Spending and Receiving Stolen Coins.

[MarketNeutral]

Isn't the person who committed the theft (or other crime) the one who's tainted, not the bitcoins? And what is a bitcoin but a record of a transaction? What would you expect to happen if someone stole your bitcoins? What if you had a fraction of a fraction of a tainted bitcoin in your wallet, among thousands of non-tainted coins, and law enforcement confiscated your entire wallet because it contained a tainted coin? Do you expect them to understand or care about the finer distinctions of bitcoin or monetary science?

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[organofcorti]

You won't need to taint coins for law enforcement to do this. all they need to do is trace the blockchain.

[check_status]

Where is frglr in all this drama, we need some graphs!

This is the coolest shit ever (Note: Thief in Red)-----------V

[marcus_of_augustus]

Isn't the person who committed the theft (or other crime) the one who's tainted, not the bitcoins? And what is a bitcoin but a record of a transaction? What would you expect to happen if someone stole your bitcoins? What if you had a fraction of a fraction of a tainted bitcoin in your wallet, among thousands of non-tainted coins, and law enforcement confiscated your entire wallet because it contained a tainted coin? Do you expect them to understand or care about the finer distinctions of bitcoin or monetary science?

Quite, money is an information technology, and like all technologies is amoral.

Requiring bitcoins to have a moral status is ludicrous, and belies a fundamental misunderstanding of what money is. Best leave moral judgements up to the conscience of the thieves and the God who watches over all and don't place such an impossible requirement on bitcoin.

[MarketNeutral]

Isn't the person who committed the theft (or other crime) the one who's tainted, not the bitcoins? And what is a bitcoin but a record of a transaction? What would you expect to happen if someone stole your bitcoins? What if you had a fraction of a fraction of a tainted bitcoin in your wallet, among thousands of non-tainted coins, and law enforcement confiscated your entire wallet because it contained a tainted coin? Do you expect them to understand or care about the finer distinctions of bitcoin or monetary science?

Quite, money is an information technology, and like all technologies is amoral.

Requiring bitcoins to have a moral status is ludicrous, and belies a fundamental misunderstanding of what money is.

Amen to that.

[JusticeForYou]

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.

Yes, I can agree it is ok to try to trace the coins. People do it for many reasons. People even do it with IRL dollars: http://www.wheresgeorge.com/ I can also certainly understand wanting to get your coins back. You know, I once left my physical wallet on a bar once. I went back to get it and low and behold, it was gone. There was about 200 dollars in it plus all my id. Do you know who I blamed the most?  ME, I was an idiot. Did I want to get it back? Yes. Did I expect to get it back? No.

But what if I saw a guy exiting the bar with the wallet in his hand? Is he the thief? Or did he just call the police and was walking outside to give it to the officers?  (Just saying that 'self help' from an un-objective person usually has bad results.)

So, yes do all the tracing and tracking that you want. Try to find out what happened and prevent it from happening again.

There was someone here that lost 100 BTC from some unknown reason from his computer. He immediately tried tracking the coins but didn't seem to care how the coins where stolen. He deleted his drive and started fresh.

This doesn't mean I don't want to stop thieves. I don't want thieves getting away with theft. There are just two methodologies to stoping them.

1) Make it easy to track and retrieve the coins from thefts. (The unintended consequences of this will destroy the whole community)

2) Make it impossible for the thieves from stealing them in the first place. (Can't see a flaw in this one and the encrypted wallet is along this line)

You know what attracts me to BTC? The fact that I have Wallets that can't be stolen to a mathematical certainty. NO, virus can get them. Absolutely, no one can get them. Utilizing a shared secret, there are wallets that I can't get unless others agree to let me get them and they can't get them unless I agree. (Defeats the Rubber Hose Decryption Methods).

The whole point is don't keep BTC in a hot wallet or even on a computer connected to the internet that you can't afford to lose. Hell, don't even keep them on a computer that can get stolen.

Bitcoin is an almost perfect safe deposit box. Stop giving people the keys to the boxes.

Plus business that require a float, could certainly have an insurance fund for loss of the float. IF it takes 18K for a float, then have 18K in a cold wallet just incase.

[Gabi]

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.

+1

[Global BTC]

As a seller on Bitmit, and in general, I can't do much to prevent people from paying me with "tainted" coins. I can't control who gets to buy my goods. If I do receive a "tainted" payment, what should I do? Refund it? How do I even know it's "tainted". I don't know exactly how Bitmit's escrow service works, but I fear it might "taint" everything if someone would make a payment with "tainted" coins through it.

