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Comment by willvarfar | Hacker News Reader

This comment by Andre is enlightening:

> I know how this is done. It is the best way to launder bitcoin revenue generated from all kinds of illegal activities. They go to Giftly or Gyft and by Amazon gift cards for the bitcoin. Then they just pay themselves. That is the only way to not get your account closed. It is not credit card fraud!!! Gift cards are always under the radar on Amazon.

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Unless I'm missing something this doesn't really seem to launder the money. Sure you have converted bitcoin to cash but the cash still doesn't look like legitimate income if you don't sell the books under your own name (which they clearly don't). So wouldn't it be easier to just sell bitcoin on exchanges like localbitcoin?

> the cash still doesn't look like legitimate income

It would if you used your real identity for the "book" sales instead of fraudulent id. Then the proceeds are legitimate. Govt would have to prove you faked the sales, which is easy to hide.

It also doesn't seem that far fetched to actually write a 60 page book. One topic per book (civil war, computers, carbons, whatever) copy and paste wikipedia articles on various points related to the topic, some crappy pics, and bam, one day of work and you've got something you could claim to be a real book if anyone started investigating.

Or just publish one of these:

https://en.wikibooks.org/wiki/Guitar

https://upload.wikimedia.org/wikipedia/commons/7/74/Guitar.p...

I don't think it would be that easy to hide. It would be easy to dragnet and find suspects by getting Amazon to report % of purchases by gift card by author, and then following up manually with a few customers should be enough to filter out any false positives and snare the scammers.

But what are you going to charge them with? Where is the evidence? The wrongdoing is hidden in the gift card purchases which you can't actually tie to the faker seller.

If you live in a western country it isn't a very smart way to launder the money as you will eventually get caught. If you live in other places it is a way to move the money without it getting flagged. I'm guessing that local bitcoin probably isn't popular in N. Korea or China.

...aren't those gift cards you buy with bitcoin bought with stolen CCs?

The bitcoins could also come from drug sales, extorsion, betting, fencing stolen property, …

Or the ransoms people pay for decrypting their harddrives etc. Lots of ways to get bitcoin and want to get cash.

Gyft appears to me to be a legit business (I only had a short look at their website). Buying gift cards at regular prices and then selling them with a small markup while providing anonymity for your customers seems plausible.

Drug dealers profiting from bitcoin need to get their money out too, ya know.

I guess, but the scam is robust because they "outsource" the illegality of stolen credit cards to the person selling the gift card. Pretty insidious.

Defrauding a seller with stolen credit cards is despicable. I know someone who had an online startup selling tickets and was massively defrauded by foreign hackers with stolen credit cards. He was personally liable for the losses and it ended up bankrupting him. His life was a downward spiral after that, resulting in divorce, losing his home, and ultimately committing suicide.

Remember reading here about how candy japan being hit by something similar. [0]

[0]: https://www.candyjapan.com/behind-the-scenes/candy-japan-hit... / https://news.ycombinator.com/item?id=10237697

What's crazy is it only takes one bad actor to cause problems like this. Often fraudsters will just use one website to "test" if a card is good, by using it to make a small purchase. If it goes through, the card is good. One fraudster might do this 100 times on a small site. The merchant is liable for the chargebacks that will come within 30 days, and each chargeback typically costs $15. Additionally, if the percent of chargebacks as a total of all transactions goes over 2%, the merchant account provider will likely close the account due to risk.

Why was he personally liable?

I suspect its because he won't have setup the company as one with limited liability: https://en.wikipedia.org/wiki/Limited_liability the result being that when people sued, they sued him personally rather than the company.

It's not always so simple when you're a small company owned by one person. Even if you have an LLC, if you run into significant money problems someone with enough resources WILL come after you personally.

or he had it as an LLC, but made a mistake along the way that pierced the corporate veil. Or as a small business, he was just straight-up forced to pierce the corporate veil. (banks do this to small biz all the time).

If you are a small business with no significant assets or revenue - say you are plugging away making $4k/mo scraping by - you will likely not be getting a merchant account without a personal financial guarantee.

The corporate veil is mostly a fiction for small bootstrapped startups without initial seed capital.

More than likely he borrowed money and despite the entity structure, personally guaranteed it (which is typical for most small business loans)

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