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Comment by numbsafari | Hacker News Reader

The holder of C could potentially be prosecuted for receiving stolen property, under AML laws, or as a co-conspirator in the original theft.

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If you replace bitcoin with cash, by your logic I'd be arrested for selling a thief an apple if he paid for it with stolen cash.

That's the distinction. Is it money or is it a fenced good?

If I'm receiving currency (be it real money or bitcoin), I'm not going to think about where it came from. It's fungible.

Unless he's reaching into a giant purple spattered bag that says "bank vault" and the name of a bank you know was robbed.

Then you will be asked to cooperate and reveal the identity of the thief. If you don't, then yes you are in "potential" trouble.

I see no issue with cooperating. If they want to see my security footage then let them get a subpoena. If they want to see the IP logs and customer data for a potential money launderer, it's the same bar.

Physical dollars each have a unique serial number - aren't these sometimes used to track criminals as they spend stolen funds? Or is that just a Hollywood exaggeration?

Re: currency tracking, you might like this:

https://www.wheresgeorge.com

I think it's only useful if you know which serial numbers were stolen, for example if you give specific range of serial numbers as a ransom payment.

When I worked as a bank teller briefly, we had this planned out. There was a stack of bills (usually 10s, but it was kind of random) that we were only to give out if we were actively being robbed. They were indistinguishable from regular currency to avoid suspicion, but the serial numbers were recorded for tracking purposes.

This was in a small town bank, and I'm sure that larger banks have more sophisticated policies. I'm curious to know if ATMs have any similar features.

> by your logic I'd be arrested for selling a thief an apple if he paid for it with stolen cash.

Yes, this can happen. Especially for higher valued items

https://en.wikipedia.org/wiki/Handling_stolen_goods

Unfortunately, under the US drug laws, this is allowed. You're a drug dealer and rent an apartment? The landlord could now be at risk, regardless of whether they know how you make money to pay them. It's how the Feds have compelled completely law abiding citizens to work with law enforcement and/or threaten to take everything.

> I'd be arrested for selling a thief an apple if he paid for it with stolen cash

Welcome to anti-money laundering law. KYC regulations basically mean, for anyone handling large volumes of money, it's the vendor's business, and liability, to know where customers' money comes from.

But C is just some address the thief used. You see, you can create a million of them a minute for free, and then move the stolen and clean money between them in a randomized way, making it indistinguishable from real transactions. All you see on the blockchain is money moving between addresses.

Exchanges do know the identities of a small fraction of all addresses, that's true. But if someone wants to remain anonymous, and has a relatively small amount (in relation to exchange's liquidity), it becomes trivial to hide the money.

Something like MtGox amounts are much much more complicated to clean in their entirety, that I agree with.

Where does the clean money come from?

"Clean" in this case only means not this stolen money. It can be some other stolen money. Or it can be borrowed money.

The bitcoin tumbler is a service that does the mixing, and as long as it has more than one customer, it can do the mixing.

I really gotta wonder what sort of protection this actually provides.

A tumbler only helps if a lot of people with legitimate BitCoins frequently mix them in, so that people with coins from a mixer have a plausible claim of innocence. If mixers are primarily used by criminals, you've only anonymized which crime you've committed, you haven't really laundered the money. If those coins touch your real-world identity, you may not be incriminated in a particular crime, but you've made yourself into a suspect in a relatively small pool of crimes.

You are correct. Tumbling is not laundering, it's only there to make the tracing close to impossible.

Amortized guilt seems a lot better to me than specific guilt. Finding a charge in there is really difficult. As is 'beyond the shadow of a doubt'.

Beyond that, you could buy legitimate bitcoin and only use it to 'legitimize' mixing pools.

Possibly, but only if they get caught. I imagine many of these services are run by individuals who remain anonymous to avoid prosecution in the event their service is used for money laundering.

I would like to know what is their average lifetime. AlphaBay was not exactly the same, but it was longest running market - meaning a bit above 3 years. It does not give much confidence.

Does this maybe change depending on jurisdiction?

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