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Author Topic: Spending and Receiving Stolen Coins.  (Read 7194 times)
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May 20, 2012, 10:17:01 PM
 #41

How does it work with cash?  Like with any stolen goods?  If you KNOW you're accepting stolen cash, you're guilty of a crime. If you don't know, then, well, you don't know. Can someone come to you the next day and say - well, those were stolen banknotes, give them back, and work things out with whoever you got them from?

To the people who were unaware they were receiving stolen Bitcoins, they would not face any charge.

Of course not, but they would be required to turn it back to the rightful owner if it were cash (or any other stolen goods) in most countries.

No you wouldn't.
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May 20, 2012, 11:02:45 PM
 #42

Who is even deciding they are stolen?  Have they been reported stolen to the appropriate police agency in the appropriate jurisdiction? What is the Police Report Number? So people can report reception of stolen coins? Who is the assigned case officer? So the people reporting can talk to the right person.

If no report has been filed, then this is 'self help' in order to retrieve stolen coins. Which could make the people recovering the coins thieves themselves if they haven't dotted the 'i's' and crossed the 't's'.

There will be many DB's of 'Tainted' coins. Some will be updated, some will not be, some will be forgot, so when the coins are returned to a rightful owner there will be a probability that those DB's won't be updated and the coins will be confiscated again from the rightful owner.  

Then there will be the issue of why some coins form some businesses get returned but other coins form other businesses don't get returned. It will not be 'equally' enforced which is a problem in of itself.

Don't forget, it's impossible for anyone to know whether or not coins that have been stolen, even if decided by a court that the theft actually happened, there's no way to tell if one of the transactions between the theft tx and the tx transferring the coins to you was not the coins being returned to the original owner already and spent again "legitimately".

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May 20, 2012, 11:26:42 PM
 #43

Doesn't anybody else see the very Big problem with this "Recovering Tainted Coins" or even labeling them 'tainted'?

Businesses will stay away in droves because there are to many 'what ifs' to the equation.

What If: Bicoinica stole its own coins reported them stolen and then gets to recover them after selling them at market? (Not accusing just a what if for example).

What If: A business or site isn't aware of the stolen coins and uses them and passes them on. (i.e. the Faucet) Technically the faucet received stolen coins and passed them on. Should they be responsible for the coins they passed on? Or should just the end receiver?

Who is even deciding they are stolen?  Have they been reported stolen to the appropriate police agency in the appropriate jurisdiction? What is the Police Report Number? So people can report reception of stolen coins? Who is the assigned case officer? So the people reporting can talk to the right person.

If no report has been filed, then this is 'self help' in order to retrieve stolen coins. Which could make the people recovering the coins thieves themselves if they haven't dotted the 'i's' and crossed the 't's'.

There will be many DB's of 'Tainted' coins. Some will be updated, some will not be, some will be forgot, so when the coins are returned to a rightful owner there will be a probability that those DB's won't be updated and the coins will be confiscated again from the rightful owner.  

Then there will be the issue of why some coins form some businesses get returned but other coins form other businesses don't get returned. It will not be 'equally' enforced which is a problem in of itself.

And plus: Most of the people pulling off these thefts will know how to get around the set up systems to avoid the problems of them being 'tainted' so some unsuspecting third party will get shafted.

So all these systems of labeling coins 'tainted' will only hurt the greater bitcoin community.

The Intent here is good, but remember the cliché: "The road to hell is paved with good intentions."

I mostly agree with your post, but I feel that we are being fixated on non-issues here, and missing the (simple) point.

Someone breaks into my apartment and steals cash and gold, or breaks into my computer and steals private keys.  To me, these are two reasonably similar scenarios from the legal and moral point of view. They stole something of value, because they know it's valuable.

In either case, I would expect to be able to report the crime to the authorities and see reasonable efforts dedicated to these being located and returned to the rightful owner, that is me. I have a friend whose car got stolen, he reported it, and months later was contacted by the police and had his car returned to him.

If someone knowingly accepts stolen goods, I think in most countries they would be subject to prosecution, and I believe this to be a good thing. If your country falls into this category, but you don't like it, do everyone a favor and move someplace else, like to that paradise of like-minded people. Good luck.

