, 02:05:18 AM
 #33

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t's safe to say that my editors and myself, as well as all of my sources, were floored by the novelty of this invention, which I liken to something out of a Phillip K. Dick novel. That being said, I reported what many knowledgeable sources said were money laundering vulnerabilities.

I was floored too, then elated.

Not sure what you mean by "money laundering vulnerabilities", maybe it is strength that ALL trade can be private in this currency rather than a vulnerability?

One man's terrorist is another man's freedom fighter. Ghaddafi's fighting Western Bloc forces alongside rebels with allegedly "Al Quaeda" amongst them, Things are pretty messed up already so deciding who are the bad guys anymore is arbitrary and those in power abuse it, cutting off commerce because some meglamaniacs want to play god and tell everybody what they can and can't trade is a blind alley for humanity, nothing surer. We are on the threshold of a new enlightenment, if the power-brokers can let go peacefully.

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April 17, 2011, 05:00:15 AM
 #34

My point is that our publication does not take sides.

Im sorry you must have wrote that incorrectly because the title of your editorial says otherwise.

I was initially infuriated upon reading the title and most of the article.

The conclusion I got was that you overwhelmingly sought to demonize bitcoin.

I think you should work a bit on that not picking sides thing.
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April 17, 2011, 05:24:02 AM
 #35

I was initially infuriated upon reading the title and most of the article.

What in the article did you find to be factually incorrect or misleading?
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April 17, 2011, 06:59:55 AM
 #36

Colby's article was probably about as balanced as you can be when the immediate, direct audience is the anti-money laundering crowd and those tasked with compliance. I think it's great that the web address is moneylaundering.com instead of antimoneylaundering.com.

Money laundering is a pejorative term to begin with because it insinuates that the participants do not have certain inherent rights to financial privacy. The Jews "laundered" their money to Switzerland in order to escape Hitler's holocaust.  Come on, people!  Financial privacy is a fundamental human right that has been consistently eroded and violated by governments.  We must take a step back and comprehend that "secrecy" does not mean "concealment", but rather that "secrecy" means "privacy" in its most basic sense.

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April 17, 2011, 09:01:59 AM
 #37

I thought the article pretty good actually. It makes points made on these forums many times, related to AML regulations and financial privacy. If you don't like the way this article paints BitCoin, consider that you'll see far less balanced and accurate pieces from other publications in future, guaranteed.

There has been a lot of talk about how governments could effectively regulate BitCoin given their mandate to fight crime. It's definitely worth discussing that more. Banning BitCoins at the merchant or exchanger level is a non-starter because coins can be split and merged arbitrarily. Attempting to ban an address across all economic actors would cause "badness" to ripple outwards transitively eventually causing system collapse.

A much more workable approach is to freeze assets at the miner level. I posted a discussion of what I mean here:

  http://bitcointalk.org/index.php?topic=5979.0
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April 17, 2011, 10:06:02 AM
 #38

Colby's article was probably about as balanced as you can be when the immediate, direct audience is the anti-money laundering crowd and those tasked with compliance. I think it's great that the web address is moneylaundering.com instead of antimoneylaundering.com.

Money laundering is a pejorative term to begin with because it insinuates that the participants do not have certain inherent rights to financial privacy. The Jews "laundered" their money to Switzerland in order to escape Hitler's holocaust.  Come on, people!  Financial privacy is a fundamental human right that has been consistently eroded and violated by governments.  We must take a step back and comprehend that "secrecy" does not mean "concealment", but rather that "secrecy" means "privacy" in its most basic sense.

Amen to that, +1.

Let's bring back the "radical" old idea that a man's financial affairs are his alone, private and nothing to do with the state.

The facist creep away from economic freedom has set back advancement of humanity immeasurably in untold ways.

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April 28, 2011, 06:31:14 AM
 #39

Colby's article was probably about as balanced as you can be when the immediate, direct audience is the anti-money laundering crowd and those tasked with compliance. I think it's great that the web address is moneylaundering.com instead of antimoneylaundering.com.

Money laundering is a pejorative term to begin with because it insinuates that the participants do not have certain inherent rights to financial privacy. The Jews "laundered" their money to Switzerland in order to escape Hitler's holocaust.  Come on, people!  Financial privacy is a fundamental human right that has been consistently eroded and violated by governments.  We must take a step back and comprehend that "secrecy" does not mean "concealment", but rather that "secrecy" means "privacy" in its most basic sense.

Amen to that, +1.

Let's bring back the "radical" old idea that a man's financial affairs are his alone, private and nothing to do with the state.

The facist creep away from economic freedom has set back advancement of humanity immeasurably in untold ways.

+10
grondilu
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April 28, 2011, 06:36:05 AM
 #40

Colby's article was probably about as balanced as you can be when the immediate, direct audience is the anti-money laundering crowd and those tasked with compliance. I think it's great that the web address is moneylaundering.com instead of antimoneylaundering.com.

Money laundering is a pejorative term to begin with because it insinuates that the participants do not have certain inherent rights to financial privacy. The Jews "laundered" their money to Switzerland in order to escape Hitler's holocaust.  Come on, people!  Financial privacy is a fundamental human right that has been consistently eroded and violated by governments.  We must take a step back and comprehend that "secrecy" does not mean "concealment", but rather that "secrecy" means "privacy" in its most basic sense.

Amen to that, +1.

Let's bring back the "radical" old idea that a man's financial affairs are his alone, private and nothing to do with the state.

The facist creep away from economic freedom has set back advancement of humanity immeasurably in untold ways.

+10

+1   (don't want to inflate the rating so I stick to +1, not +10 nor +100)
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