BTC-e and its founder charged in 21-count indictment over hack of Mt. Gox
justice.gov
justice.gov
I can get the "there were US customers" - but why not Europe? Or Japan? Or Russia? Or Australia? I'm sure BTC-e had customers from all over the world (and money laundry is pretty much a crime everywhere).
So, when does it become "you have broken the US law and you are under arrest"?. Does it work the other way around too? If you start a gay social network in US, can Russia come in (the first time you are flying in one of the Russia's partners territories) and say "you are breaking Russian gay laws, you are under arrest"?
Yes.
That's usually a good sign that nothing exciting happened; business as usual.
He was arrested in early June and by early July was on parole with family in Seattle:
http://databank.isranet.org/article.asp?article=64465
After which terror charges were never filed and the gov't began seeking deportation on extraordinarily pedestrian grounds, with his lawyer speaking publicly about the case:
http://www.kolkenandkolken.com/index.php?src=news&srctype=de...
Can't find anything after that, but he's not listed in the USCIS's Online Detainee Locator System and AFAIK could not have been legally deported to Somalia.
WikiLeaks documents on him, combined with other sources, paint a picture that he's either a) a somewhat prolific terrorist/human trafficker; or b) a politically active Muslim immigrant in the USA who might be kinda sorta guilty of some clerical crimes and may've acted a teensy bit dodgy when returning to the USA. (b) is probably way more likely given that DHS was apparently OK releasing him on parole.
Not every country has the resources to track down billions of dollars' worth of BTC transactions and use them to build a bulletproof case against a specific person. So if someone else offers to do it for free, why say no?
USA prosecuting him doesn't mean that other countries can't, it simply means that USA was a bit quicker to do so. For example, it's technically possible that he's acquitted in USA for the AML part, but immediately after that gets extradited to Japan for some charges regarding the MtGox hack.
OTOH someone who broke a Russian law we don't find objectionable (and who isn't connected or famous) would be unlikely to get much assistance from the embassy beyond basic legal advice and help hiring a lawyer.
Ain't no thang but a chicken wang.
I have a few deep biases against the Russian govt for reasons I won't delve into here. Despite this I believe in extradition laws as a tool of enforcement beyond borders and a means of political outreach/goodwill building.
If Russia made unreasonable demands then we would be right to turn them down. If they need assistance with something truly heinous and actionable then it feels like our duty to act upon it. These international interactions are just as important as education & commerce to building lasting diplomatic relations.
Edit: Since my question wasn't clear, the emphasis was on customer, as in: "customers of a business that also engages in money laundering aren't usually considered victims of that money laundering."
More to the point though: money laundering statutes were written (speaking very broadly) because they don't have to prove the underlying crime. It's criminal to be evading disclosure and tracking requirements even if all the money was obtained legally.
It was criminal to help fuel a nuclear arms race that put everyone at risk of nuclear holocaust. It was criminal to destroy Iraq for bullshit reasons. It's criminal to kill people with drones based on metadata.
But criminalizing money laundering? That's just power tripping.
As another user said, cars and guns are used for robberies, if you banned them, then you would also be curbing criminal activity.
Buying a gun from a guy that you know or highly suspect used the gun to kill a guy and is selling you the gun for the express purpose of hiding what gun was used in the murder sounds the same.
^Those are closer to what money laundering is.
So how is that different from a restaurant deep in mob territory in some urban area that serves tons of mobsters dinner every evening? Should that restaurant be prosecuted? How about the corner grocery that serves the same mobsters? I mean, food is just as critical to surviving as money is, right?
No, IMO it should not be prosecuted as long as they are only serving food and getting paid the normal way.
They might very well get in trouble if they for example
start offering the mobsters empty "takeaway food" for 1000 monies,
transfer 900 monies in payment for non-existent ingredients to a shell company run by mobsters.
Warning: IANAL. And I made this example to be simple and clear. I guess you could get in trouble for less than that.
What I meant is I've been to a restaurant which turned out to be a money laundering front but I can't seriously describe myself as a victim. In fact, the food there was cheap and delicious!
But I appreciate your clarification. To rephrase what you are saying: it falls under US jurisdiction because some US persons were victims of a crime and some of that crime money ended up being traded on BTC-e (allegedly).
And of course there's no victims in money laundering. It's a victimless crime that has the sole purpose of helping prosecutors when they aren't able to find a real crime.
While the laundry operation is victimless it often directly assists crimes that have very real crimes:
Trafficking
Drug abusers [0]
Illegal weapons trade [1]
[0]: Esp. as since it is currently illegal they suffer a lot as getting their drugs means dealing with people you normally don't want to deal with and doing stuff you rather wouldn't do.