[bulanula]

As a seller on Bitmit, and in general, I can't do much to prevent people from paying me with "tainted" coins. I can't control who gets to buy my goods. If I do receive a "tainted" payment, what should I do? Refund it? How do I even know it's "tainted". I don't know exactly how Bitmit's escrow service works, but I fear it might "taint" everything if someone would make a payment with "tainted" coins through it.

Exactly. The idea of tainted coins is LUNACY for something like Bitcoin.

MtGox has got us into this shithole with "tainted" money. Well done sirs ! 

[JusticeForYou]

As a seller on Bitmit, and in general, I can't do much to prevent people from paying me with "tainted" coins. I can't control who gets to buy my goods. If I do receive a "tainted" payment, what should I do? Refund it? How do I even know it's "tainted". I don't know exactly how Bitmit's escrow service works, but I fear it might "taint" everything if someone would make a payment with "tainted" coins through it.

Exactly. The idea of tainted coins is LUNACY for something like Bitcoin.

MtGox has got us into this shithole with "tainted" money. Well done sirs !  

Yes, this is when I first came across it. MTGOX froze an account of some poor guy that bought coins off of TH and sent to MTGOX. It seems that a lot of 'tainted' coins came from TH. The unfortunate account holder at MTGOX that received them would bear the punishment if decided to be employed by an individual or company.

I think what might need to happen is to set up a 'legal attack fund' for businesses that resort to 'self help' in freezing coins, accounts, and coins.  You know why real Banks and Exchanges don't freeze and take stolen money back if they deemed something suspicious without a warrant and/or subpoena to do so?  BECAUSE they will get sued into Bankruptcy oblivion.

Maybe that would stop some of this insanity.

Would there be interest in a fund of this sort. We can head over to Legal and set one up with a lawyer.

[LoupGaroux]

And the fact that Luke Jr., fascist manipulator extraordinaire, is behind the definition and the "cleansing" of this category of coin is just laughable. A developer who wants to impose his will on the world in every possible way, and especially in terms of cryptocurrency deciding what is valid and what is not? Spare me.

Your slander discredits your entire post.

Since nobody has jurisdiction over Bitcoin, I think there is no issue.

Every State has jurisdiction over Bitcoin transactions initiated or received within its borders, just like any other business done there.

It's only slander if it is not true. This "clean-up" service is another example of the need of a few, especially the delusional power-hungry do-it-my-way-or-I-will-fucking-kill-you nutburger few, forcing their vision of how the world should be on the rest. You are an accomplice to this alleged theft by creating a mechanism to "purify" these alleged stolen coins.

And let's take a moment to consider the situation here... a site that supposedly loses $200,000 in value in the blink of an eye, is now back mere weeks later claiming that he was mysteriously hacked AGAIN??? This time, "luckily" only $70,000 worth of coins vanished. And the "thief" is magnanimous enough to want to give his filthy lucre away to random souls through IRC? And look, the same clique of dominance-obsessed tools is coming out with the pre-positioned plan to make all of these tainted coins clean again, and we can just make all the loss disappear.

Bullshit.

And you are so wrong on the jurisdictional issue that it isn't even worth educating you on it. Ownership of bitcoin is not a "transaction" in a jurisdictional sense.

[Luke-Jr]

And the fact that Luke Jr., fascist manipulator extraordinaire, is behind the definition and the "cleansing" of this category of coin is just laughable. A developer who wants to impose his will on the world in every possible way, and especially in terms of cryptocurrency deciding what is valid and what is not? Spare me.

Your slander discredits your entire post.

It's only slander if it is not true.

Exactly my point.

You are an accomplice to this alleged theft by creating a mechanism to "purify" these alleged stolen coins.

I didn't create a mechanism to "purify" anything. I created a straight-forward method to return the stolen coins to their rightful owner.

Since nobody has jurisdiction over Bitcoin, I think there is no issue.

Every State has jurisdiction over Bitcoin transactions initiated or received within its borders, just like any other business done there.

And you are so wrong on the jurisdictional issue that it isn't even worth educating you on it. Ownership of bitcoin is not a "transaction" in a jurisdictional sense.

It doesn't matter whether the law considers it a financial transaction or not. All that matters is that at least one end of the deal took place within the State's borders.

[hazek]

I think what might need to happen is to set up a 'legal attack fund' for businesses that resort to 'self help' in freezing coins, accounts, and coins.

No need, if this is something MtGox for example stipulates in their ToS i.e. their contract they will get regulated by their customers taking their business some place else and if they don't they will get sued by their customers for damages. Problem solved.

[LoupGaroux]

And the fact that Luke Jr., fascist manipulator extraordinaire, is behind the definition and the "cleansing" of this category of coin is just laughable. A developer who wants to impose his will on the world in every possible way, and especially in terms of cryptocurrency deciding what is valid and what is not? Spare me.

