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Comment by ethbro | Hacker News Reader

Randomly swapping coins is an attempt to address anonymity.

https://en.m.wikipedia.org/wiki/Cryptocurrency_tumbler

This is basically money laundering, right?

It's privacy. Money laundering is a fake crime and propaganda by governments with prosecutors unable to find real crime.

It's as bad as calling copyright infringement "theft" or even "piracy", though the later term has been pretty watered down. Or how banks push the idea of "Identity theft" as if someone stole your identity versus the bank failing to verify your identity.

We don't call encryption "information laundering" and niether should simple financial privacy have any negative term.

People go to prison for it all the time. It's as real as any other crime.

If you are acting in a way that's indistinguishable from someone who is attempting to hide evidence of a crime, don't be surprised when people think you are doing something wrong.

> If you are acting in a way that's indistinguishable from someone who is attempting to hide evidence of a crime, don't be surprised when people think you are doing something wrong.

Do you apply this kind of reasoning to encrypted communications? If not, why not?

I mean it's a made up victimless crime that only serves prosecutors. It's on the moral level of asset seizure and worse than "crimes" like wire fraud.

Prosecutors are free to think someone's doing something wrong. Investigators might be able to get warrants under such suspicions (iffy but perhaps acceptable). But they should need to find actual wrongdoing to be able to convict people, and this last part is what is lacking today.

It is only money laundering if is done with money that is the result of a crime.

Just like a trader is only a fence when he trades stolen good.

Therefore, by definition, money laundering is assisting a crime. If the crime had a victim, then, by proxy, laundering the money of the crime is not victimless either.

This is absolutely not true, at least in the US. If you are a business that transmits even 100% lawful funds without registering with FINCEN and registration as a MSB in your jurisdiction, you can and will be charged with money laundering.

Also, using your argument about money laundering, what about a restaurant that serves mostly mafioso, but never engages in any unlawful activity themselves. They are providing food to criminals, which is even more critical to their criminal enterprise. After all, the mafia can't commit crimes if they can't eat, right? And they are paid with funds that result from crimes. By your analogy, the restaurant owner is assisting in a crime. So should that restaurant owner be charged with some kind of new crime? (like money laundering is a relatively new crime that has been created over the past 50 years) Like, criminal gastronomy, feeding in the 3rd degree, or something?

Simply not true. Look up Hawala, a money transfer system that's been around for over 1000 years. Use it in the US and be prepared to deal with money laundering charges, regardless of the lack of crime. Or just try having your small business make repeated $9000 deposits of completely legit and clean money.

Money laundering is now about not reporting all your financial movements to the government. It's surpassed the even controversial idea of using it against criminals in lieu of real crimes.

> Money laundering is now about not reporting all your financial movements to the government.

It's surprising how many people are unaware of this, even on a forum composed of fairly informed people like HN.

Right, and if you're lucky, they'll just steal all your money.

>Money laundering is a fake crime and propaganda by governments with prosecutors unable to find real crime.

Absolutely true. I'm a convicted money launderer because I once used a chinese bitcoin exchange instead of an European one.

The wires from the Chinese exchange were nothing compared to the EU ones, simply the origin country was enough to justify my conviction.

But why? Was it dirty money somehow?

Nah, I was charged with other crimes (none of which had a financial incentive, according to LE or the courts).

While at it they "subpoenad" my bank account history, saw a bunch of wires from normal European exchanges and then one wire from a Chinese account. Never cared to ask about the European ones (I verified that they didn't ask the exchanges directly either.), but the Chinese one was apparently particularly interesting.

They asked me a few questions, I explained the (legal) source of the money, few years later the thing actually got to court and I was found guilty with the only evidence against me being the country where the funds came from.

Not worth it to appeal, I might get my 6-7k euros back but would probably end up paying more than that for lawyers.

Can you give more information about the crimes you were charged with?

Pretty boring.

50700 counts of aggravated unauthorized access to computer systems for making some scripts to drop a bot on lots of coldfusion site. Incl https://news.ycombinator.com/item?id=5552756

1 count of the same https://news.ycombinator.com/item?id=6637426

1 of the same + bonus charge for possibly starting a SMTP server on the domain https://news.ycombinator.com/item?id=5098218

Credit card fraud for sharing some cards on IRC and unsuccessfully trying to use a few.