[1]: no, I'm still pro guns. I just don't want them sold illegally.
(I would have put /s here, but all these lines will be used at face value soon enough).
No. Because there never is any planning between the manufacturer and the bank robbers.
Remember: we are talking about money laundering operations here, not accidentally receiving stolen goods without knowing.
Can these use be abused? Yes. Very much. Should they still exist? Yes.
The car-related analogy isn't a car manufacturer. It isn't even an anonymous, stealth rental car service (although plenty of crimes could benefit from it).
The analogy is a taxi service that advertises itself as willing and able to crash through police barricades.
Edit: I should be quite clear, I am neither for or against AML regulations. I, however, am for an equal playing field. I would like to see a world where the increasing quantity of money one has doesn't have an increasing effect on how many times one's vote counts at the expense of those who don't have as much. Privacy and the ability to act collectively to support unpopular opinions should not be a commodity that can be bought and sold in the form of a corporate veil.
Law is not a bright shiny source of truth from outer heaven, it is a sketchy framework of hacks and patches written in haste to aid people in resolving their conflicts.
But things that are illegal are... illegal.
Nobody in this thread is really debating the morality of illegal actions we're talking about. And while debating morality can be entertaining, it doesn't really change what happened here.
Building an encrypted messaging app is knowingly assisting crimial activities ... all you'd need is standard communication privacy laws, not actual encryption.
If you go by the economic definitions of money, which generally include uniformity and fungibility, money laundering is really a whinge from law enforcement that police work is difficult, and can't they please go after someone who may be less dangerous and less guilty, but is much easier to catch?
You can't reasonably expect people to investigate the full history of all money they receive as payments. Merchants have the right to presume that their customers are innocent in the absence of blatantly obvious evidence to the contrary.
As they say, gold has no smell. A coin that was obtained by murdering its former owner cannot carry residual guilt from the crime. Once it is used to buy a sack of oranges at market price, it is indistinguishable from a coin that was mined and refined by devout monks, repeatedly donated to charity, sequentially blessed by all the religious figures at that bar where all the jokes happen when they walk into it, and then spent on a sack of grapefruits.
If you buy a house with 50% legit income, and 50% black market contraband profits, you don't seize half the house and claw the other half back from the previous owner. The proceeds of criminal activity attach to the criminal, not to the property. The money has no soul or conscience. It is innocent whenever the person who carries it is.
And money laundering is not a crime, in my opinion, because in order for it to be a crime, certain inaccurate assumptions about money have to be true--namely that money is not uniform and fungible. It artificially makes money from a marijuana dispensary business different from money from a pharmacy. Cash should be cash, agnostic of the sins of its bearer.
Money with a history is not uniform and fungible.
If you make a dollar that came from a criminal worth less than a dollar that came from a saint, you are attacking one of the foundation concepts of money.
For the sake of argument, let's say I get $1 from my crime boss for intimidating a witness. I put it in my pocket. Then I find $1 lying on the street. I put that in my pocket. Then I help an old lady put groceries in her car, and she tips me $1. I also put that in my pocket. Then I go to the convenience store and buy a pack of gum. I reach into my pocket and pull out $1. What is the source of that money?
My pocket. Most people simply don't care where that dollar came from before that. Most people have no conceivable means of knowing where it came from before that. And if they knew, they wouldn't have the recordkeeping capacity to distinguish which dollar came from which activity. They only really care that I pay for the gum instead of shoplifting or strong-arming the clerk.
But ever since the invention of forensic accounting as a crime-fighting/investigative-reporting tool, it would seem that following the money often remains a valid tactic even when other methods of investigation fail. This is because financial businesses must keep meticulous records, as a consequence of being such juicy targets for fraudsters. So all the cop has to do is pop down to the bank records office with a warrant.
So as a society, we have a choice between having money that is more suitable for open trade, and money that is more suitable for combating crimes. My personal preference is for the former. Those who would like for money laundering to be a crime in and of itself--rather than an inchoate offense dependent on other crimes--prefer the latter.
The root question is whether you believe that criminals should be allowed to participate in white-market commerce, like normal people. I do. With that opinion, their blood lucre spends the same there as all the more righteous bills. They might be discouraged from committing crimes if they are less able to profit from them, but I don't think that's the case. If you make the cost of whitewashing black market money 25% of its face value, the criminal just does more crime, or charges more for their black market stuff. It's just another cost of doing [black market] business.