Your slander discredits your entire post.

It's only slander if it is not true.

Exactly my point.

You are an accomplice to this alleged theft by creating a mechanism to "purify" these alleged stolen coins.

I didn't create a mechanism to "purify" anything. I created a straight-forward method to return the stolen coins to their rightful owner.

Since nobody has jurisdiction over Bitcoin, I think there is no issue.

Every State has jurisdiction over Bitcoin transactions initiated or received within its borders, just like any other business done there.

And you are so wrong on the jurisdictional issue that it isn't even worth educating you on it. Ownership of bitcoin is not a "transaction" in a jurisdictional sense.

It doesn't matter whether the law considers it a financial transaction or not. All that matters is that at least one end of the deal took place within the State's borders.

As it was mine.

Go ahead and illuminate the class then... how exactly did you determine that the coins were stolen, what was the process you took to determine the rightful owner, and explain how having an anonymous "thief" send coins to random people , who then send them to YOU, who claim to be sending them on to somebody else is A) straight-forward; and B) anything other than a mechanism to change the reputation created by external parties concerning these coins.

Ownership, and the transfer of ownership of the results of a hashing algorithm do not constitute a "transaction". Regardless of what popular opinion might say about the means of that transfer, the only "crime" here is the removal of data without permission. If that even happened. There is no documentation that Bitcoinica did not transfer these funds out himself, no proof that you are not the "thief" who has been giving coins to a group of confederates through IRC, no proof that a non-authorized transfer happened at all. Other than the word of a limited circle of insiders who stand to make a considerable amount of gain from manipulating these coins. There is a semi-load of reasonable doubt surrounding this issue, and the very fact of who the players are crying hack for the second time in weeks, and the reputation of the white hats rushing to establish the restitution mechanism adds more to the question of who is zooming who in this matter.

Frankly, given your history of abuse of power, obsessive-compulsive behavior, and irrational attacks I wouldn't trust you to put the coins into the slot in an automatic car wash, much less be the steward of integrity for a quarter of a million dollars worth of funny money. This whole thing reeks of a select few insiders scamming another group of naive players.

And that, Sir, is not slander, that is healthy skepticism and very public doubt concerning your integrity, and the veracity of this story.

[Luke-Jr]

And that, Sir, is not slander, that is healthy skepticism and very public doubt concerning your integrity, and the veracity of this story.

No, everything you accuse me of therein is a lie. This degree of slander should really get you banned, IMO.

[Gabi]

Yes, censoring the opponent is always a good idea.

[JusticeForYou]

I think what might need to happen is to set up a 'legal attack fund' for businesses that resort to 'self help' in freezing coins, accounts, and coins.

No need, if this is something MtGox for example stipulates in their ToS i.e. their contract they will get regulated by their customers taking their business some place else and if they don't they will get sued by their customers for damages. Problem solved.

MTGOX as far as I know take an appropriate response in their Terms of Use. Reception of tainted coins 'might' kick off a AML Identity request. They as far as I know, do not require you to identify where you received coins (nor should you tell them, you should only tell properly Identified LE Officers if you wish). You may be required to identify. The problem there is that you could send coins to everybody at MTGOX forcing the AML requirements on everybody. That might not be good for business. Especially when people are often required to identify multiple times.

I mean seriously MTGOX is requiring tougher rules than Banks. They might as well just become one and get it over with. I can open an account here with a DL and SSN. Some 'illegals' can open accounts here with just a consulate ID and not even be a citizen. Pretty soon, Americans will be using foreign banks overseas for ease of use. Unfortunately many of them won't take US Citizens because of the insane requirements being imposed on them by the FED.

I was more inclined to mean 'other' businesses that use the tactic of freezing and re-claiming coins deemed 'tainted'.

You are right in that the free market should take care of this but the free market also includes the use of lawyers to speed up decisions.

Plus: Think of the unemployment rate and GDP. Imagine all the people that need to be hired and money needing to be spent when lawyers get involved.

That alone might keep organizations from trying 'self help' methods and just wait for LE Inquiries before taking actions.

What happened to the days when Businesses required a warrant to take actions rather than just 'you follow our rules or else' threats?

We need to get back on track to appropriate rules and stop this craziness. Lets start with Lawyers and Lobbyists before we bring out the guns to take the country back.

You know what is sad? The 'terrorists' won on 9/11. They successfully have taken away our Liberties by forcing us to pass the Patriot Act and allowing our government to do anything they want under the guise of National Security.

Prying back that power that was given to them is going to be hard. Bitcoin is a start, to prove the uselessness of the rules.

