I'm not the most saavy BTC person, but isn't part of the allure of bitcoin the ability to evade this type of seizure?
Have a stash that people dont know about, no series of shell corporations and foundations required.
This is some quality spin, so kudos for that.
You make it sound like the government and the individual in question came to a friendly agreement, when what happened was the government discovered the person's identity and used the powers available to them to get a consent to forfeiture out of them.
>Very different than any random judge or municipal police freezing anything they want.
Not at all. Just as the authorities have to know an identity to freeze an account in a criminal matter, if they know your identity then they can compel you to give up your Bitcoin stash. You can refuse, but then you'll go to jail. It's no different than some drug lord burying their money in the desert somewhere and refusing to give it up to the feds when they come.
People keep pretending Bitcoin/cryptocurrency is magic and immune to real world pressures, and keep getting rude awakenings when they learn it's not.
No, they don't have the keys, they can't sign a message as you.
It generally requires a court order to get money out of your bank. If it's a Bitcoin wallet, then they can just send the court order to you directly, and put you in jail until you comply (i.e. as many years as it takes). The differences seem a bit superficial to me.
If such thing were to happen, and afterwards you complied, then there would be little grounds to hold you for contempt of court.
The court system is not a computer program you can fool with clever tricks. If you are facing a court order to surrender money or other assets and try to evade it by moving the money around, you are just going to find yourself in deeper trouble. People have tried it before.
I'm merely pointing out that the differences are not superficial.
There can be any number of reasons the coin was moved:
- hacked by some 3rd party
- corruption by officers (https://news.bitcoin.com/rogue-silk-road-agent-admits-to-ste...)
- partner in crime moved them, with or without consent from suspect.
Ex: Being in the vicinity of a crime when it takes place may make you a suspect (aka "fishy"), but this alone is not enough to prove guilt.
All your comments in the thread are about "proving it," when, at the end of the day, it's up to 12 people in a box, most of whom don't know the first thing about bitcoin. Refusal to decrypt, wife moving Russia, etc... The government is going to make an extremely convincing case, with plenty of witnesses and all the time and money and lawyers they need. Meanwhile you'll be communicating with your defense lawyers from behind bars. You might be right -- maybe they can't prove any ill-intent -- but that's not a gamble with the odds in your favor.
- Can the prosecution show where and how Mr. X moved the funds while he was in jail?
- Can they show who he communicated with or ordered to abscond these funds?
- Can they identify who controls the funds now?
- Can they identify anyone else who may have had control of these funds while in their previous wallet?
The answer is basically no to any of those questions. This is simply because of the nature of crypto and mathematics; a set of seed words allows anyone to restore access on any machine, from anywhere on the planet.
Criminal law is all about intent.
So, here's an example of the non superficial elements here:
Say, one gets the "gimme your coin" order, says no, goes to jail.
While in jail, the coins move, OK?
Person in jail cries, "Uncle!" and gives up the wallet.
Authorities find it empty.
Who had what intent?
If the intent is to circumvent the order? That's an additional crime period. It may involve others too, who may also be committing crimes. The intent will link it all back together somehow, and that's what the law will resolve. Crucially, the person supposed to give up coin won't end up with coin, because they are ordered to give it up.
If the intent was not to circumvent the order? Someone, somewhere did something with intent, and that intent will boil down to theft from law enforcement, who is entitled to that coin, due to the order. That person would now be a criminal, and on it goes. The person ordered to give up coin still won't end up with it, and someone else is now being hunted down for having stolen coins from law enforcement, who will do whatever it takes to end up with the coins so ordered to them.
Put in very simple terms, understanding intent and law can all look like this:
Say we find a dead person. Is that a crime?
If anyone else, other than the dead person, anywhere, intended that dead person end up dead, yes! It's murder. Could be for hire, vengeful, whatever.
Maybe someone was stupid. That's a different intent, and a different crime. Maybe it's manslaughter of some kind. Could be reckless, for example, or negligent.
If there was no intent associated with the dead person then there is no crime, and we've just, sadly, got a dead person.
Maybe the person stepped in front of a bus. That's suicide.
In all cases, there is a dead person.
Intent determines whether there are also criminals, what their crime is, and all that other stuff.
Make sense?
