
Why the feds took down one of Bitcoin’s largest exchanges - SirLJ
https://www.theverge.com/2017/7/29/16060344/btce-bitcoin-exchange-takedown-mt-gox-theft-law-enforcement
======
ineedasername
This is what I never understood about bitcoins's reputation, especially
earlier on, about its supposed anonymity. I suppose that's much less the case
now. But it always seemed odd that people considered it at all anonymous when
the blockchain kept a record of everything. Sure it might not be immediately
identifiable with a specific individual, but unless it was a wholly closed
system, entry & exit points would always be clear, along with all the hops
from wallet to wallet along the way.

And the longer the system exists, the more information will accumulate that
would allow anyone with an interest in doing so to correlate blockchain
transactions to "real-world" people & systems.

I'm sure I'm missing something though, since I'm by no means a cryptologist,
or more than an interested spectator on crypto-coins. (I mined about 0.1 bc
back when it was still possible to do that in a week or so on a mid-range AMD
GPU. and, shocked at the rise in value, cashed it in for about $200 a few
years ago.)

~~~
brndnmtthws
Monero[1] was created, among other reasons, to solve the privacy problem. It
uses something called a ring signature[2], which is composed of a group
'decoy' public keys, plus yours, as part of every transaction which makes it
impossible for an outsider to trace. Monero is fungible, whereas Bitcoin is
not.

[1]: [https://getmonero.org/](https://getmonero.org/)

[2]:
[https://getmonero.org/resources/moneropedia/ringsignatures.h...](https://getmonero.org/resources/moneropedia/ringsignatures.html)

~~~
0x4f3759df
Monero and Dash are both making a play at the anonymous space, do you have an
opinion about Monero vs Dash?

~~~
lawn
1\. Monero's transactions are private by default. In Dash it's optional (and
slower).

2\. Dash is basically a coin join, working like a Bitcoin mixer. This means
you can still gather some information from the mix given enough analysis. It's
different compared to Monero where you cannot tell which of the possible
inputs is the right one. The security is based on probability and cryptography
instead of obfuscation.

3\. Monero hides both the addresses of the transaction and the amount. In Dash
the transaction amount is open and analysis could correlate the obfuscated
sending and receiving addresses.

4\. The mixing in Dash is performed by "masternodes", a subset of all nodes,
and if compromised they can break the privacy. Particularly scary after the
recent Bitcoin mixer shutdown. Monero contains no such third party weakness.

All in all the anonymity of Dash is a joke compared to what Monero gives you.

~~~
elmar
Any idea why Monero as such low usage traction?

~~~
lawn
Mainly two reasons I think:

1\. There are no mobile wallets, multisig or hardware wallets. Now all of
these are in the works and hopefully ready this year.

2\. Very little effort has been spent on marketing compared to other coins
(for example Dash). The biggest reason is that Monero is community funded and
it's not possible to use a share of the developers share of coins, as there
isn't one. This is compared to the marketing in Dash which has been fueled by
the instamine. Focus has instead been placed on developing the fundamentals.

In fact it's a bit surprising that Monero has had the popularity it has. The
official GUI was only released relatively recently and before then you were
sort of forced to use the command line client.

------
eadz
These domain name seizures from non US-resident entities keep coming.

But more worryingly, "The language in the indictment about BTC-e’s “criminal
design” mimics the indictment against Liberty Reserve".

This also mimics the Kim DotCom / MegaUpload take down, along with a likely
"FBI" operation in a foreign country.

It seems there is now a policy of taking down things that are "criminal in
design" \- waiting for the next raid on "criminal in design" encryption
software...

~~~
hexc0de
Like Telegram Messenger

~~~
spacemanmatt
Or Signal

~~~
blubb-fish
especially signal!

------
FRex
>Money laundering is the process of transforming the profits of crime and
corruption into ostensibly "legitimate" assets.

>A cryptocurrency tumbler is a service offered to mix potentially identifiable
or 'tainted' cryptocurrency funds with others, with the intention of confusing
the trail back to the fund's original source.

English might not be my native language but I can see lots of parallels.

I never actually considered this before but a mixer is the physical world
would be getting mailed (by anonymous parties) 10 bags of money, 9 legitimate
ones and one known to be from mafia and with sequential bill numbers known to
feds and then repacking and mixing up the banknotes and receiving 10 visitors,
each of whom gets one bag from you.