Money laundering for receiving a wire of ~6.5k euros from China.

There might be something more, but that's all I can remember for now. Mostly pretty silly things anyway.

I realize now that I somehow misparsed your comment as saying that you had been charged for other crimes as a result of that transaction, but when rereading it now, the causality is actually in the opposite direction. I guess once they had a solid case for one, they just threw in everything else they found suspicious? Thanks for being so open.

>I guess once they had a solid case for one, they just threw in everything else they found suspicious?

Yep, it tends to be an easy extra charge to slap on anyone who isn't keeping very good books.

As MichaelGG said, a fake crime.

Wait, you're HTP Ryan?

Conviction in the US?

The Nordics.

This is pretty easy to reason about: the electorate benefits from information privacy more than it could benefit from thought police.

The electorate would benefit less from total financial privacy than it does from the ability to enforce taxes and civil judgements.

> The electorate would benefit less from total financial privacy than it does from the ability to enforce taxes and civil judgements.

I'm not so sure about that.

One nice thing about rising inequality is that the proportion of people who are net beneficiaries of redistributive policies approaches 100%.

From the utilitarian perspective, what is the point of financial privacy (from the government)? It looks like money laundering and purchases of illegal substances seem to be the biggest "benefits". Those are benefits that aren't beneficial to the government or the people that are governed.

Spending habits can reveal a ton of information about a person. At that point, financial privacy has the same justification as encrypted communication or any other kind of privacy: protecting people from Government overreach. Knowledge is power.

The real crime is tax evasion.

If I collect money for my illegal pharmacy, then launder it through some retail front, am I not paying all taxes at that point?

...No? You haven't paid taxes on the first transaction at all.

There wouldn't be a second transaction (the front store) if it weren't for trying to pay taxes on the first. So that's not really a defensible line of reasoning. Only, perhaps, if the tax rates would differ.

It doesn't matter why they exist: they are different transactions and taxes are assessed separately.

Sure, so if you want to use circular logic to say the real crime of money laundering is tax evasion, when money laundering actually results in more taxes being paid, that's fine. But don't expect that to be a persuasive moral argument for making money laundering a crime.

I didn't say the real crime of money laundering is tax evasion. The real crime of money laundering is obstruction of justice. But taxes are certainly being evaded, too.

You are paying some tax, just not all the required tax. Specifically you are evading income taxes. As I recall in the US at least, there is an option on your IRS form to report any income derived from illegality so that the relevant tax can be paid. Whether anyone has ever done so I don't know but something like that could have kept Capone out of prison.

If you illegally sell $10 worth of drugs, then record your front store of selling $10 of Tylenol (that you don't actually buy or sell) then the $10 of drug money has been fully taxed.

There's taxes from the supply chain of Tylenol that don't get paid when it's $10 in illegal drugs that are actually sold. Much like Bitcoin, with a black market you can only tax at the egress points when the money needs to touch a regulated financial entity whereas an all-legal system can tax any time money changes hands.

Certainly that's someone else's crime, and they need to launder their own proceeds.

Under US law, no.

Money laundering requires the intent to conceal the origin of proceeds from certain specific unlawful activities or to avoid financial reporting requirements. Hiding the origin of lawfully obtained money is legal.

That would only be if you used the tumbler for the purpose of avoiding financial reporting requirements.

Simply using a tumbler is not illegal.

For instance, if someone used legally obtained money to buy bitcoin, put them through a tumbler, then used the bitcoin to buy drugs. That would not be money laundering because it does not hide the proceeds of a crime or avoid any financial reporting requirements.

On the other hand, if the drug dealer took the bitcoin that they were paid with and put it through a tumbler, that would be money laundering because they would be hiding the origin of the proceeds from selling drugs.

> Simply using a tumbler is not illegal.

Right, but operating a tumbler without FINCEN registration and a MSB license is illegal. Even if the money put through it is entirely legal.

This is not true. There simply doesn't exist any court that'd accept your justification that your service is only intended to conceal the origin legitimately obtained funds.

It's only money laundering if the source of coins is illicit. You can legally tumble clean coins all day long.

Certainly.

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