If you're trying to make crime unprofitable, you really need to seize assets and revenue streams only after a conviction, and in proportion to the magnitude of the crime. Civil forfeitures with inanimate defendants and prosecuting inchoate offenses in the absence of primary offenses is just slapping justice across her blindfolded face.
Like, let's take the complication of know your customer out for a second. Of course you should not be prosecuted because a bank robber comes to your store and uses the money he stole to buy something. But if you are keeping fraudulent books in a cash-heavy business to conceal the source of tens of thousands of dollars you or your associates made through criminal activity, why shouldn't it be a crime?
That is the thing: if you are knowingly working with criminals to perform their crime then you are involved in crime:
Case 1: Planning the getaway from a bank robbery. Driving the getaway car.
Criminal? yes
Case 2: Driving a taxi with a person who happened to have robbed a bank earlier that day. Getting paid in stolen cash.
Criminal? no
Case 3: Helping to carry and hide away stolen goods or physical money when you know they are stolen.
Criminal: yes
Case 4: Helping someone with anything just because you are a nice guy/gal. Afterwards it turns out you assisted in a major art heist without knowing.
Criminal: no
Case 5: Helping to launder stolen money or money from trafficking when you know or should know[0] the source.
Criminal: yes
Case 6: well at this point you either get it or not.
The very concept that not telling the government about everything you do financially is somehow a crime is simply abhorrent.
Actually here we somewhat agree. As much as I am a fan of paying tax and avoiding criminality I'm also a huge fan of cash. :-)
[0]: (Actually it is stricter now - borderline hilarious as my bank for the last twn years starts asking for my passport because of the KYC rules)
Anyways yes if you are working with the criminals that's one thing. Running a BTC exchange, if you aren't inquiring about the customers funds (you shouldn't, it's none of your business!) then it should be no issue. If you somehow know the BTC was stolen from Mt Gox, then yeah, you're helping with the hack and should be charged for that (not for money laundering, just for whatever the general charge is as a participant to a crime).
Here we agree. If they knew or should have known then they are guilty.
(not for money laundering, just for whatever the general charge is as a participant to a crime).
I think this is what money laundering originally meant:
Washing dirty money by for example using them to pay shell companies who again pay "clean" companies.
Aiding criminal activity, which money laundering most assuredly is, is itself a crime.
In money laundering, only the retail business pays the tax, so effectively its not the equivalent taxation.
The only difference is in the details of the corporate taxation. Selling meth legally might be taxed differently than laundromat services. So an ethical money launderer should look to use front businesses that have an equivalent tax rate and not take advantage of any special tax discounts that wouldn't apply to the original source.
What are those?
Edit, found this: "FinCEN today assessed a $110 million civil money penalty against BTC-e for willfully violating U.S. anti-money laundering (AML) laws. Alexander Vinnik was assessed $12 million for his role in the violations." In the US, government agencies can keep such fines for themselves, providing them with a nice incentive to go after such cases.
But it also gives poor people a chance to sue someone big, because their lawyer isnt asking for a fixed fee.
In these sort of situations, the main thing that tends to apply is not the ability to get a judgement in court but the ability to get that judgement enforced. So if, say, Fiji were to make up a law and convict, say, Donald Trump under it, no one would care--Fiji would have no practical way to enforce that judgement. But the US can generally get its judgements enforced, even outside the US.
In the specific case of the financial world, the size and importance of the US financial markets gives the US unparalleled power to enforce judgements. The US could not only lock you out of dealing with USD transactions directly, they could also direct banks that do business in the US to not do business with you.
Likewise, if some random country made a bunch of case law in its own courts establishing that foreign nationals in other countries were to be punished for making heretical texts available to citizens of that country, we'd laugh at them, not say "well, the case law is well established" and extradite our citizens.
No, they wouldn't have. While each extradition treaty is to an extent sui generis—they are individually negotiated, not boilerplate—extradition under such treaties for non-digital, meatspace offer see where the accused's acts at issue are not charged to take place in the physical territory of the extraditing country are often within their scope. In particular, no territorial restriction on the location of the offense eligible for extradition appears, unless I've overlooked it, in the US-Greece extradition treaty, which long predates the digital age.
Should the authorities in a particular jurisdiction fail to enforce financial crimes, indicting a bank or sanctioning an individual in that region can effectively block all counter-parties from doing business with them (as they are now doing business with a sanctioned or indicted party).
It's hard to explain in laymens terms without sounding like some kind of "Illuminati-nut" (for lack of a better term) ):
And also requires a better understanding of interbank standards and practices, money/current-markets, SWIFT, etc.
