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Comment by olegkikin | Hacker News Reader

Yes, kind of. Surprise, crime happens. HSBC laundered what, $670 billion dollars of Mexican cartels? How many executives ended up in prison? Didn't they pay some tiny fine and that's it?

http://www.reuters.com/article/us-hsbc-probe-idUSBRE8BA05M20...

Also mixing is not laundering. Mixing only allows you to stop the tracing. Converting these mixed coins on a large scale to something like dollars is very very hard. Most exchanges that interact with the traditional banking system do check where you got the money from. It's not like you can send $1M worth of tumbled coins to Bitstamp/Kraken/Coinbase and convert them to dollars without tons of paperwork. And it's not like you can buy a house/car/boat with these coins and expect the IRS not to show up.

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>Converting these mixed coins on a large scale to something like dollars is very very hard. Most exchanges that interact with the traditional banking system do check where you got the money from. It's not like you can send $1M worth of tumbled coins to Bitstamp/Kraken/Coinbase and convert them to dollars without tons of paperwork. And it's not like you can buy a house/car/boat with these coins and expect the IRS not to show up.

This nicely explains why the Mexican cartels (in their simplicity) used US dollars and not Bitcoins ;).

But I still wonder about the paperwork, it completely escapes me.

I mean, there are mainly three "legit" ways to actually become in possession of a Bitcoin:

1) mining it

2) buying it (i.e. giving real money in exchange for it), let's say as an investment

3) accepting the Bitcoin as payment for any service, good, etc.

Why any of the above (that have more or less a proven/provable origin and thus that can justify the provenance of the Bitcoin and somehow do the appropriate paperworks) would want to use a mixer?

Or - differently put - once you Bitcoin has gone through the mixer isn't it not anymore suitable to any exchange requiring this paperwork? I.e. it becomes "unspendable" money (if not in very small quantities, small amount single operations, limited quantities of operation).

Or am I missing something?

>Why any of the above (that have more or less a proven/provable origin and thus that can justify the provenance of the Bitcoin and somehow do the appropriate paperworks) would want to use a mixer?

I haven't made any darknet purchases yet, but if I do I'd like my legally purchased Bitcoins not to be linked back to Coinbase which has a lot of identifying information on who I am.

>I haven't made any darknet purchases yet, but if I do I'd like my legally purchased Bitcoins not to be linked back to Coinbase which has a lot of identifying information on who I am.

But I wasn't hypothizing the case of buying anything on a darknet or anything "debatable" (which would be a good reason to try to strip each and every information) I was trying to understand why - excluded the use of the Bitcoin for any less than perfectly clear, transparent and legitimate operation - one would want to use a mixer.

In your case the Bitcoin (which was "legit" before) becomes somehow "tainted" by going through the mixer.

Is your argument HSBC committed a crime so everyone else should be allowed to, too?

No, my point was, if you're so worried about money laundering, bitcoin should be the least of your worries. One bank laundered more in a few years than ALL of bitcoin is worth multiplied by 15.

And I doubt a significant portion of bitcoin is used for money laundering - it's mostly geeks, investors, and other early adopters holding it.

Another point was - the government generally doesn't seem to care about massive scale money laundering. I have no other explanation why nobody went to prison, and the fine was only $1.9B on $670B laundered.

I don't think so, I think the argument was that, if crime is possible it will probably happen. There was no moral judgement about that.

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