If someone unknowingly accepts stolen goods, and these are at some later point identified as such by the authorities, again AFAIK in most functioning countries these goods will be returned to their rightful owner. Now, whoever accepted these goods unknowingly gets screwed - but not really. The asshole who stole my stuff and sold it or donated it to them will be responsible for making up to the victim(s).

So, all the yelling and kicking about "tainted" coins is missing these simple points. Tracing stolen coins is good to the extent that it might help identification of criminals, and returning of stolen goods to their rightful owners. There's really nothing more to it. It applies to cash, cars, books, and should apply to Bitcoins. I don't see the problem with it.


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May 20, 2012, 11:52:22 PM
 #44

Quote

I mostly agree with your post, but I feel that we are being fixated on non-issues here, and missing the (simple) point.

Someone breaks into my apartment and steals cash and gold, or breaks into my computer and steals private keys.  To me, these are two reasonably similar scenarios from the legal and moral point of view. They stole something of value, because they know it's valuable.

In either case, I would expect to be able to report the crime to the authorities and see reasonable efforts dedicated to these being located and returned to the rightful owner, that is me. I have a friend whose car got stolen, he reported it, and months later was contacted by the police and had his car returned to him.

Ok, I'll accept that. I would assume you would report it to the Police and let everybody know what is the Police Report Number is and who is the case officer that people reporting the coins can contact. What is the Police Report number in this case and who is the case officer?
Or is this just 'self help' here?


Quote
If someone knowingly accepts stolen goods, I think in most countries they would be subject to prosecution, and I believe this to be a good thing. If your country falls into this category, but you don't like it, do everyone a favor and move someplace else, like to that paradise of like-minded people. Good luck.

Ok, the owners of the faucet have committed a crime in this scenario and should be prosecuted. Or are you saying: Knowingly? If so, I can guarantee that everyone will say they didn't knowingly do it.


Quote
If someone unknowingly accepts stolen goods, and these are at some later point identified as such by the authorities, again AFAIK in most functioning countries these goods will be returned to their rightful owner. Now, whoever accepted these goods unknowingly gets screwed - but not really. The asshole who stole my stuff and sold it or donated it to them will be responsible for making up to the victim(s).

This sort of makes sense, but soon enough you are talking about the majority of the community acting to return the coins because after awhile the 'tainted' coins will be in everyones wallet.

But more importantly, this couldn't be enforce 'equally' as some will return and some won't return. Quickly creating an imbalance where people that do return are screwing themselves compared to others that don't return. Not to mention isolating the coins from the wallet takes work and isn't supported in the official client. Coin Control could help in this but this takes work to do so not only does the honest person lose his money, he also loses his time and effort value.


Quote
So, all the yelling and kicking about "tainted" coins is missing these simple points. Tracing stolen coins is good to the extent that it might help identification of criminals, and returning of stolen goods to their rightful owners. There's really nothing more to it. It applies to cash, cars, books, and should apply to Bitcoins. I don't see the problem with it.


It 'might' do that. But it is more likely that innocent victims will be labeled and possibly prosecuted for something they had nothing to do with.

BTW: Do you have 'stolen' coins in your wallet? Do you know how to answer that question and find out? Should the average John Q Public?


You will eventually run across the occasional guy that just screams to get caught but more often than not, it will be the end receiver.


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May 21, 2012, 12:06:47 AM
 #45

For me

1) Entering someone's physical house without their consent IS a crime.

2) Obtaining Bitcoin by hacking someone (just sending electrical signals on the Internet) IS NOT a crime.

The problem with making (2) a crime, is that you lose the neutrality (and free speech capabilities) of the Internet, and leads to abuse of power. All "virtual" crime can be prevented with proper IT security, so if we wanna keep the neutrality of the Internet, we should focus on prevention of virtual crime rather than punishment.

Of course, governments around the world consider both a crime, so people should be careful. Actually, pretty much anything you do can be considered suspicious criminal activity, especially just normally using Bitcoin.

Am I the only one who believes this?

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May 21, 2012, 12:15:14 AM
 #46

For me

1) Entering someone's physical house without their consent IS a crime.

2) Obtaining Bitcoin by hacking someone (just sending electrical signals on the Internet) IS NOT a crime.