They also allege that BTC-e is (at least partially) hosted in the US and does business with many US companies, which is likely true. But that's not what they charged him with. Maybe that will come later after he's extradited and they have a chance to go through the evidence they no doubt collected when they arrested him.
On an unrelated note, it looks like the traceability of Bitcoin transactions played a major role in this. It turns out that Bitcoin is really not a great way to launder money, unless you want a record of your money laundering archived forever, redundantly, on a distributed system of computers around the world! I expect future crypto-locker viruses to switch to Monero instead of Bitcoin now that they can no longer cash out through BTC-e. Subsequently I expect to see Monero delisted from any exchange that follows KYC after some pressure from law enforcement.
If you are trying to stay out of jail, I'd consider Monero a good mid-term strategy. Anything else (including Zcash) of probably not even that great in the short term. (So few people use the anonymous part of Zcash that you have a terrible anonymity set). Dash, pivx , etcetera are just plain insecure.
Otherwise, sell porn, have one customer from Saudi Arabia, go for a vacation in Turkey, and here comes your flogging extradition trip.
At the same time, US has a "Hague invasion act" authorizing military action against international prosecution of their officials.
I'm not sure it's a factor here.
That has been the case for a really long time, hasn't it?
Sweden only moved against TPB after the WTO threatened them with sanctions. It's likely that New Zealand caved in the belief that they'd face similar unpleasantness.
We must understand that underneath the fancy dressings and the formalities that we create to make ourselves feel important, humans are essentially the same; our psychologies are all dictated by the same biological processes. We must not kid ourselves about this. It is always dangerous to upset or frustrate powerful interests. If you taunt someone much more powerful than you, as TPB did, do not expect formalities like law to make a difference.
A lot of starry-eyed entrepreneurs go in thinking that everyone will be pleasant and sportsmanlike, and see their work as a friendly collaborative competition. This is not true! People will skirt and break every rule they can to win, because they see the competition as a matter of survival, not as a fun game.
The copyright cartel is out of control along every axis. Not only do they make use of an artificially-granted, market-destroying monopoly to stifle the creative speech of the public, but in multiple cases now, they've triggered an extralegal override of national sovereignty to persecute a little guy who was frustrating their oppressive business model in ways that were completely legal within his/her jurisdiction.
If our politicians want to get out under these peoples' thumbs, they need to seriously revise copyright law, and tell the fat cats that they're going to have to be productive to make money instead of milking royalties for 100+ years and sending the feds across the world to black bag entrepreneurs.
It's a bit like a game of sudoku. A mixin input could have 4 different coins, and technically you can't be certain from the signature which is the real input. But in reality you can do downstream or source analysis and come up with probabilities for whether the prior transactions were authored by the same wallet, or associate with other keys used by other mixin inputs. Every little bit adds to the probability of two addresses being linked, and it really doesn't take many bits of information to confirm or eliminate mixin inputs as being real or fake.
This is notably different from how ZeroCoin operates, where the anonymity set is everyone and it is fully untraceable. However ZeroCoin has problems with respect to performance and deployment :\
It's the same as RSA4096, in theory you could bruteforce eventually crack a key, but in reality it's not a viable attack.
You're just saying abstract things without backing them up with details. Also Zcoin has scaling issues with TXs being 50x of Zcash (another Zerocoin-based implementation)
The problem is that there are a lot of knobs to tweak here. Which coins do you pick? They're not all random because at least one of the coins is from your wallet. People have specific usage patterns that give a prior on what output is the user's vs a randomly selected one. (E.g. an output that is 2 years old is less likely than one that is 2 weeks old to be the user's, since most outputs being spent are recent.) In addition, details of the transaction such as how many other coins are selected per signature, reveal what client might be used.
It has been our experience with bitcoin that it is incredibly hard to mask what software is used to generate a transaction. It turns out that there are a ton of things that can watermark a transaction and thereby decrease your anonymity set -- from coin selection to serialization choices to the default settings of optional knobs like fee or locktime. And these generally interact very badly with ring signature systems. If your wallet version makes transactions a certain way, and none of the other mixin inputs you included do exactly the same thing, then it is blindingly obvious which input is actually yours -- the one from a transaction that matches yours in these other respects.
For another, they hide balances, and they do actively pay attention to the information leaks, and they employ strategies to fight that. When the drug markets were busted, dash and pivx users were discovered, but Monero users were kept hidden.
It's pretty clear to me that they are at least moderately successful where nobody else really is yet. New strategies may come out tomorrow to unmask everyone, I certainly wouldn't bet my own life on Monero's safety, but they overall are outperforming everyone else in a practical sense.