[hazek]

From MtGox ToS:

Members represent and warrant that they are the legitimate owners and are allowed to use all monetary sums and Bitcoins deposited on their Account and that the Transactions being carried out do not infringe the rights of any third party or applicable laws. Members who are not consumers ("Business Members") will indemnify Mt. Gox for any and all damages suffered and all liability actions brought against Mt. Gox for infringement of third party rights or violation of applicable laws.

To the extent permitted by law, Mt. Gox will not be held liable for any damages, loss of profit, loss of revenue, loss of business, loss of opportunity, loss of data, indirect or consequential loss unless the loss suffered is caused by a breach of these Terms by Mt. Gox.

In the case of fraud, Mt. Gox will report all necessary information, including names, addresses and all other requested information, to the relevant authorities dealing with fraud and breaches of the law. Members recognize that their account may be frozen at any time at the request of any competent authority investigating a fraud or any other illegal activity.

TERMINATION

Members acknowledge and agree that their Account may be suspended until they provide Mt. Gox with documents evidencing their identity and/or any other information that Mt. Gox deems necessary to secure the Accounts, the Transactions and/or the Platform.

Additionally, we may, in appropriate circumstances and at our discretion, suspend or terminate Accounts of Members for any reason, including without limitation: (1) attempts to gain unauthorized access to the Site or another Member’s account or providing assistance to others' attempting to do so, (2) overcoming software security features limiting use of or protecting any content, (3) usage of the Platform to perform illegal activities such as money laundering, terrorism financing or other criminal activities, (4) violations of these Terms, (5) failure to pay or fraudulent payment for Transactions, (6) unexpected operational difficulties, or (7) requests by law enforcement or other government agencies.

We also reserve the right to cancel unconfirmed Accounts or Accounts that have been inactive for a period of 6 months or more, or to modify or discontinue our Site or Platform. Members agree that Mt. Gox will not be liable to them or to any third party for termination of their Account or access to the Site.

Basically if you use MtGox you agree that they can do to your account or/and money what ever the hell they want.

[JusticeForYou]

From MtGox ToS:

Members represent and warrant that they are the legitimate owners and are allowed to use all monetary sums and Bitcoins deposited on their Account and that the Transactions being carried out do not infringe the rights of any third party or applicable laws. Members who are not consumers ("Business Members") will indemnify Mt. Gox for any and all damages suffered and all liability actions brought against Mt. Gox for infringement of third party rights or violation of applicable laws.

To the extent permitted by law, Mt. Gox will not be held liable for any damages, loss of profit, loss of revenue, loss of business, loss of opportunity, loss of data, indirect or consequential loss unless the loss suffered is caused by a breach of these Terms by Mt. Gox.

In the case of fraud, Mt. Gox will report all necessary information, including names, addresses and all other requested information, to the relevant authorities dealing with fraud and breaches of the law. Members recognize that their account may be frozen at any time at the request of any competent authority investigating a fraud or any other illegal activity.

TERMINATION

Members acknowledge and agree that their Account may be suspended until they provide Mt. Gox with documents evidencing their identity and/or any other information that Mt. Gox deems necessary to secure the Accounts, the Transactions and/or the Platform.

Additionally, we may, in appropriate circumstances and at our discretion, suspend or terminate Accounts of Members for any reason, including without limitation: (1) attempts to gain unauthorized access to the Site or another Member’s account or providing assistance to others' attempting to do so, (2) overcoming software security features limiting use of or protecting any content, (3) usage of the Platform to perform illegal activities such as money laundering, terrorism financing or other criminal activities, (4) violations of these Terms, (5) failure to pay or fraudulent payment for Transactions, (6) unexpected operational difficulties, or (7) requests by law enforcement or other government agencies.

We also reserve the right to cancel unconfirmed Accounts or Accounts that have been inactive for a period of 6 months or more, or to modify or discontinue our Site or Platform. Members agree that Mt. Gox will not be liable to them or to any third party for termination of their Account or access to the Site.

Basically if you use MtGox you agree that they can do to your account or/and money what ever the hell they want.

LOL, yea most TOS have a 'whatever' we decide clause.

You ever see the sign at a Valet parking place that they are not responsible for etc..., etc...?

IT'S a LIE.

You can say one thing, but the courts decide if it is actually what you intended.

Otherwise their would be no need of civil courts. You could just point to TOS and say didn't you read the sign.

[tysat]

And that, Sir, is not slander, that is healthy skepticism and very public doubt concerning your integrity, and the veracity of this story.

No, everything you accuse me of therein is a lie. This degree of slander should really get you banned, IMO.

I wouldn't call it slander, more of a strong opinion.  You need to chill out.