Intent alone does not prove anything, you need proof of act (actus reus to the mens rea).
To play along with your analogy; do you have proof that someone killed someone else? Even if you have a damning confession letter which proves intent. Do you have a murder weapon? Evidence that puts the person at the scene of the crime? Circumstantial evidence like phone location data?
Ironically intent is the far harder thing to prove, I have no idea why you chose to base your argument on intent.
You are quite correct in that a conviction requires more than intent.
However, intent is what differentiates crimes and it's an important part of any discussion of this kind.
You will note successful prosecutions can happen sans explicit proof of acts.
There is a solid case against that, but we all know it can, does, will continue to happen.
Finally! In more abstract scenarios like this, I wager intent will carry considerable weight too, and it will due to the lack of physicality.
How does the prosecution prove my intent to circumvent compliance orders? How do they prove that I moved the coins, or prove that I ordered the moving of the coins?
Without evidence, this is quite impossible.
That doesn't just happen.
There will be more orders. Who had access to the wallet, etc... Wiretaps, observation, all of it is part of the game now.
In short, investigation will continue, as well all available means and methods applied to better understand who moved the coins and why they were moved.
That is likely to be an expensive, potentially freedom limiting, time.
Being unable to prove it NOW doesn't mean forever being unable to prove things.
Good luck with that game. It's very difficult, time consuming, dangerous, and expensive to play. Your opponents are willing to play hard indefinitely.
Best not benefit from the moved coins in the future.
Both implication and deduction are available legal means too. Remember that part.
Mix it all one wants. It remains extremely difficult to avoid others knowing value, otherwise unaccounted for, finding it's way back. That plus a shake down of everyone the person ever knew remains potent, relevant and effective.
I have followed the rough tech developments. None of what I wrote is impacted too much. Obtaining real world value of any significance is where all the weak points are, and where long established means and methods play well.
People are super leaky. Records everywhere, redundant in many cases too.
Like I said, good luck!
There are no longer "entry" and "exit" points because everyone uses it and accepts it. Crypto is a good as cash. Anything you can do with a suitcase full of illicit hundred dollar bills today, you can do with your phone tomorrow.
The trade of "illegal" assets goes on and will continue to go on to the end of time, whether that's marijuana or prostitution services. The spectrum of legality will vary in different parts of the world. Like many contrabands, there won't be enough resources to enforce prohibition of it, the population may not see the point of its illegality (as there is not an obvious social cost), and eventually the tides turn.
What else can they invoke? Any other crimes? Maybe several very expensive, time consuming, personally exposing investigations start up.
Punitive methods will be on the table. I am not speaking highly of that, but will say it definitely happens.
If you’ve arranged to share control of the Bitcoin wallet with someone else so they can move coins out of it in order to evade a court order, what’s happened is you’ve now conspired with someone else to evade a court order. Say hello to the RICO act, or something like it. Maybe you’ll be spending some time in prison after your assets are seized, and maybe your friend will be too. It’s kind of hard for your friend to claim that they were innocent.
There are a lot of tough laws against this stuff which are designed to work against the mob and organized crime. You’re not really inventing something new, you’re just doing old-fashioned mafia stuff, but using computers to do it. The court doesn’t care that you used computers to do it.
My wife flees to Russia and moves the coin to another wallet, without my knowledge. Or maybe it was an agreed plan. Who can prove otherwise.
Eventually I give up and decrypt the wallets.
What are your legal grounds for prosecuting me for this further action? What can you prove? How are you going to prove that I conspired, and that this wasn't my wife going rogue?
That didn't just happen. Someone intended it to happen.
Investigations and all available means will be used to obtain the coins. That could continue for the remainder of time all involved have here.
It requires new charges to be laid, evidence to be provided, and due process in reasonable time.
My point was the hard physics of it: the assets can be moved, and proving who moved it is very difficult.
Others, myself included, totally recognize the physics. That doesn't change the law much, just how it's enforced.
Should all that prove ineffective, as in justice is not served, we can all look forward to new and innovative law too.
In the end, we've got the basic human control issues in play.
The basic human remedies will also remain in play.
Prime example being it's quite possible to make life a real living hell for people, if nothing else. It's also possible to make that all being worth it very difficult to actualize.