The problem with making (2) a crime, is that you lose the neutrality (and free speech capabilities) of the Internet, which leads to abuse of power. All "virtual" crime can be prevented with proper IT security, so if we wanna keep the neutrality of the Internet, we should focus on prevention of virtual crime rather than punishment.

Of course, governments around the world consider both a crime, so people should be careful. Actually, pretty much anything you do can be considered suspicious criminal activity, especially just normally using Bitcoin.

Am I the only one who believes this?


No, Your #2 Scenario is wrong. I just believe that there should be shared responsibility for the theft but punishing everyone that could possibly come into contact with the coins is also wrong.

i.e. Goto down town Detroit in a Ferrari leave the keys in the car, the car running, the doors open, and leave for the day. The thief that steals the car is doing wrong, but the owner shares some responsibility. In fact, this is a well known insurance scam. The owner is expecting the car to get stolen. Sometime these type of thefts are prearranged.

This is very complicated and hard to prove much of anything. Lets drop the 'tainted' coins idea. Now if someone steals 18K Coins to an address and immediately sells from that address to a verified MTGOX account, then we can 'start' to talk. But, who is going to do that?  But other than that, this is a bad idea.

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May 21, 2012, 12:18:38 AM
 #47

All "virtual" crime can be prevented with proper IT security, so if we wanna keep the neutrality of the Internet, we should focus on prevention of virtual crime rather than punishment.


All physical thefts could be prevented with proper physical security.  

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May 21, 2012, 12:26:30 AM
 #48

All "virtual" crime can be prevented with proper IT security, so if we wanna keep the neutrality of the Internet, we should focus on prevention of virtual crime rather than punishment.


All physical thefts could be prevented with proper physical security.  

This is true for both. The level of security implemented is 'usually' a direct correlation to the value of the item(s) being protected.

So if you leave your running Ferrari in Detroit unprotected, don't be surprised it is stolen. If you leave your running Ferrari in Detroit with a Tank protecting it, you might be surprised if it is stolen.


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May 21, 2012, 01:31:35 AM
 #49

Its not a "blame on yourself" type of thing, since the end users could not do anything to prevent this.

They could have decided *not* to entrust their coins to a bucket shop that just had 40k BTC stolen from them through lax security practices two months ago. That would certainly have prevented it.


The self-reported hacker from the recent Bitcoinica theft has been distributing stolen coins over IRC.

If you recieve offers of stolen coins or have been sent tainted bitcoins, visit https://bitcointalk.org/index.php?topic=82581.0, for information on how to redeem them safely. As with any theft, law enforcement will likely become involved and stolen coins may subject you to criminal investigation and/or charges - please be safe!

Bitcoin-related channels will not tolerate soliciting or distributing stolen coins.

For more information regarding the situation, please visit https://bitcointalk.org/index.php?topic=81045.0

This is BS. While we're at this silliness, we can also charge Patrick with criminal negligence.


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May 21, 2012, 02:35:40 AM
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Quote

I mostly agree with your post, but I feel that we are being fixated on non-issues here, and missing the (simple) point.

Someone breaks into my apartment and steals cash and gold, or breaks into my computer and steals private keys.  To me, these are two reasonably similar scenarios from the legal and moral point of view. They stole something of value, because they know it's valuable.

In either case, I would expect to be able to report the crime to the authorities and see reasonable efforts dedicated to these being located and returned to the rightful owner, that is me. I have a friend whose car got stolen, he reported it, and months later was contacted by the police and had his car returned to him.

Ok, I'll accept that. I would assume you would report it to the Police and let everybody know what is the Police Report Number is and who is the case officer that people reporting the coins can contact. What is the Police Report number in this case and who is the case officer?
Or is this just 'self help' here?

Yes, if I expect you to believe my claims of that sort, I'll need to at least report the crime to the police and let you know what the details are.  And most of us are aware that falsely reporting a crime is, well, a punishable crime.

Quote
Quote
If someone knowingly accepts stolen goods, I think in most countries they would be subject to prosecution, and I believe this to be a good thing. If your country falls into this category, but you don't like it, do everyone a favor and move someplace else, like to that paradise of like-minded people. Good luck.

Ok, the owners of the faucet have committed a crime in this scenario and should be prosecuted. Or are you saying: Knowingly? If so, I can guarantee that everyone will say they didn't knowingly do it.

