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Author Topic: Mt Gox thinks it's the Fed. Freezes acc based on "tainted" coins. (unlocked now)  (Read 16584 times)
nybble41
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March 23, 2012, 08:17:35 PM
 #41

Assuming there's legal precedent to treat bitcoin the same as physical goods which can be stolen (which there isn't as of yet), ....
Exactly. Bitcoins aren't physical goods. They aren't even digital goods (data). They are more like points in a game, existing only in the minds of the participants. The rules of this game say that whoever can provide a valid, signed transaction controls the bitcoins. Within the rules of the bitcoin system, there is no such thing as stolen bitcoins. If you have the private key, however it may have been obtained, you are a legitimate (co-)owner. This is not to say that no crime has occurred, but that crime--unauthorized access to the computer holding the private key--is independent of the bitcoin system.

The real problem is that the "decentralized" bitcoin system can essentially be held hostage to the demands of a single organization (MtGox) involved in over 80% of all bitcoin transactions. We need more diversity. Given a reasonable amount of competition, no exchange could afford to pull stunts like this. More to the point, we need to rely less on exchanging BTC and USD and instead develop a proper market involving only non-monetary goods and BTC. Currency exchange should be on the fringe, not front and center.
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March 23, 2012, 08:36:58 PM
 #42

More to the point, we need to rely less on exchanging BTC and USD and instead develop a proper market involving only non-monetary goods and BTC. Currency exchange should be on the fringe, not front and center.
Agreed. Unfortunately, there is little chance of this happening.

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March 23, 2012, 08:48:44 PM
 #43

More to the point, we need to rely less on exchanging BTC and USD and instead develop a proper market involving only non-monetary goods and BTC. Currency exchange should be on the fringe, not front and center.
Agreed. Unfortunately, there is little chance of this happening.

Yes, to get to this more ideal situation, we will have to survive this intermediate period, in which we will have some dependence on exchanges.

This is the first time I've been seriously worried about Bitcoin's future. I still can't believe exchanges could be so short-sighted as to behave in this manner.

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March 23, 2012, 08:54:06 PM
 #44

The criminal law that applies to Intersango specifically (because we're based in the UK) is section 22 of the Theft act 1968, named handling stolen goods.

Here's a link to the Theft Act, and here's an excerpt:

Quote
22 - Handling stolen goods ...

A person handles stolen goods if (otherwise than in the course of the stealing) knowing or believing them to be stolen goods he dishonestly receives the goods, or dishonestly undertakes or assists in their retention, removal, disposal or realisation by or for the benefit of another person, or if he arranges to do so.

Even if Bitcoin is classified as "goods", I don't see anything in the Theft Act that says AML procedures make any difference.
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March 23, 2012, 09:02:34 PM
 #45

Nefario please drop the strawman.

Nobody is saying Mt.Gox is vioalting their own terms and conditions.  They wrote their own fraking terms and conditions so I would hope they don't violate them ... and if they do they can just change them.  Nobody is also saying Mt.Gox should willfully break the law.

So please please please for the love of Satoshi stop using those two strawmen.

However between willfully breaking the law <-----------------------------------> asinine response to anoymous claims online

there has to be a place where common sense prevails.

Nothing under the law requires this level of scrutiny based on internet forum claims.  Some anonymous person on the internet said that another anonymous person took some digital keys which belong to him.  The coins were then transfered through dozens (actually now hundreds) of accounts and someone with a token amount of coins and likely an even smaller token amount of "tainted coins" to provide personal information because "the law" (as if some generical universal law exists) requires it.

BULL FRAKING CRAP!

Banks don't even do that kind of due diligence on small cash deposits. It is complete and utter nonsense.  Just because Mt.Gox put it in their terms and conditions doesn't make it right.  AML has nothing to do with stolen funds especially not unproven funds back up by nothing more than an internet post (BTW I think Zou is telling the truth but it has no relevence under the law).

Still your nonsensical and onesided defense of the indefensible has saved me the trouble of ever using your exchange.
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March 23, 2012, 09:08:43 PM
 #46

Assuming there's legal precedent to treat bitcoin the same as physical goods which can be stolen (which there isn't as of yet), you still have NO PROOF that those bitcoins were stolen.