If you are living in the US and spending money to support your lifestyle you are very likely within the reach of the law, and the money you are spending has to come from somewhere and go to somewhere. If you are not spending your Bitcoin and benefiting from it, then what’s the point? And if you are spending the Bitcoin and benefiting from it, then law enforcement can investigate those transactions.
Taking someone's assets vs coercing them to hand over their assets, are not the same thing.
You can take my gold, my dollars, my factories, my real estate, all by force.
You can take my freedom, you can take my life, by force.
You cannot take my Bitcoin by force. You might be able to put me through enough pain for me to give it up. But this is not a guarantee.
We have been discussing this in the context of being a sneaky cyber criminal with a just law system. But imagine you live in a nation where the government (military junta) is "nationalizing" all wealth and assets. Then tell me the best way to protect your money.
If you were assuming that the law was just then you’ve been having a different conversation. I’ve just been assuming that this is the US legal system, nothing more, nothing less. Do not assume that the US legal system is just.
The US law system is reasonably competent, has a global reach, and can out-wait you.
As we speak, billions of dollars of illegal drug cartel money sloshes along the international banking system, sometimes enabled by the banks themselves. The powers that be seem very ineffective at stopping them. I think you have too much confidence in the capabilities of these systems.
Any brilliant plan you think up in the course of a few seconds will be likely to run into the fact that the common law has a thousand years of collective experience.
There's no brilliant plan, there's just mathematics.
What does the prosecutor do when the funds get moved and the suspect is under lock and key? Because of the decentralized nature of crypto, you cannot even show who moved the funds. All you know is that they were moved.
So if you're a prosecutor, what are you going to show the judge to persuade them that an obstruction of justice has occurred?
Folks who think cryptocurrencies are magic cheat codes are just not aware of the flexibility and enormous powers that a court has to overwhelm mechanistic attempts to defeat their decisions.
- Can the prosecution show where and how Mr. X moved the funds while he was in jail?
- Can they show who he communicated with or ordered to abscond these funds?
- Can they identify who controls the funds now?
- Can they identify anyone else who may have had control of these funds while in their previous wallet?
- Can the prosecution rule with 100% certainty that this was not a hack or theft by some other party, including police?
The answer to those is probably no. Is that enough to convince a judge/jury of reasonable doubt? I'm not a lawyer.
A billion dollars is an enormous amount of money. The kind of money that could covertly pay an entire prison worth of guards to look the other way for an escape attempt.
Of course, you end up on the run for the rest of your life, which doesn't sound especially fun.
It depends on where you live, sure. But in the US, there’s a fair bit of resistance to bribery.
1B gets you in the door. You still need to know the right people to pay off. You can't just google it. This is why you see all the billionaires at their billionaire parties, good old networking.
Trump tends to pardon the people who will get him into the news cycle, like sadistic war criminals, corrupt or openly racist officials like Blagojevich and Arpaio, or whoever Kim Kardashian told him to.
https://en.wikipedia.org/wiki/Bill_Clinton_pardon_controvers... https://en.wikipedia.org/wiki/List_of_people_pardoned_by_Bil...
You should read Swiss investigative journalist, Daniel Amman’s King of Oil.
The furor over these pardons including the Marc Rich pardon was 100% political.
Clinton pardoned relatively the same amount of people as previous presidents but with a heavy focus on “leftists.”
Also, Marc Rich had left the US before he started working across trade embargoes and singlehandedly built the OTC oil market. He also worked actively with the US on covert oil sales while being prosecuted by the DOJ.
Going through a few intermediaries, I don't see a reason why a presidential pardon in exchange for $100MM in crypto couldn't be arranged either, especially in the dying hours of a presidency.
Obviously this is all silly spy novel stuff, but a reasonably intelligent person with mid-level or better criminal connections and literally a billion dollars to work with, coupled with a hell of a lot of motivation, could probably figure out something.
All that being said, outside of real political backing (i.e. continual payments every month), I'd doubt the person would remain free for very long after the deal was done.
First thing is to get away at least one town or two, preferably a couple counties, from where people might recognize you. Use rail or a taxi, and shut down your phone.
