
Chainalysis in Action: Justice Dept Demands Forfeiture of 280 Crypto Addresses - PatrolX
https://blog.chainalysis.com/reports/lazarus-group-north-korea-doj-complaint-august-2020
======
motohagiography
This asset forfeiture along blockchains seems like charging a restaurant for
serving gangsters because their customer paid using the proceeds of crime.
Except with a blockchain, it becomes like seizing assets as compensation from
a vinyard that supplied the wine to the restaurant who served the gangsters,
and maybe even garnishing the wages of the grape pickers to be sure.

It's stolen money, and how can anyone be against stopping crime, except the
definition of crime always seems to expand. The trouble with "justice" is it
is a good for which demand is infinite, with the false implication that the
price paid for it is never too high. I'd be wary of these technologies.

~~~
JumpCrisscross
> _like charging a restaurant for serving gangsters because their customer
> paid using the proceeds of crime_

Money is fungible in a way tokens on a public blockchain are not.

Better analogy would be the DoJ seizing a stolen painting bought at auction.
The auction was legitimate. The buyer whose asset has been seized did nothing
wrong. But the property is identifiably illicit.

If one has significant assets in cryptocurrencies, it would seem necessary to
do a certain level of due diligence on the provenance of incoming coins.

~~~
vmception
blockchain tokens are experiencing a flight to fungibility as we speak.

the state is aware and all of their actions have to be precise and large all
at once because the antifragile nature of these networks makes them harden
after every enforcement event.

right now, more private blockchain technologies are outliers that experience a
threat of shunning and being crippled.

but existing networks are going to upgrade en masse, and will have strength in
numbers against all existing exchanges and public policy discussions

basically what it comes down to is the observation that the government never
had any rationale to surveil people's money and it found itself in the
convenient position to do so over the last 30-40 years, leveraging financial
institutions where it at least has to issue a subpoena to obtain information.
Over the last 5 years it found itself in a more convenient position of
embracing transparent public blockchains to surveil even more without needing
a subpoena, alongside the capability of also issuing subpoenas to crypto
financial institutions.

this power is simply going to be removed from the state, reverting its
surveillance capabilities at or below what it can do with cash, with
individuals themselves needing to be subpoena'd if it can identify them.

the governments will just have to find another way to curb whatever behavior
it is actually trying to prevent.

(disclaimer, this isn't intended to be "edgy" and I would say any perturbation
only highlights my point of how used to the idea of an omnipotent state you've
become, but its not a prerequisite)

technologies to watch are:

Aztec implementing Zk-Zk Rollups. This will allow all existing erc20 tokens to
inherit privacy on a highly scalable private system, unburdened by layer1
blockchain throughput limitations. It allows new erc20 tokens to be issued
privately where no origin is know in a highly scalable private system.

RenVM implementing EdDSA, this allows isolated private cryptocurrencies like
Monero to be swappable and transposed to an erc20 token. This removes
liquidity limitations of cryptocurrencies like Monero, and removes the problem
of exchanges removing liquidity routes of Monero. Aztec + RenVM would simply
add a whole pipeline. Also provides exits for less private assets to swap out
back to the Monero blockchain, which is currently not surveillable.

Taproot and Schnor on UXTO blockchains like Bitcoin. Adds levels of
confidentiality.

There are quite a few other technologies as well.

------
1f60c
The official name of the complaint kind of made me laugh:

> United States of America v. 280 virtual currency accounts

~~~
arcticbull
Typical of asset forfeiture, as the charges are made against property instead
of people ("in rem") to entirely side-step the whole innocent until proven
guilty thing. That applies to people, not property, so you charge the
property. Disgusting practice in general, IMO, but hilarious case names.

"United States v. An Article Consisting of 50,000 Cardboard Boxes More or
Less, Each Containing One Pair of Clacker Balls" [1]

"United States v. One Lucite Ball Containing Lunar Material (One Moon Rock)
and One Ten Inch by Fourteen Inch Wooden Plaque" [2]

[1]
[https://scholar.google.com/scholar_case?case=671831224892866...](https://scholar.google.com/scholar_case?case=6718312248928663926&q=413+f+supp+1281&hl=en&as_sdt=2006)

[2]
[https://scholar.google.com/scholar_case?case=644728520528855...](https://scholar.google.com/scholar_case?case=6447285205288552861&q=252+f+supp+2d+1367&hl=en&as_sdt=2006)

~~~
schneidmaster
My personal favorite is "United States v. Approximately 64,695 Pounds of Shark
Fins"
([https://en.wikipedia.org/wiki/United_States_v._Approximately...](https://en.wikipedia.org/wiki/United_States_v._Approximately_64,695_Pounds_of_Shark_Fins))

~~~
jonas21
I rather like _United States v. One Book Called Ulysses_ , in no small part
because the book won.

[https://en.wikipedia.org/wiki/United_States_v._One_Book_Call...](https://en.wikipedia.org/wiki/United_States_v._One_Book_Called_Ulysses)