If you want to discus whether bitcoins are property or not, and whether they can be stolen or not I'd say take it to another thread, because thats a major tangent.


Exchanges are not looking for proof, they're not the police, not a court, and not putting anyone on trial.

What they are doing is complying with local laws, rules and regulations by reporting activity out of the ordinary.

This is outlined in MtGox's terms and conditions, which the user must agree to to use the service. The same user complaining agreed to these terms and conditions.

Quote
if we suspect that any suspicious activity is going on in your account.

Note how it doesn't say they require proof of suspicious activity, only suspicion.

Bottom line - users have to trust the exchanges not to pull this kind of shenanigans - and if you agree with Mt.Gox's shady behaviour here, you can't be trusted either. Which is very disappointing - because we need alternatives to MtGox when they start with this incredibly misguided nonsense.

Bottom line is MtGox is asking for a scan of the persons ID, nothing more.

It doesn't matter whether I agree or not, any exchange operating in a first world country has to comply by the  laws regardless of your or my opinion.


WRONG. In certain countries they're asking for a notarized form of identification - one user was saying that the cost was $50. However, even if it was free, as pointed out by the OP of this thread, it's not their right to demand it. The AML TOS you're referring to was not the issue here, because the OP was not in violation, as the OP already stated and I already repeated.

Good job ignoring the very important point that your local laws for physical goods and even wire fraud have not ever been shown to apply to bitcoin.

The ethical problem is that they allow the deposits and transactions to occur, THEN lock the account. This "suspicious activity" is, as was already pointed out, completely undefined. As applied it appears that all bitcoin transactions can also be called "suspicious activity."

Please, continue to argue your head off - you're just making your exchange look bad. You've avoided all the real problems we've pointed out with your arguments, and you clearly think extortion is fine. Great! At least people can see it before they deposit money or BTC with you.

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March 23, 2012, 09:23:30 PM
 #47

Quote
Bottom line - users have to trust the exchanges not to pull this kind of shenanigans - and if you agree with Mt.Gox's shady behaviour here, you can't be trusted either. Which is very disappointing - because we need alternatives to MtGox when they start with this incredibly misguided nonsense.

I'm with him.

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March 23, 2012, 09:51:18 PM
 #48



The ethical problem is that they allow the deposits and transactions to occur, THEN lock the account. This "suspicious activity" is, as was already pointed out, completely undefined. As applied it appears that all bitcoin transactions can also be called "suspicious activity."


+1

Imagine walking into a pawn shop; you have a watch to sell, and so you place it on the counter.  The pawn shop owner then confiscates the watch and says, "I don't know, you seem a little fishy to me."  He then asks you for a driver's license and telephone number and tells you that before he can consider letting you pawn the watch, he needs to conduct an investigation to make sure that you aren't a criminal.

At this point, of course, you naturally ask for your watch back as you don't like the glare of scrutiny coming from the pawn shop owner.  The pawn shop owner tells you, "I'm sorry, I can't give the watch back to you either.  After all, you might be a criminal.  Either provide the necessary identification or I retain the right to keep your watch."  By this point, you're trying to argue reasonably with the pawn show owner -- surely he doesn't do this with EVERY customer, does he?  It's your watch and this son of a bitch is telling you that it might not be, or, even if it is, that perhaps you didn't acquire it legally. 

And what evidence does he have to support his claims?  Nothing, zip, nada -- only a personal judgment that the possibility of fraud exists, and that the existence of the possibility alone is enough justification to confiscate your watch.








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March 23, 2012, 10:51:10 PM
 #49

Nothing under the law requires this level of scrutiny based on internet forum claims.  Some anonymous person on the internet said that another anonymous person took some digital keys which belong to him.  The coins were then transfered through dozens (actually now hundreds) of accounts and someone with a token amount of coins and likely an even smaller token amount of "tainted coins" to provide personal information because "the law" (as if some generical universal law exists) requires it.
based on internet forum claims.  Some anonymous person on the internet
forum claims.  Some anonymous person
claims
Wow. You seem to think that a forum is the one and only means of communicating the information, and that that makes it automatically invalid?
The ability to prove that they are his with a signmessage doesn't occur to you, nor the fact that the transaction log is cryptographically irreversible?