Pay hotels, food, gas, anything in cash so it can't be used to track you down, get rid of your old phone/sim card/computer, don't use Facebook to contact family or "associates", don't do drugs or at least stay away from trouble (bar fights) and for heavens sake don't drive a beater car, use rail or bus instead (flights are monitored).
Even crossing borders is easy in many cases. Dress up as a hiker and go for it. If you're not in a narc smuggling area and have sea access, buy a small rubber boat (with cash) and use that to get out of the country.
When cash runs out: agriculture, anything in the hospitality area (hotels, motels, pubs, restaurants), cleaning and moving services, construction/teardown always have high demand for new able and willing staff, pay in cash and don't give a fuck about who you are as long as you show up on time and do your work without stealing stuff. If you're into sex work and it's legal where you are, it's a great way to make money.
You need a place to stay? Every area has some sort of ... shoddy district with cheap lodging, Craigslist or whatever can get you actual cheap rentals.
Other things to avoid? Mentioning you're on the run, bragging about whatever crime you did, stealing, getting into fights, driving a car (random traffic stops, "your tail light is broken"), breaking more than one law at a time.
You can get a fairly long run if you stick to the above, many years even without resorting to bribery. If you are in an area where bribery is the norm though - South America, Eastern Europe, Russia, Africa come to mind - then by all means go for it, might make your getaway a whole lot easier.
Some cases have put people in jail a long time for contempt when they refused to hand over passwords.
https://www.post-gazette.com/opinion/editorials/2020/07/01/L...
If your money is in a (regulated) bitcoin exchange, then the government has more-or-less the same access to it as if it were in a bank. The serve a court order to the third party you have entrusted with your money, and the third party complies, without your direct involvement.
Many of the arguments about bitcoin involve comparing apples to oranges. Bitcoin is a currency, its direct comparison is dollar bills, but most of the problems that it purports to solve are aspects of banks not dollars. There is some argument to be made that you can do more with Bitcoins without involving a bank, but I see a lot of people putting Bitcoins in banks (or exchanges or other regulatable third parties), and a comparison of Bitcoin + surrounding financial institutions vs Dollars + surrounding financial institutions is not as favorable to Bitcoin.
The only incentive for the suspect to remember the passphrase after being sentenced would be earlier parole.
If the suspect tried to use the bitcoins after being released then another charge could perhaps be brought for perjury.
None of this is specific to bitcoins or totally new. It's roughly the same situation as when the court thinks that the accused knows where the stolen money is hidden, but the accused claims not to know. Courts must have dealt with hundreds of cases like that, so we could look up somewhere how they handle it in different jurisdictions, if we really wanted to know. I'm curious about it, but perhaps not that curious.
I think you overestimate the sanity of jurisdictions.
See RIPA for example: https://en.wikipedia.org/wiki/Right_to_silence_in_England_an...
If you owed the IRS tax money, you have a legal obligation to pay it, the IRS isn't responsible for coming and finding it. Garnishment or seizure are tools they can use to get the money, but the obligation is always there. If you don't pay you incur fines and penalties, potentially criminal penalties.
You also have an obligation to report your assets. If you tried to keep your Bitcoin stash secret from the IRS to hide your money, you'd be looking at very serious criminal penalties, not to mention you could never touch your stash again if the IRS is coming after you without them immediately seeing you actually do have extra funds.
Stop treating this as some abstract technical problem that ignores real-world consequences.
Do you? I own things that are worth money that I've never had to report to anyone.
I see needing to report a gain when the asset is sold, but the asset itself is less certain. Do I need to tell them about the $100 bill in my wallet?
Even after trial, conviction and sentencing, the court reporter said the Feds still weren't able to recover around $5 million of the total money and have no idea what happened to it.
In June 2014, the United Nations Office on Drugs and Crime (‘UNODC’) published a ‘Basic Manual on the Detection and Investigation of the Laundering of Crime Proceeds Using Virtual Currencies’ (hereinafter ‘Manual’) providing a guide as to how the Bitcoin can be located and seized.
The advantage of locating and seizing the Bitcoin wallet is that the potential complex jurisdictional issues that the use of virtual currencies creates, (as it operates in the online environment that blurs the national borders) can be avoided. The physical location of the instrument containing the Bitcoin wallet will in most cases be considered as the rightful jurisdiction for the purposes of freezing, seizure and confiscation.