You just laundered the money, sort of... it gets screwy (that's a very
technical term ;) although does it really? From 9 legitimate bags you made 10
(functionally) legitimate ones. You can't trace the mafia guy after your
mixing, you can't pick a guy with a bag at random and say he is the mafia
perp, you can't say each of these guys now has 10% of illegitimate money in
his bag because they can't be responsible (and don't even know) about actions
of other people who mailed you money. An entire money bag just got laundered
(by the definition above, it was crime proceeds and is now ostensibly
legitimate because it can't be distinguished).

~~~
StavrosK
Laundering isn't about traceability. It's about taking money that's been
gotten illegally (and thus you can't spend without the IRS asking questions)
and paying tax on it so it appears as if you earned it by legitimate means.

Making traceable money untraceable doesn't mean it's now clean.

~~~
FRex
It seems to be about both taxes and making yourself not traceable to a crime
(or the latter is a side effect of the former, since making money appear
legitimately earned will of course unlink it from any crimes as a side
effect/prerequisite).

Look at the definition here and tell me it doesn't sounds like a mixer:
[https://www.fincen.gov/history-anti-money-laundering-
laws](https://www.fincen.gov/history-anti-money-laundering-laws)

Similarly there can be unusually high tax (like the 75% in Poland) on
undocumented income but if that money could also be traced to a bank heist or
drug deal as well you would be in much more trouble than just that tax.

As for USA's (un)usually far legal reach, strong extradition agreements, etc.
- that can be up for debate. But money laundering itself (especially when
starting with stolen funds) is hardly legal anywhere and mixers seem to fit
the definition of laundering at a glance if you consider Bitcoin a currency,
it's typical case of law not catching up with the technology and legacy laws
being reused instead.

~~~
StavrosK
Yeah, you're right, the two are pretty well intermingled. To me, laundering is
more about the "paying taxes" part, but there's definitely an element of
obfuscation.

------
ithought
The charges seem exaggerated. If he's responsible or directly involved in the
Mt. Gox theft, then they should prosecute him for that. The referencing of
Internet usernames as evidence of crimes indicates they have a weak case or
they're using it as public relations campaign against bitcoin.

The price of Litecoin was usually higher on btc-e I think solely because
people would deposit btc and buy ltc as a way to hide the source of their
coins. It was widely considered shady but trustworthy by its longevity.

------
microsage
> The language in the indictment about BTC-e’s “criminal design” mimics the
> indictment against Liberty Reserve — an anonymous currency service taken
> down by law enforcement in 2013 — which also accused the online exchange of
> having a “criminal design” and a system “designed so that criminals could
> effect financial transactions under multiple layers of anonymity.”

Basing the indictment on the intent of the design - something hard to prove or
reason about objectively - seems like a very slippery slope. Couldn't a
similar statement be made about almost any system that protects user privacy?
Or maybe they're referring to specific legal requirements not being conformed
to rather than a general "criminal design"?

~~~
rothbardrand
The money laundering statutes are so broad that you are a felon under them if
you take money out of your savings and put it in your checking in order to
make your credit card payment one month. Even if all three are at the same
bank and none of the money is the result of a criminal activity.

~~~
dboreham
Citation?

~~~
thephyber
I highly doubt that scenario exists without some other incriminating action,
behavior, or police observation.

Civil Asset Forfeiture is an attack on private property and the legal
principle of "innocent until proven guilty", but there has to be _some_
suspicion of a crime (usually alleged drug paraphernalia) or simple corruption
on the part of the police and/or judges.

There is a money-laundering-related charge, IIRC called "structuring", in
which the reporting threshold of $10k/day/person is intentionally avoided (eg.
by $9,999 transactions on consecutive days). This isn't usually charged "out
of the blue". In the recent Hastert structuring case[1], he told a bank
employee that he was avoiding the reporting threshold even though his money
transfers weren't actually money laundering after profiting from a crime.

There is a lot that I disdain about money laundering laws and civil asset
forfeiture, but I'm not inclined to believe that "rothbard-rand" (the surnames
of two famous Libertarians) has no dogs in this fight, so to speak.

[1]
[https://en.wikipedia.org/wiki/Dennis_Hastert#Indictment](https://en.wikipedia.org/wiki/Dennis_Hastert#Indictment)

------
beautifulfreak
I wonder if the Mt Gox parties et al who were robbed will be refunded their
bitcoin, since there is a ledger, or if the government will just keep
everything. How could a refund be accomplished anyway? Would one need proof of
owning a wallet that was emptied?