If you're a bit patient and are willing to get your money only a small amount at a time I don't see why you wouldn't be able to launder even a significant amount of bitcoins. Use coin mixers, convert back and forth with other crypto-currencies (including Monero if you want), split and merge the coins, mix that with actual transactions to 3rd party accounts (gambling sites, donations, whatever)... Eventually people will lose track, or at the very least you'll have plausible deniability that the coins changed hands at some point.
Anyway, then you have cash money, you buy BTC back. Or keep the cash, I mean I wouldn't want to keep BTC if I had stolen it. It's pretty much worthless on its own - as proven by pretty much all media always going about $4 billion instead of 600K+ BTC.
Once the US have this guy in custody, they can then get their hands on the server transaction records, and chase down the criminals who extorted money from people and companies in the US.
That step is putting pressure on exchanges to blacklist coins that have been through a mixer.
Cash is the ultimate mixer because of lack of technology.
But it's not hard to put pressure on exchanges.
This is why digital money is ultimately traceable. And the most tracdabke money is one that has a global, distributed ledger :)
Far better to have trustlines. You would have to track down friends of friends, and deanonymize people's public keys. Unlike Bitcoin, anyone can start a trustline with anyone else without authorization from the government :)
Believe me or not, in some countries it is possible to setup a bank without having a single in-person visit by an official.
This would be a very dangerous precedent for the cause of privacy. It's the financial equivalent of banning encrypted communication.
And isn't this an admission that Monero is of no real legal use? Otherwise, why would you care about cashing it out at an exchange? You could spend it on goods and services instead.
>And isn't this an admission that Monero is of no real legal use?
What kind of absurd conclusion is that? There are infinite number of possible non-criminal reasons why one would want to convert one currency to another. In fact, the currency having the property of not leaking private information has no bearing on that.
>Otherwise, why would you care about cashing it out at an exchange? You could spend it on goods and services instead.
This is absolute nonsense. Why do we have USD-YEN exchanges?
It doesn't necessarily mean prohibiting anonymous instruments like physical cash or Monero, but it means that any non-small use of such instruments is required to be accompanied with documents about the transaction.
E.g. you can legally sell stuff for a briefcase of cash, but you're required to declare the transaction, including the identity of that person (e.g., in USA, IRS form 8300 for cash amounts exceeding $10000; you can legally sell stuff online for Monero or whatever other consideration, but if it's a significant amount, then you are required to identify the person even if the payment instrument is anonymous.
The parent comment gave a prediction of Monero being banned by exchanges. That is the electronic equivalent of banning cash deposits.
>E.g. you can legally sell stuff for a briefcase of cash, but you're required to declare the transaction, including the identity of that person (e.g., in USA, IRS form 8300 for cash amounts exceeding $10000; you can legally sell stuff online for Monero or whatever other consideration, but if it's a significant amount, then you are required to identify the person even if the payment instrument is anonymous.
While unrelated to the topic I was referring to, this is indeed a slippery slope. The minimum amount for reporting to FinCEN started at $10,000 decades ago, and hasn't changed despite inflation reducing the real value of that sum by several fold.
In some countries the minimum amount has even been reduced in nominal terms, despite it already gradually declining in real terms due to inflation. Amidst this gradual criminalisation of ever less substantial anonymous cash transactions, there are a growing number of calls for banning cash altogether. That is a textbook example of a slippery slope.
This won't happen. KYC will still remain, but privacy is an important feature that many legitimate businesses want in crypto for completely legal and good reasons. Many of the businesses in the EEA are interested in Ethereum gaining privacy features, and Ethereum plans to add zkSNARKS. At that point it's not just Monereo, ZCash, etc that the exchanges would have to ban but Ethereum as well. It'll be a losing battle for law enforcement.
Any "international law" that would stop this is toothless.
For example, they hit Libya with missiles right when Al-Gaddafi sent troupes to defend from future-ISIS militants.
So yes, the US will get involved in stuff that matters to it.
> The question for me is: why US?
Because if you know the US is coming and dropping bombs, who the hell wants to fight it? Even Russia is abstaining hard to prevent the nuclear war possibility though the US have been doing all it can to start it.
So why did the U.S. intervene? Gaddafi was going to ruthlessly slaughter everyone in Benghazi. He said so, and had the tanks to do it rolling across the desert. It turns out that the U.S. military is really good at killing tanks in the desert (esp in a low air defense threat environment), so the White House and DoD knew that they would have blood on their hands if they stood by and watched. Also, unlike Syria, Gaddafi had no strategic allies to complicate things. That is, other than us.