Despite the technological difficulty in the early detection of illegitimate use of Bitcoins, it is nevertheless possible although difficult for Bitcoins to be seized as proceeds of crime. The most effective way law enforcement authorities can seize Bitcoins is by obtaining the private keys which are linked to the Bitcoins or physically confiscating the ‘Bitcoin wallet’.
Essentially once they have court approval and know where the wallet is - hard drive, USB drive, digital wallet. They will confiscate the wallet (similar to physical property seizures from a drug dealer) then just transfer the BTC to an account or wallet they control.
The above article is from Australia, but the manual is used internationally so I'm assuming it would be the same for the US:
https://www.lexology.com/library/detail.aspx?g=40d618a0-89e0...
As with all legal topics, not a good assumption.
> Essentially once they have court approval and know where the wallet is - hard drive, USB drive, digital wallet. They will confiscate the wallet (similar to physical property seizures from a drug dealer) then just transfer the BTC to an account or wallet they control.
You know this requires them having access to the private key. There is no "just transfer the BTC", there isn't even a guarantee that they are the only custodians of it as the wallet itself can be replicated and the "physical location" being in many places at once. There is no way of disproving that, only assuming based on most people's poor operational security.
... is probably illegal in almost every known reasonable country because it usually amounts to tax evasion.
So I'm not sure about this meme of "mega millionaires hiding their money is 'bad' if they identify as 'CEOs' but 'maybe good' if they identify as 'hackers'".
They don't know if you spent the rest of it immediately or kept it if you never put it into a domestic bank.
Because you can borrow against it instead of selling and without touching a financial institution, and this gives you liquidity without a tax event
Welcome to the 2020s
But how do you repay the loan without liquidating the bitcoin?
No different than unsecured debt
If your 'rainy day fund' is a stack of bills in a box, sure, but other than that there isn't much you can do with significant amounts of money that isn't going to involve some kind of transparency.
Literally trading those dollars for anything else involves gain/loss.
You're not going to be able to 'borrow against' anything under your mattress, it will have to be in some kind of regulated security, a bank account, or real estate - but it's moot - exchanging one asset for another is on the whole financial neutral.
More pragmatically, if you're 'borrowing against sums' you will be paying interest, there's almost a 100% chance you'll want to declare that against any other form of income for the tax shield.
Again, all of this 'hide your money' stuff is really the domain of tax evaders and likely the #1 flag for tax audits.
there is no obligation to report possible deductions.
you wouldn't here and you would remain compliant if you paid the interest with money you already paid taxes on.
the rest of your analogy just doesn't work.
The way to get around this, is to start an offshore company in whats referred to as an tax haven. Basically its a company that has an unknown owner normally some legal secretary or a lawyer firm stands as owner and somewhere there is a presigned agreement by them that transfers the ownership of the shares in the company to someone else that you can write in(TBD). So the company is basically in limbo between owners .
But yeah, that how you would do it, of course its a bit more, but that is the gist of it.Just make sure the legal company you hire or find on google isn't hacked, lol. Oh, and also, don't get a company card with this offshore company and use it to buy groceries, the tax people look out for that sort of thing :)
But you could likely defer taxes this way, by holding the bitcoin with the offshore company. You would then only pay taxes when you liquidated the bitcoin and paid yourself something.
Whereas if you held the bitcoin yourself, you would need to liquidate to pay taxes every year that it increases in value.
The government didn't crack the wallet address. They 'compelled' the owner to give it to them. Bitcoin was not designed to evade that type of seizure.
https://heraldsheets.com/irs-will-pay-625000-cracks-monero-n...
See “Breaking Monero” series on YouTube.
Governments can be very vindictive if their tax revenue is threatened.
If you have a use case for Monero, you're better off it remains exotic enough that it flies under the radar.
In my circles, That’s instructions forgetting away with murder: “Shoot. Shovel. Shut up.”
Does it mean something else in this context?
At least according to the materials I've read.
Bitcoin is harder to seize under civil asset forfeiture.
ETA: in the US. Not sure about other countries.
More people have lost money to Bitcoin scams and exchange fraud (see e.g. Mt Gox) than have lost their money to civil forfeiture. Depending on the price of Bitcoin, but (based on the current price of Bitcoin) more $$$ has been lost to crypto fraud as well.