Yes, I was saying "knowingly."  People on IRC yesterday come to mind. They were even confirming that transactions "seemed legit" as they were receiving stolen coins. I agree that we don't know for sure these came from Bitcoinica hack, or that such hack has happened at all, but most of courts in this world would, I believe, conclude from the logs that the recepients believed the coins were stolen, and still provided their addresses.

Quote
Quote
If someone unknowingly accepts stolen goods, and these are at some later point identified as such by the authorities, again AFAIK in most functioning countries these goods will be returned to their rightful owner. Now, whoever accepted these goods unknowingly gets screwed - but not really. The asshole who stole my stuff and sold it or donated it to them will be responsible for making up to the victim(s).

This sort of makes sense, but soon enough you are talking about the majority of the community acting to return the coins because after awhile the 'tainted' coins will be in everyones wallet.

But more importantly, this couldn't be enforce 'equally' as some will return and some won't return. Quickly creating an imbalance where people that do return are screwing themselves compared to others that don't return. Not to mention isolating the coins from the wallet takes work and isn't supported in the official client. Coin Control could help in this but this takes work to do so not only does the honest person lose his money, he also loses his time and effort value.

Again yes, this is a problem. In my unqualified opinion, in most jurisdictions owners of Bitcoinica could require holders of stolen goods to return these to the rightful owner. These people can then sue the "Bitcoinica Hacker" for damages, although it probably wouldn't work: this person has not even deceived them regarding the nature of the merchandise: they knew it was stolen, and that they were not engageing in the transaction with the rightful owner.

Quote

Quote
So, all the yelling and kicking about "tainted" coins is missing these simple points. Tracing stolen coins is good to the extent that it might help identification of criminals, and returning of stolen goods to their rightful owners. There's really nothing more to it. It applies to cash, cars, books, and should apply to Bitcoins. I don't see the problem with it.


It 'might' do that. But it is more likely that innocent victims will be labeled and possibly prosecuted for something they had nothing to do with.

BTW: Do you have 'stolen' coins in your wallet? Do you know how to answer that question and find out? Should the average John Q Public?

Innocent victims will only be those who unknowingly accepted stolen coins - and perhaps they should look into a class-action lawsuit against the hacker. And no, I wouldn't know if I have some of the stolen coins in my wallet, but I do know that I wouldn't accept a donation of any kind from someone claiming to have stolen whatever is being donated.

Quote

You will eventually run across the occasional guy that just screams to get caught but more often than not, it will be the end receiver.

Again, if the courts cannot prove (usually "beyond reasonable doubt") that you knew the goods were stolen, you are not subject to criminal prosecution.

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May 21, 2012, 02:57:15 AM
 #51

All "virtual" crime can be prevented with proper IT security, so if we wanna keep the neutrality of the Internet, we should focus on prevention of virtual crime rather than punishment.


All physical thefts could be prevented with proper physical security.  

It's your choice whether you want to make your virtual belongings accessible remotely through the Internet. Anyone has the capability to simply pull the plug, and totally secure their virtual belongings from being accessed through the Internet. This is not the case with your physical belongings.

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May 21, 2012, 03:15:33 AM
 #52

All "virtual" crime can be prevented with proper IT security, so if we wanna keep the neutrality of the Internet, we should focus on prevention of virtual crime rather than punishment.


All physical thefts could be prevented with proper physical security.  

It's your choice whether you want to make your virtual belongings accessible remotely through the Internet. Anyone has the capability to simply pull the plug, and totally secure their virtual belongings from being accessed through the Internet. This is not the case with your physical belongings.
It is your choice to have glass windows and doors that open with pocket sized keys.  Anyone can have a house built without windows, in fact it should be cheaper. 

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May 21, 2012, 03:23:55 AM
 #53

Quote
I do know that I wouldn't accept a donation of any kind from someone claiming to have stolen whatever is being donated.


See, you might not have that option. If you have used 1 address publicly or even privately ( the private person might make it public), they 'Anyone' could just send you coins. You don't have the option of refusing to accept them. The Blockchain accepts them on your behalf.    Now, you are in a position of proving you didn't know that you weren't expecting them.

i.e. YOU have been FRAMED for something you did not do. Try telling people that someone just gave them to you.