(BTW I think Zou is telling the truth but it has no relevence under the law).
Why not? A clear and precise link from the beginning of where the issue started, to wherever they are now is pretty hard  impossible to argue with, I'd say.


OT, why is it taking so damn long for Bitcoin to get its day in court?

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March 23, 2012, 11:04:28 PM
 #50

Nefario please drop the strawman.

Nobody is saying Mt.Gox is vioalting their own terms and conditions.  They wrote their own fraking terms and conditions so I would hope they don't violate them ... and if they do they can just change them.  Nobody is also saying Mt.Gox should willfully break the law.

So please please please for the love of Satoshi stop using those two strawmen.

However between willfully breaking the law <-----------------------------------> asinine response to anoymous claims online

there has to be a place where common sense prevails.

Nothing under the law requires this level of scrutiny based on internet forum claims.  Some anonymous person on the internet said that another anonymous person took some digital keys which belong to him.  The coins were then transfered through dozens (actually now hundreds) of accounts and someone with a token amount of coins and likely an even smaller token amount of "tainted coins" to provide personal information because "the law" (as if some generical universal law exists) requires it.

BULL FRAKING CRAP!

Banks don't even do that kind of due diligence on small cash deposits. It is complete and utter nonsense.  Just because Mt.Gox put it in their terms and conditions doesn't make it right.  AML has nothing to do with stolen funds especially not unproven funds back up by nothing more than an internet post (BTW I think Zou is telling the truth but it has no relevence under the law).

Still your nonsensical and onesided defense of the indefensible has saved me the trouble of ever using your exchange.

Not taking sides, but many times in my life I've had large bills with ink on them like the one pictured below that offers proof that at one time that bill was illegally obtained. I've even had such billes given to me by bank tellers.


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March 23, 2012, 11:25:15 PM
 #51

Nefario please drop the strawman.

Nobody is saying Mt.Gox is vioalting their own terms and conditions.  They wrote their own fraking terms and conditions so I would hope they don't violate them ... and if they do they can just change them.  Nobody is also saying Mt.Gox should willfully break the law.

So please please please for the love of Satoshi stop using those two strawmen.

However between willfully breaking the law <-----------------------------------> asinine response to anoymous claims online

there has to be a place where common sense prevails.

Nothing under the law requires this level of scrutiny based on internet forum claims.  Some anonymous person on the internet said that another anonymous person took some digital keys which belong to him.  The coins were then transfered through dozens (actually now hundreds) of accounts and someone with a token amount of coins and likely an even smaller token amount of "tainted coins" to provide personal information because "the law" (as if some generical universal law exists) requires it.

BULL FRAKING CRAP!

Banks don't even do that kind of due diligence on small cash deposits. It is complete and utter nonsense.  Just because Mt.Gox put it in their terms and conditions doesn't make it right.  AML has nothing to do with stolen funds especially not unproven funds back up by nothing more than an internet post (BTW I think Zou is telling the truth but it has no relevence under the law).

Still your nonsensical and onesided defense of the indefensible has saved me the trouble of ever using your exchange.

Not taking sides, but many times in my life I've had large bills with ink on them like the one pictured below that offers proof that at one time that bill was illegally obtained. I've even had such billes given to me by bank tellers.




Thats crazy, Im in South Africa and they our banks wont even accept notes with small tears in it. Probably why our Banks didnt go belly up with the recent financial crisis Wink

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March 23, 2012, 11:42:17 PM
 #52

Wow. You seem to think that a forum is the one and only means of communicating the information, and that that makes it automatically invalid?
The ability to prove that they are his with a signmessage doesn't occur to you, nor the fact that the transaction log is cryptographically irreversible?

SignMessage doesn't prove anything.

Hint: the thief can SignMessage now also.

Still that is the job of POLICE.  If the POLICE investigated determined the claim was valid and demanded Mt.Gox provide ID of any depositing stolen coins that would be different.  Nothing indicates that is the case.
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March 24, 2012, 12:36:04 AM
 #53

Good job ignoring the very important point that your local laws for physical goods and even wire fraud have not ever been shown to apply to bitcoin.

Not to take sides, but I don't think this particular point is relevant. Courts handle bizarre concepts all the time.