And now we get to suffer the long term consequences of preventing that genocide by stabbing a new friend in the back. We saved lives in Benghazi and toppled a ruthless dictator. We also fueled the rise of ISIS, and helped pave the way for nuclear confrontations in Korea and the Middle East.
I think people are too quick to pass judgment on US or NATO intervention in matters and aren't acknowledging the extreme complexity involved in making the right decision. When dealing with some of these international conflicts, sometimes it's less a matter of making the right choice but rather making the least awful choice, and it's often impossible to determine the true consequences of decisions in advance.
Yes, that is what I think.
Gaddafi was not toppled because he was going to kill civilians. In fact, it is the other way around. Gaddafi has been killing his opposing politicians for decades. This happened with the best knowledge of his US, EU friends at the time and at really a ridiculous and holocaustic level.
The time the US intervened was when he was going to "truly" protect his country or power from real armed extremists.
If you think the US intervene for the sake of "humans" then you are gullible to your media. The US has been actively intervening in the middle east which resulted in countless (hundreds of thousands) of people and children dying directly from US fire.
There are thousands of people dying from hunger every day. The cost to feed them is certainly much less than the cost of wars the US has engaged. But the US will not help these "black" guys despite having the food, infrastructure and money.
The US only intervenes in countries where there are strategic resources; or to help its allies ( israel / south korea ).
I'd like to see them try to extradite this guy. LOL!
So, when does it become "you have broken the US law and you are under arrest"?. Does it work the other way around too? If you start a gay social network in US, can Russia come in (the first time you are flying in one of the Russia's partners territories) and say "you are breaking Russian gay laws, you are under arrest"?
The best way to think about this is in terms of the laws of the country you are in.
We might be a outraged that Otto Warmbier was treated so harshly (killed really) by North Korea for allegedly stealing a propaganda poster, but at the end of the day we understand that he went to North Korea and in North Korea, North Korean laws apply.
The next step is to ask about actions that took place outside the country you are in but are illegal under that countries laws. So if, for example, Seth Rogen who famously made a movie making fun of Kim Jung-Un were to travel to North Korea we would not at all be surprised if we were arrested and sentenced to a very harsh punishment.
Finally, consider that extradition laws are just like any other domestic laws. The treaty between Greece and the United States means that for the purpose of a lot of criminal laws, physically entering Greece is the same as physically entering the United States.
In this case it was ultimately Greece that decided that what Vinnik did was sufficient to take away his freedom. He subjected himself Greece's judgment by going to Greece. If he had stayed in Russia he probably would not have been extradited.
Going to another country is something many of us take lightly, but it can be a really big deal.
P.S. An investigation from 2 days ago also fails to find any Bulgarian connection to BTC-e: https://bivol.bg/en/no-bulgarian-connection-found-so-far-in-...
Now the top 12 or so volume-ranked Bitcoin exchanges listed at https://cryptowat.ch are perfectly legitimate trustworthy companies. The ones I'm not sure about are CEX.IO and Luno (not saying they aren't trustworthy, I just don't know them that well) and, well, Bitsquare which as a decentralized exchange is bound to have some shady participants.
Your link is not evidence of "strange convolution." The reason there are so many steps/screenshots is because the payment service is in Russian, and the guide is designed for non-Russian speakers.
Most people never dealt with fiat on BTC-e, and would use someone like Coinbase to fund the purchase of coins, and trade exclusively in crypto on BTC-e.
> Now the top 12 or so volume-ranked Bitcoin exchanges listed at https://cryptowat.ch are perfectly legitimate trustworthy companies.
BTC-e was number six on that list...
The crime was committed outside the U.S., he didn't come to the U.S., the servers weren't in the U.S., Mt.Gox was based out of Japan, and Greek police arrested him.
I've seen this enough to know this is common, but what is going on with this world?
It's not just about Mt. Gox.
No, but he either robbed, or laundered money for people who robbed US citizens (MTGOX customers.)
It really is time for people to stop being gobsmacked at the idea that once you get entangled with an entity in a particular country, anything you do to or with that entity which violates the country's laws is fair game for them to extradite and prosecute you over. Shouting, "But I didn't do it in your country, I did it on the internet!" does not get people out of that.
Also, given just how much global network infrastructure passes through the US, and the near-impossibility of productively cashing out of most criminal schemes without involving a US institution, people should stop being surprised that their clever attempts to commit the perfect stateless crime are neither clever nor stateless.