BTW: I have at times randomly just given coins to people without their knowledge that I was going to send them coins. This can be fun. It can mess with statistics, financial reports, reporting of losses and gains. I do it to try to get people to realize some fallacies in the accounting and use of addresses. Am I harming anyone? No, I think not. I'm just giving them BTC, it's not my fault that they have used faulty methods for accounting.

To my knowledge, none of the coins have been 'tainted'.

You do realize that 1 "tainted" BTC is actually 100,000,000 Million tainted coins if separated and sent properly.

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May 21, 2012, 03:29:35 AM
 #54

I'm not supporting hacking by any means, nor do I support the idea of "tainted coins". It's not necessary. Why not trace all the coins that are known proceeds from illegal activities label them as "criminally active" and if any point the address can be traced to an individual, then assume they're guilty and let them try to prove their innocence.

I've always preferred the "assumed guilty until proven innocent" model myself. Work ok in medieval times, didn't it?

Seriously though, I do see this becoming a problem when bitcoin becomes large enough for law enforcement to take it seriously. It's not hard to trace coins. Especially with laundering, law enforcement types might just be happy to assume you're guilty even if the only thing you're guilty of is withdrawing coins from GLBSE. Making coins tainted won't stop this from occurring without agreement from not just all parties but from all bitcoin clients. And even then some would make it into the population before they're reported. And how do you report it? What level of evidence is required? What happens to the poor buggers that now find their 100btc are worthless?

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May 21, 2012, 03:48:35 AM
 #55

I'm not supporting hacking by any means, nor do I support the idea of "tainted coins". It's not necessary. Why not trace all the coins that are known proceeds from illegal activities label them as "criminally active" and if any point the address can be traced to an individual, then assume they're guilty and let them try to prove their innocence.

I've always preferred the "assumed guilty until proven innocent" model myself. Work ok in medieval times, didn't it?

Seriously though, I do see this becoming a problem when bitcoin becomes large enough for law enforcement to take it seriously. It's not hard to trace coins. Especially with laundering, law enforcement types might just be happy to assume you're guilty even if the only thing you're guilty of is withdrawing coins from GLBSE. Making coins tainted won't stop this from occurring without agreement from not just all parties but from all bitcoin clients. And even then some would make it into the population before they're reported. And how do you report it? What level of evidence is required? What happens to the poor buggers that now find their 100btc are worthless?

More importantly, if a system is put in place to determine coins tainted and reclaim them from vendors and exchanges, what happens when BTC are declared 'illegal' buy governments or institutions?

They now have methods of taking the coins away.

As far as making untraceable coins, it is already being done. Where are all the Casascius coins?  Where are they recorded in the Blockchain when traded? Trading of wallet.dat(s) when properly secured by non-forgable methods will be huge. You don't even need to check on the internet for the casascius coins still being there. Anyone with a copy of the blockchain can do it.

Making coins of similar or better can be done by almost anyone. So there isn't even a central supplier of the coins.

And in reality all the blockchain does is show transfer of funds, it can't show the intent or purpose of the transfer. Is it a donation? a payment for legal services? a payment for illegal services? a kickstarter? a winning raffle?

Please make this 'tainted' business go away. It will harm the community. I would think that the people trying to enforce this 'tainted' business know the flaws to it. So, I tend to start thinking on why they are supporting it. It raises questions as to the reasons for their support of it.

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May 21, 2012, 03:55:51 AM
 #56

You do realize that 1 "tainted" BTC is actually 100,000,000 Million tainted coins if separated and sent properly.

Currently 1 BTC can only be split into 100 million pieces.

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May 21, 2012, 05:30:24 AM
 #57

Please make this 'tainted' business go away. It will harm the community. I would think that the people trying to enforce this 'tainted' business know the flaws to it. So, I tend to start thinking on why they are supporting it. It raises questions as to the reasons for their support of it.

Alright, how about a change in terminology?  Forget about the "tainted" coins, it's a disturbing idea with potentially disturbing consequences. Can we agree that it's okay for individuals to invest efforts into tracing allegedly stolen coins, simply for the sake of getting closer to identifying the thief?  If some day someone decides to actually report a theft (has this even ever happened in the history of BTC?), and this is taken seriously by the law enforcement and courts, wouldn't these tools prove useful?  Are there any problems with this idea?  The way I see it, victims of BTC theft have vested interest in defeating the (pseudo)anonymity of Bitcoin. That's all.