It's not hard to imagine becoming the first test case and losing one's livelihood over it. Would you be willing to pay off any court-ordered fines in the unlikely event of their prosecution?
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March 24, 2012, 12:41:26 AM
 #54

SignMessage doesn't prove anything.
It does when you sign a message with an uncompromised key from an INPUT that goes to an output that is considered compromised. Take for example MtGox's famous 500K wallet - if the key were stolen, they could prove ownership by signing a message using an uncompromsed key that was previously used to add funds to the big fat wallet.

Now if the addresses were used for customer deposits, this might not be reliable, as anyone could have had a direct input transaction. But if the wallet were used only internally, or if there were other database records that correlated with huge deposits as well as the keys, then I would consider this method reliable. For instance, an archived backup of a database with records of a large internal transaction that went directly to a compromised key.

Still that is the job of POLICE.  If the POLICE investigated determined the claim was valid and demanded Mt.Gox provide ID of any depositing stolen coins that would be different.  Nothing indicates that is the case.
Who says the POLICE are not asking for the info? MtGox has repeatedly stated that they will comply with investigations of this sort, and just because they don't come right out and say that the cops are currently asking for the info doesn't mean that it isn't happening. Furthermore, the investigators don't know shit about bitcoin, and it is certain that they would just ask for as much evidence as could be mustered in bulk, instead of doing their own gumshoe work. I expect that this will remain the status quo for quite a while yet.

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March 24, 2012, 01:24:13 AM
 #55

Just get verified, dude, no big deal.

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March 24, 2012, 02:47:29 AM
 #56

Who says the POLICE are not asking for the info? MtGox has repeatedly stated that they will comply with investigations of this sort, and just because they don't come right out and say that the cops are currently asking for the info doesn't mean that it isn't happening. Furthermore, the investigators don't know shit about bitcoin, and it is certain that they would just ask for as much evidence as could be mustered in bulk, instead of doing their own gumshoe work. I expect that this will remain the status quo for quite a while yet.

That is the whole point.  We don't know.

If Mt.Gox policy was "we will freeze account and seek account information when facing court order or legislative requirement" we wouldn't even be having this discussion.

there policy is they will freeze accounts which may seem suspicious based on whatever they feel is suspicious and release funds based on whatever they decide is good enough.

The first is called due process, the second is called bullshit.

Say I sold you a video card and you paid me then I said wait these coins are tainted I need to freeze them based on my internal policy of coins looking suspicious and stuff.  I then demand you provide me say photocpies of your ID, your mothers maiden name, your SSN, full address, phone numbers and everything else I need to commit identity fraud.   When you say no well I guess I need to keep those funds frozen.  They Police might want them.  Sorry.

You would be getting me a scammer tag overnight.  However Mt.Gox does the same thing and people fall in line and say "they have to".  Really?
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March 24, 2012, 02:51:23 AM
 #57

That is the whole point.  We don't know.

If Mt.Gox policy was "we will freeze account and seek account information when facing court order or legislative requirement" we wouldn't even be having this discussion.

there policy is they will freeze accounts which may seem suspicious based on whatever they feel is suspicious and release funds based on whatever they decide is good enough.

The first is called due process, the second is called bullshit.
I cede to you that that policy is BS, and should be changed to how you suggest above.

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March 24, 2012, 03:01:43 PM
 #58

Dear Mt.Gox,

why do you allow unverified people to trade money for BTC, if you're trying to help the cops with "tainted" coins? I think there are a lot of "tainted" coins....
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March 24, 2012, 03:10:56 PM
 #59

Dear Mt.Gox,

why do you allow unverified people to trade money for BTC, if you're trying to help the cops with "tainted" coins? I think there are a lot of "tainted" coins....

There are not many tainted coins. Except during big events such as the Linode hack, we rarely see any tainted coin hit us at all.

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March 24, 2012, 03:15:10 PM
 #60

Dear Mt.Gox,

why do you allow unverified people to trade money for BTC, if you're trying to help the cops with "tainted" coins? I think there are a lot of "tainted" coins....

There are not many tainted coins. Except during big events such as the Linode hack, we rarely see any tainted coin hit us at all.

please define term "tainted coin" exactly!
i would love to have a way to check any deposit beforehand.
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