The idea that "on the internet" is a magical stateless realm has only ever been an idea in the minds of naïve geeks. It has never been reality.
I'm certainly not surprised the US wants to prosecute, as it seems to want to apply US law to the whole planet.
But I am surprised the in some ways that the system allows it - that person never left Greece. What if the action was something illegal in the US but perfectly legal in the place they are sitting? I don't see that the crime necessarily takes place overseas when what they are really doing is sitting in a room, sending electronic signals from a machine.
>> The idea that "on the internet" is a magical stateless realm has only ever been an idea in the minds of naïve geeks. It has never been reality.
That's not what I'm saying, it's not a stateless realm, but actions taken were not taken in the USA.
When one country chooses to extradite someone to another, it's more often because their government doesn't approve of the actions they are accused of either and was presented with sufficient evidence.
What if Thailand wanted to extradite you because you joked about their king on HN?
You would just laugh, not make a point about "well, what do you expect when you challenge a nation's royal sovereignty? Have some respect on the internet! Thailand takes this very seriously."
But it isn't. If the guy were in the US and had done something illegal and involved Greek citizens or a Greek company, the US would almost certainly extradite to Greece to let them prosecute him. Extradition treaties, and jurisdiction over crimes that involve a country's citizens or other entities of that country's laws (such as corporations it's chartered) are incredibly normal bog-standard boring well-established concepts in law. Nobody should be surprised that this guy is getting extradited.
So: can Thailand extradite you if you happen to say something about the king? Nope. And that's not even close as an analogy. What if you printed a bunch of insulting leaflets and mailed them to your colleagues in Thailand to distribute, and also wired money into a Thai bank to support the campaign, and also hacked some Thai-hosted websites to put up disparaging messages, though? Would you be willing to admit that at least some of that creates a crime under Thai law that you committed, and that elements of what you did took place at least partly in Thailand, thus giving them jurisdiction and a reason to extradite (though extradition often requires both countries to view the act as illegal under their own laws, so the extradition is unlikely to succeed)? I'd hope you would.
But this is HN, where we clutch our pearls and gasp any time the real world teaches us that "But I did it on the internet! There can't be jurisdiction for the internet!" isn't an argument accepted by courts of just about any country.
2) If you run online exchanger and have a single US customer, then you have to register your operation in USA. I find it ridiculously stupid.
The system isn't that strange, almost every business in the US is primarily regulated by the states. What's strange is that most Americans don't realize this.
The key point is that doing fully digital business online (as opposed to selling physical goods online to people within your country) doesn't mean that no jurisdiction applies, it means that all of them do - if you do international trade with USA, then you have to be mindful of USA laws.
I wouldn't be too sure about the US having control over the BTC-e wallets. Their Ethereum hot wallet[1] (with around $100M funds in it) has been untouched since the website has gone down. I'd assume that there's more than one person at BTC-e having access to those funds. Assuming the US government has access to the keys - why didn't they move the funds somewhere else in order to secure them?
[1] https://etherscan.io/address/0x91337a300e0361bddb2e377dd4e88...
When you don't know much about something, it can often look stupid.
This isn't new or complex, though. If you do business across a border, governments on either sides of the border may take an interest in the transaction. If you don't like that, don't do business across a border. "Online" isn't a special magic transdimensional place. It's just a web of connections between existing places.
> When you don't know much about something,
> it can often look stupid.
Also, "if you don't like it, don't do it!" is not a commentary on the issue.
Btc-to-diamonds.website ? If it's online, it's tracked by 5 eyes Tor? 5-eyes is even more interested Craigslist? Great, go meet a stranger in a parking lot and gamble that you don't get robbed.
The comment is general but it's right. As it & other posters in this thread have pointed out - existing power structures control the world. The internet does not exist in an imaginary "stateless" vacuum.
https://www.reddit.com/r/SheepMarketplace/comments/1t0ueq/sh...
https://www.theguardian.com/technology/2013/dec/09/recoverin...
0) http://invezz.com/analysis/forex/147-btc-e-anonymity-reigns-...
It won't take long for one of the cryptocurrencies with private transactions to rise in dominance, since this sort of crackdown imposes costs and uncertainty on all participants.
If the goal of the DOJ was to fight crime, the most effective approach would have been simply to infiltrate mixers and trace money flows relevant to investigations, something BTC is perfect for.
Instead, this move sends a strong signal to the cryptocurrency community that hardening measures are needed.
For instance: http://zerocoin.org/
So long they prevent people from cashing out big time, then they're on the same level as cash (see, needing to deposit boxes of cash with HSBC).