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May 21, 2012, 05:38:12 AM
 #58

I can't believe there are prominent members of the Bitcoin community promoting this nonsense yet again.

This whole thing is moot, or even a can of worms too large to deal with, since we don't even know Bitcoinica had their coins stolen. So, for me, I'll start taking this talk seriously when the advocates of this "tainting" business give proof that coins were ever stolen in the first place.

But they know they can't.

Because Bitcoinica can't.

They can't prove that they themselves didn't just take the coins for whatever reason. They can't prove they aren't in collusion with the alleged thief. They can NEVER prove that they don't have the private key that the bulk of coins eventually gets sent to, to be stored away for 10 years and finally retrieved after this is long forgotten, and Bitcoin 2.0 has been developed to hide the source of a funds transfer.

That's not to say that no theft occurred. Nor is it to say that the alleged thief is guilty of no crime. And it's certainly not to say that asking money from some yokel claiming it's stolen has no moral implications.

But it's outright nonsense to take the position that anyone discovered to have bitcoins traceable back to a "theft" address needs to send them to whoever claimed they were stolen, or else suffer some consequence. If you take that position, you clearly don't realize what you're advocating.


Bitcoin is the ultimate freedom test. It tells you who is giving lip service and who genuinely believes in it.
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In the future, books that summarize the history of money will have a line that says, “and then came bitcoin.” It is the economic singularity. And we are living in it now. - Ryan Dickherber
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ATTENTION BFL MINING NEWBS: Just got your Jalapenos in? Wondering how to get the most value for the least hassle? Give BitMinter a try! It's a smaller pool with a fair & low-fee payment method, lots of statistical feedback, and it's easier than EasyMiner! (Yes, we want your hashing power, but seriously, it IS the easiest pool to use! Sign up in seconds to try it!)
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The idea that deflation causes hoarding (to any problematic degree) is a lie used to justify theft of value from your savings.
westkybitcoins
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May 21, 2012, 05:46:10 AM
 #59

Please make this 'tainted' business go away. It will harm the community. I would think that the people trying to enforce this 'tainted' business know the flaws to it. So, I tend to start thinking on why they are supporting it. It raises questions as to the reasons for their support of it.

Alright, how about a change in terminology?  Forget about the "tainted" coins, it's a disturbing idea with potentially disturbing consequences. Can we agree that it's okay for individuals to invest efforts into tracing allegedly stolen coins, simply for the sake of getting closer to identifying the thief?  If some day someone decides to actually report a theft (has this even ever happened in the history of BTC?), and this is taken seriously by the law enforcement and courts, wouldn't these tools prove useful?  Are there any problems with this idea?  The way I see it, victims of BTC theft have vested interest in defeating the (pseudo)anonymity of Bitcoin. That's all.

Trace away. The blockchain is public.

But how exactly will the thief be positively identified? Is the intent to simply finger and prosecute the first person in the chain with an identifiable address who won't (or can't) give a "good" explanation as to how he wound up with "stolen" funds?

Bitcoin is the ultimate freedom test. It tells you who is giving lip service and who genuinely believes in it.
...
...
In the future, books that summarize the history of money will have a line that says, “and then came bitcoin.” It is the economic singularity. And we are living in it now. - Ryan Dickherber
...
...
ATTENTION BFL MINING NEWBS: Just got your Jalapenos in? Wondering how to get the most value for the least hassle? Give BitMinter a try! It's a smaller pool with a fair & low-fee payment method, lots of statistical feedback, and it's easier than EasyMiner! (Yes, we want your hashing power, but seriously, it IS the easiest pool to use! Sign up in seconds to try it!)
...
...
The idea that deflation causes hoarding (to any problematic degree) is a lie used to justify theft of value from your savings.
amencon
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May 21, 2012, 05:46:25 AM
 #60

Doesn't anybody else see the very Big problem with this "Recovering Tainted Coins" or even labeling them 'tainted'?

Yes, the flaws are so immediately and glaringly obvious you almost have to consider ulterior motives may be involved whenever this is brought up.
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