------
necessity
Aside from theft - of which the only evidence is money passing through the
wallet of people associated with him - it seems that no crime was committed.
Another attack on Bitcoin, and the war on drugs continues to kill more than
the drugs themselves.

~~~
21
Like it or not, the lack of KYC/AML is in itself a crime. Maybe you should
rephrase "Nothing which I would consider a crime happened"

------
ryanlol
“Anybody who thought about this for a second understood that law enforcement
was working on a case against BTC-e,” said Jerry Brito, executive director of
Coin Center. “The question was just whether the government would catch them.”

~~~
rothbardrand
Jerry's a great guy and Coin Center is the EFF of crypto. Everyone should send
them some coins.

------
erikpukinskis
What happens when someone builds an autonomous Bitcoin exchange on Ethereum?

~~~
jeremyt
Decentralized exchanges are already in the works.

~~~
steveeq1
Etherdelta already works:
[https://etherdelta.github.io/](https://etherdelta.github.io/)

~~~
honestlyreally
Which sadly doesn't get enough love. It's going to take Gox 2.0 before people
realise its true value.

~~~
StavrosK
It's really slow to load for me, but can you buy BTC with USD from it, for
example? Otherwise it's not really solving the hard part of the problem...

------
firethief
Another speakeasy bites the dust; the Wild West is ending.

~~~
ryanlol
Quite possible that that's the joke here, but people have been saying this
since the Wild West was actually ending.

------
mikulas_florek
What about ordinary people who had money/bitcoins/other cryptocurrency on
btc-e? What will happen with money in btc-e's wallets?

~~~
tyingq
It sounds like the US just got control of the domain, not the server(s).

Some reports that their other domain may still be up (btc-e.nz), but it just
hangs for me.

~~~
zeep
Would their IP still work then?

~~~
tyingq
They used to be hosted at cloudflare.

So, you could put "104.23.131.83 btc-e.com" in your /etc/hosts file and try
it. I did that, but cloudflare times out.

------
ttam
> Japanese exchange run by Frenchy gets hacked by Russian, fences BTC through
> a Bulgarian exchange and is arrested in Greece for USA warrant

[https://twitter.com/cactuspits/status/890358676300718081](https://twitter.com/cactuspits/status/890358676300718081)

------
mirimir
OK, so it's cool to see some of this background.

But far more important is the challenge of designing an exchange that can't be
taken down.

------
tyingq
Did they get [http://btc-e.nz](http://btc-e.nz) also?

------
chx
> There are many legitimate uses of Bitcoin

What are those. I have claimed here and will repeatedly do so -- there are
none. I mean, sure, there are a few companies which integrate the sell-your-
bitcoins-buy-our-product in one go but the volume of that is near irrelevant.
And no, international transfers do not count as a usage because not only the
sender needs to buy bitcoins the seller needs to sell them too...

~~~
honestlyreally
Very bizarre to state the obvious use cases, then nullify it with handwaving.

The current cost to move $10m of bitcoin across international borders is about
$1. Attempt the same via conventional means and you'll quickly realise it's
benefits go beyond monetary efficiency.

As for current working use cases Factom[0] stores an auditable timestamped
data trail in a merkle tree structure, which is then anchored into the bitcoin
blockchain.

This is a tech minded site, I would hope people here understand the value of
immutability. Real immutability, data that can't be altered or undone in
anyway.

Many seem upset at bitcoins meteoric rise and the rampant speculation for good
reason, but make no mistake blockchains will be around long after we are gone.

[0] www.factom.org

~~~
SwellJoe
And, yet, it cost me eight bucks to move a few hundred bucks from Coinbase BTC
into USD.

Also, are BTC transaction fees really that low ($1 for a 10m transaction)?
I've been hearing complaints for a while now about how long it takes to
process minimum fee transactions. I don't have any experience with it, as I
haven't messed around with BTC in a few years, but, it's definitely part of
the argument for the changes happening tomorrow.

~~~
soared
Stop using coinbase then? They double your transaction fee and take half as
revenue.

~~~
SwellJoe
Perhaps I should use BTC-e to convert to USD...Oh, wait...

So, what other reputable exchange is there that works for BTC->USD and vice-
versa and doesn't have ridiculous fees (I agree that Coinbase fees are
outrageously high).