~~~
owenversteeg
Hahah, interesting backstory on that one. Quote from Wikipedia:

In 1932 Random House, which had the rights to publish the entire book in the
United States, decided to bring a test case to challenge the de facto ban, so
as to publish the work without fear of prosecution. It therefore made an
arrangement to import the edition published in France, and to have a copy
seized by the U.S. Customs Service when the ship carrying the work arrived.
Although Customs had been told in advance of the anticipated arrival of the
book, it was not confiscated on arrival, and instead was forwarded on to
Random House in New York City. As seizure by Customs was essential to the plan
for a test case, Morris Ernst, the attorney for Random House, took the
unopened package to Customs, demanded that it be seized, and it was.

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8wilson
I'm a PM at Chainalysis, and the work has genuinely been has been the most
interesting and impactful work of my life.

If you're a mission driven engineer, or interested in supporting our amazing
customers, we're hiring a number of positions.
[https://boards.greenhouse.io/chainalysis](https://boards.greenhouse.io/chainalysis)

Feel free to contact me if you want to know more.

matt @ chainalysis/com

~~~
javert
Hi. You are are ruining bitcoin because it cannot be used for P2P transactions
anymore, because you'll get tainted coins, that cannot be converted into USD,
because the exchanges reject them.

Please release a tool that allows regular people to query your system, so we
can reject tainted coins, just like the exchanges do. I don't mind if you
charge for it, even if it's a lot.

If you have any advice on this problem, please let me know. Thanks.

~~~
hyc_symas
They're not ruining Bitcoin, they're only making it painfully obvious how
totally unfit for use Bitcoin has always been.

~~~
javert
Bitcoin could be financially quite useful because of the liquidity and fixed
supply. A single global currency that can't be manipulated or inflated would
be wonderful. It would give us a way to store wealth that isn't the securities
market [or art or land], which would make the securities market [and art and
land] much more rational.

If bitcoin gets there, of course, it's many years away.

Of course you are right that Chainalysis isn't ruining bitcoin per se. It was
intentional hyperbole on my part.

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carterklein13
Say what you will about crypto/blockchain in general, but Chainalysis has to
have one of the coolest missions out there right now. As someone who's worked
in AML before, it's truly fascinating to me. If blockchain / DeFi is the "wild
west" of finance right now, Chainalysis are the vigilantes.

~~~
Aerialoo
The vigilantes? They are literally trying to destroy privacy and fungibility
on the network. Thank god for CoinJoins.

~~~
X6S1x6Okd1st
vigilantes are people that go out and impose their version of justice on the
world. Just because your vision of justice includes privacy & fungibility
doesn't mean everyone's does.

~~~
hatenberg
Vigilantes spawn in place of formal enforcement of justice. Given that Bitcoin
is designed with that void in mind it was inevitable.

~~~
X6S1x6Okd1st
Or where they feel like their vision of justice is not being enforced.

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Pick-A-Hill2019
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cryptocurrency businesses, and financial institutions engage confidently with
cryptocurrency." />

[For those that are uncomfortable allowing JS code to run from unknown
websites and are thus presented with a 'This page requires JavaScript to run'
blank page message].

[Edit to explain - That is from
[https://www.chainalysis.com/](https://www.chainalysis.com/) NOT the
submitter's link]

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ipsin
One question I have is, what could they have done to avoid such tracking?

I thought there were more secure coins, token remixers, etc., and that if you
were determined and not stuck with one exchange or (say) Bitcoin, you could
muddy the waters pretty well.

~~~
mywittyname
I don't think you can. After all, bitcoin et al are ledgers, so you can track
any coin over its lifetime. It doesn't matter how many times you split them
apart and shuffle them around. The fact that BTC works on proof of work means
that tracking requires much, much less computational effort than the shuffling
does.

You have to exit the network at some point to avoid tracking, but then you
have the problem of finding an exit node that doesn't report to the US
government and doesn't restrict capital flight. I have no personal knowledge
of how difficult this is, but I imagine it's not easy. Then again, maybe you
just need to know the right guy at Deutsche Bank.

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jron
Does the DOJ refile the complaint each time the coins move?

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arcticbull
Well if crypto isn't good for crime anymore, what all good is it? That's the
one use case it had on real money.

~~~
bob1029
Attempting to obfuscate the origins and destinations of funds involved in
criminal conspiracies by using cryptocurrencies is quite a terrible life
choice.

Running a literal laundromat for purposes of laundering money is still a far
more viable criminal enterprise than anything involving technology.

~~~
arcticbull
Can't extort business owners with ransomware running a laundromat!

~~~
rebuilder
"To regain access to your files, insert exactly 502,20 USD in laundromat 4 at
the self-service laundry on the corner of 5th and Union."

~~~
arcticbull
It's a little on the nose, but I would absolutely watch a TV series based on
this concept.