But one of the incentives of getting rid of cash is to transform the money into something that can be efficiently sent over a large distance, which is something cryptocurrencies already do.
Not really, so long as the IRS and taxes remain a thing. And someone notices the guy who hasn't had a job in the last five years is driving around in a brand new Tesla and living it up in a mansion.
Most tax evasion enforcement is on relatively small subset of taxpayers and is for fairly easy-to-detect fudges. There has been a lot of work between the IRS and banks to set up heuristics and flag suspicious activity, but that all ends up pretty worthless with an anonymous cryptocurrency.
I suspect in a world with only cryptocurrency instead of fiat, trying to make a direct peer-to-peer transaction to purchase an expensive item like a house or car will be met with the same reaction as trying to do that today with a duffel bag full of cash.
It doesn't mean that everyone reports that, quite the contrary, but all legitimate businesses do and will.
BTC-E was one of the eastiest ways for me to change BTC and LTC in day trading. Are there comparable websites with small fees? I'm not interested in buying with fiat money.
The defendant is who run/ran BTC-E, so it's alleged to have come from the very top. The reasons why you found it so easy are probably related to why the US sees it as a criminal enterprise:
> According to the indictment, since its inception, Vinnik and others developed a customer base for BTC-e that was heavily reliant on criminals, including by not requiring users to validate their identity, obscuring and anonymizing transactions and source of funds, and by lacking any anti-money laundering processes.
It continues:
> The indictment alleges BTC-e was operated to facilitate transactions for cybercriminals worldwide and received the criminal proceeds of numerous computer intrusions and hacking incidents, ransomware scams, identity theft schemes, corrupt public officials, and narcotics distribution rings. Thus, the indictment alleges, BTC-e was used to facilitate crimes ranging from computer hacking, to fraud, identity theft, tax refund fraud schemes, public corruption, and drug trafficking. The investigation has revealed that BTC-e received more than $4 billion worth of bitcoin over the course of its operation.
Breaking open the MtGox case, part 1 http://blog.wizsec.jp/2017/07/breaking-open-mtgox-1.html
http://thehill.com/policy/technology/290745-feds-to-auction-...
Perhaps these guys were actually smart about their cold storage?
I haven't kept up to date on exchange volume. Was btc-e still a popular exchange (up until this takedown of course)?
BTC-e was still pretty big.
It is reasonably well-known that it is dangerous to leave money on exchanges. BTC is only yours when it's in a wallet with a private key that is known to you, and no third party.
Realistically, I've come to think cryptocurrency just isn't for me; it's too damned easy to lose. I also forgot my passphrase for some other BTC (I think I remember it, but it doesn't work, so, there those went). It's not huge sums; 1 BTC here (which was only worth about $300 when I "lost" it), a half BTC there, but the only BTC I still have access to is the half of one I have at Coinbase.
I may yet find one of those flash drives, or figure out what my passphrase actually is for the others. But, what I have found for sure is that BTC is too hard to keep safe (mostly from myself).
https://99bitcoins.com/ledger-nano-s-review-bitcoin-wallet-b...
I think this is one of the reasons that Bitcoin has never taken off in any real-world sense. (Yes, criminals and speculators love it. But aside from that, its use is trivial.) The math is very cool, but the anthropology was incredibly weak.
People who build real consumer products spend a lot of time studying users and solving small problems for them. As you see even in this thread, early adopters always deride the dumbness, weakness, and laziness of mainstream users. But derision doesn't cause adoption. Indeed, it often blocks the humility and hard work needed to make something competitive in the real world.
That's why BTC-e does not show a giant FBI logo with a notice.
So nothing will happen to the site or its owner, other than maybe they won't be able to transfer out USD.
"Defendant Alexander Vinnik Was Arrested in Greece to Face Charges in the United States; Bitcoin Exchange Alleged to Have Received Deposits Valued at Over $4 Billion" - article subtitle
This is a terrifying comment.
Not much different than a Thai person saying the same about a German rotting in their jail because he offended their king on Twitter. "Justice!"
There's probably 5 or less people more familiar with BTC-e than I am.
>It had a reputation of taking funds from users
Compared to the other big exchanges they've mostly had a reputation of not doing that.
Essentially all the people I can find complaining about suspended BTC-e accounts got shut down due to inconsistencies in their incoming wires.
I'm looking at BTC-e user database right now, only 0.2857% of the users are banned. Much fewer than you'd see at any other exchange, but I suppose that's not a very meaningful metric given the ease of registrations.
I agree. Good luck trying to explain that to idiots like mikeyouse (commented just before me) who miss the point entirely lol.