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.
> 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.
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.
You might be right if the money has already been spent and is in the hands of innocent people. But if those addresses are still controlled by the criminals then seizing them causes no collateral damage.
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]
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.
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
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.
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.
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.
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.
I can assure you that's not true, a lot of good developers like Chris Belcher are actively working towards it and even receive grants. New BIPs also propose privacy improvements. Anyone can care about privacy. It's a pseudo-anonymous network, but it can be used anonymously.
The word Vigilantes might (or might not) have historic nuances that you (or them) may find unfortunate.
From [1] Vigilante: a member of a volunteer committee organized to suppress and punish crime summarily (as when the processes of law are viewed as inadequate) broadly : a self-appointed doer of justice
Alright, I can't edit my post anymore but I just want to add - I see now that perhaps vigilante wasn't the right word. I was trying to fit it into a Wild West metaphor and hadn't had my coffee yet, the phrasing clearly struck a cord.
I was more just trying to phrase that the blockchain world can feel lawless at times, and Chainalysis is trying to bring some order and justice to it. Maybe that's the antithesis of why Bitcoin and other blockchain technologies took off, but I personally think it's pretty sweet as someone with previous AML experience.
<meta name="description" content="Chainalysis helps government agencies, 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].
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.
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.
The really short answer is that you should not have an expectation of privacy when sending public transfers. Even in the best case that mixers protect your privacy, your transactions will be flagged by exchanges and services as relating to mixing or another privacy feature. The really only way to have privacy without drawing suspicion is Monero. It sounds like shilling but it's true.
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.
I suspect most of these ransomware operators have the support of some government which turns a blind eye in return for a cut. There's not much value in tracking the BTC payments back to the same damn Russian bank who never seems to have any "evidence of such activities".
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.