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Comment by hummingurban | Hacker News Reader

If DOJ can show evidence of cartels, terrorist cells, and other unsavory entities laundering their money through bitcoin, ICOs, ethereum, altcoins and tether, then anyone who has ever taken crypto to work on a project, anyone who handled the influx of cash to exchange it for crypto by selling Tether (which is all of the major exchanges), are headed for a storm of hurt.

We are no longer in SEC turf and DOJ has a conviction rate of 93% as of 2012, a trend which has been increasing. It's one thing to argue against Howey Test or hide money from the Taxman. It's a whole new level of shit storm to be accused of laundering money for terrorists and drug cartels.

https://medium.com/@justsomeperson/uncovering-the-real-carte...

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Cartels, terrorist cells, and other unsavory entities also use cash, but you don't see the DOJ prosecuting everyone who has accepted cash as payment.

You definitely see them prosecuting people who accept cash from cartels and terrorist cells or engineering financial entities explicitly to do so. Tether looks a whole whole lot like one of those.

Wait, isn't that basically the basis for civil forfeiture? "We don't know why you would have this much cash, so prove it isn't related to drugs/laundering"?

In fairness, if I set up a bank which, by accident or by design, made it exceedingly easy to launder millions in cash relatively quickly, you can bet the DOJ would have a problem with that.

Transporting millions in cash is risky (either you trust the courier with that and risk their life, or you do it yourself and risk yours), and doing so internationally is extremely challenging and/or expensive. By contrast, doing it digitally is quite easy and fast.

It feels a bit disingenuous to insist the two are the same.

HSBC cooperated with cartels to launder money, apparently they even opened special counters for them to deposit cash at.

https://en.m.wikipedia.org/wiki/HSBC_Mexico#Money_laundering

Public companies tend not to get punished because it ultimately punishes the shareholders. Chickenshit club book talks about all the reasons why the DOJ doesn't go after the big public companies with criminal prosecution.

When was the last time a banker was put in jail for money laundering?

There's no trail (or not an easy trail of evidence) to know for sure where cash payments went from and to, whereas blockchain provides that trail - you just need to figure out who owns or has claimed to own the wallet etc; having that as a resource would make conviction much easier, and magnitudes easier to find people involved. I don't know how pleading ignorance would hold up depending on the role you played in any illegal activities.

Isn't traceability a positive aspect for cryptocurrency in this case? You've got nothing to worry about if you're an honest investor, and frankly, this is one of the benefits of a pseudoanonymous crypto.

> Isn't traceability a positive aspect for cryptocurrency in this case?

Not if you have to hire a lawyer to show the Bitcoins which left a violent criminal’s wallet were transferred to you legitimately.

I don't see this ever being an issue, frankly.

For law enforcement, definitely

Actually, we do see it.

Along with Civil Asset forfeiture mentioned by others, there are also:

* Know Your Customer laws,

* mandatory Suspicious Action Reports of all transactions over a certain value,

* anti-Smurfing or anti-Structuring laws that against structuring deposits to be under the threshold of SAR reports,

* a whole host of foreign transaction laws

* and plenty more...

So yes, prosecution of use of cash is very alive and healthy with people getting prosecuted for all of these crimes related to use of cash. And this is before any prosecutions that establish direct use for terrorism or drug cartels.

I've used cash for over 20 years to buy things, I have not been prosecuted for it. Neither have any family, friends, coworkers, neighbors, etc that I know. Note that I said "everyone", since the comment I replied to basically said everyone who used some shitcoin service would be open to prosecution.

No one said you will get prosecuted, they are saying organisations that facilitated conversions between crypto and USD will be investigated.

That is an incorrect comparison. They punish those who use cash illegally, just like how they seek to punish those who use cryptocurrency illegally.

> then anyone who has ever taken crypto to work on a project, anyone who handled the influx of cash to exchange it for crypto by selling Tether (which is all of the major exchanges), are headed for a storm of hurt.

Why would all cryptocurrency transactions be tainted by this? Or are you saying that the value (relative to real money) would plummet?

presumably it would foreshadow a regulatory crackdown

Sounds like torrents all over again, i.e. a giant waste of resources. Criminals will always be one step ahead of the DOJ or any other regulatory body.

Whether a "giant waste of resources" or not, the torrent ecosystem nowadays is nowhere close to what it was a few years ago.

Right, but that's thanks to innovation in the digital media space and subscription models, not necessarily regulatory pressure.

Well, it's a little different. Torrent sites didn't have centralized websites that would literally trade large sums of money for torrents.

Torrents couldn't be used to launder money for corrupt purposes. Anyone in crypto who didn't see this coming was blind or willfully ignorant.

It worked out fine for HSBC. AFAIK, nobody there went to jail for being the personal bankers to Mexican cartels.

https://www.reuters.com/article/us-hsbc-probe/hsbc-became-ba...

Worked out fine for Citigroup as well.

https://www.bloomberg.com/news/articles/2018-11-16/gett-is-s...

It worked out fine for all the people who sold toxic assets for a profit leading up to the 2008 crisis.

The government has already made its stance clear. Crime is OK if it's done in a complex way.

They just need to formalize it into a law that way citizens are aware of the complexity threshold that is required for a crime to be legal.

Well not fine from a business perspective. The fines were larger than the money made from such activities. If HSBC were primarily a front for the cartels, it would have gone bankrupt.

> If DOJ can show evidence of cartels, terrorist cells, and other unsavory entities laundering their money through bitcoin, ICOs, ethereum, altcoins and tether, then anyone who has ever taken crypto to work on a project, anyone who handled the influx of cash to exchange it for crypto by selling Tether (which is all of the major exchanges), are headed for a storm of hurt.

Oh no, the cartels and terrorist cells would have to go back to conducting all their illegal activities in physical US dollars.

> We are no longer in SEC turf and DOJ has a conviction rate of 93% as of 2012

DOJ has such a high conviction rate because they only prosecute cases they expect to win.

"DOJ has such a high conviction rate because they only prosecute cases they expect to win."

Things like kingpin laws (continuing criminal enterprise) and RICO probably help the conviction rate.

Eric Holder neutered the DOJ because he was too afraid to lose cases.

The only reason their conviction rate is so high is because they don't bother to prosecute the majority of crimes anymore. These days if you can pay an arbitrary fine, you can get away with pretty much any financial crime.. (laundering money for drug cartels, etc.)

People have used USD to fund crimes, but it would be ridiculous to say that unrelated restaurant owners would get in trouble for the mere act of accepting USD.

The US has already given guidance on this. They have already stated that BTC and other cryptos are a commodity, and legal.

The SEC itself disagrees with your absurd notion that anyone who even accept crypto as payment could be in trouble.

The terrorists in Syria were funded by US Governement, both by CIA and Armed forces.

They didnt need bitcoin to do it.

From your link:

>f. People/exchanges/entities rarely use shell companies for legitimate purposes. And by rarely, I mean almost never.

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