Savings accounts (and checking accounts) are regulated very different from investment accounts.
Well, Mt. Gox and Bitcoin? Not even remotely the same thing.
Can you please back this statement up with some citations for this? I'd be hugely surprised if the number of victims, or even the USD value, of BTC related fraud or foolishness outnumbered state sanctioned theft in the USA, considering how lucrative the theft is for the state, without any need for laundering the ill-gained funds either.
At the same time, it would be remarkable if more people lost money, or more money was lost, in BTC than through civil forfeiture, and possibly an ironic statement that exploiting foolishness is the quickest way to riches, rather than deploying state sanctioned violence.
One reason is that banks will refuse to open an account for people whose records show past behavior they don't like (bouncing checks, overdrawing accounts, leaving fees unpaid, etc.).
Some other people could open a bank account but have practical reasons not to. For example, identity theft. Someone drained all your accounts, but you still have a good-paying job. If you open another account, maybe they will drain that one too? Maybe not a good risk to take when you're trying to stabilize your situation.
Another example, probably more common, is poor people who have court judgments against them from people they owe money to. You have medical debt, or you got evicted and owe back rent, or you messed up withholding and you owe the IRS back taxes. You might be living so close to the brink that your monthly income is $1500 and you need $1499 to survive. The court lets the creditor garnish money from your account, so one day you check the balance and find $500 gone, and you can't pay your rent or buy gas to drive to work. So you prevent that scenario by dealing entirely in cash and not opening an account.
Your example isn't about Bitcoin, it's about third parties.
Far more $$$ has been lost to third parties than to Bitcoin.
The US? Random example: https://www.seattletimes.com/nation-world/the-dea-seized-her...
>Don't you think we need trusted authorities for enforcement?
Perhaps, but not everyone is lucky to live in a low corruption country.
Your account can be frozen and confiscated with little recourse.
Let assume the person is in China. Or Venezuela.
Perhaps it will be one day be moved and utilized by family descendants, whom have had time to find themselves in safer conditions.
That's the difference.
Authoritarian countries can always simply block their citizens' access to exchanges, and even just outlaw crypto ownership.
Even if its outlawed, that only slows it down at scale. People will still accept it if it has value. Drugs/prostitution/contraband can be traded even in the places where it is most strictly punished, outlawing it does nothing.
In lots of countries this is not guaranteed. Most recent example is Venezuela, central authorities imposed limited withdrawals.
With crypto, the only way the govt is doing that is if they coerce you. Try that with a "bank account".
With cryptocurrencies they have to threaten you. And if you're ok with spending some time in jail (for court contempt), there's nothing they can do.
[0]https://arstechnica.com/tech-policy/2020/02/man-who-refused-...
> After losing that appeal, Rawls raised another challenge: the federal statute that allows judges to hold witnesses in contempt for refusing to testify, passed in 1970, states that "in no event shall such confinement exceed eighteen months."
This limit does not apply if you are not a witness.
It's different when you're a defendant or a party to the proceeding.
Many people will make very expensive trades when facing long prison sentences, including people for whom a mafia torture and hit is a realistic possibility.
So "being ok with it" hand-waves away a very large amount of duress.
It wasn't clear how the "agreement" was reached and what coersion was involved.
Concealment is also generally grounds for tolling the statute.
And in some states, if criminal acts are related, the statute for the entire body of crimes doesn't begin until the last related criminal act.
See for a breakdown by state: https://criminal.findlaw.com/criminal-law-basics/time-limits...
In the U.S., they can compel someone to provide a password if doing so would not violate the owner's Constitutional rights (such as, for example, if it would be self-incriminatory). Courts in the U.S. have different thresholds at when that line is crossed, but a bright line rule is that providing a password is not self-incriminatory if the criminal case has already been litigated to its conclusion (i.e., the suspect has either been found or plead guilty, or was found not-guilty and double-jeopardy protections apply).
"On November 3, 2020, Individual X signed a Consent and Agreement to Forfeiture with the U.S. Attorney’s Office, Northern District of California. In that agreement, Individual X, consented to the forfeiture of the Defendant Property to the United States government."