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Comment by vmception | Hacker News Reader

this is the least productive use of energy

there was a time when IP blocking was enough to satisfy regulators but now they're basically saying there is nothing a company can do

one of the case studies in my ethics course during my Computer Science degree was about the regulators being satisfied with IP blocks and aware "determined" people could circumvent them due to the structure of the internet. that was a case 20 years ago.

now they're saying that's not good enough? you don't have to be particularly determined to use a VPN but the state can just give better guidance or be more collaborative instead of adversarial

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I'm starting to assume malice rather than stupidity when it comes to the US Government and it's online regulations. I feel like this investigation will serve to push even more stringent requirements for US based KYC/AML and identity verification across all online trading platforms.

Edit: Malice, in the sense that the United States can force its regulations on foreign entities without going through traditional diplomatic channels. I see this as a power-grab.

Tbf, the level of determination needed to use a vpn is much less now than it was 20 years ago.

> this is the least productive use of energy

I agree! Proof-of-work cryptocurrencies are tremendously wasteful.

This is a discussion about the CFTC's use of public resources towards a completely offchain use case

That was the joke

So is streaming video.

I derive tremendous value from the tremendous energy waste.

Does youtube use 100x as much energy if 2x more people watch videos?

People really need to look into how bitcoin's Red Queen's Race works.

Are you asking me to compare degrees of waste?

Yes. I'm asking you to do a little bit of reading and understand that there's a difference between a system that might be somewhat inefficient/wasteful/could be optimised and a system that is BY DESIGN deliberately inefficient, will keep getting MORE inefficient, and (again, by design) can NEVER be made more efficient.

The entire basis of bitcoin is that each miner has to waste more and more energy because if you ever take your foot off the gas pedal, you run the risk of some other mining syndicate executing a 51% attack against you.

No other computer system I'm aware of is designed to keep getting less efficient.

wow where did you go that taught tech ethics 20 years ago!? that's hard to find anywhere 20 years later, and even harder to find in that type of depth

I really don’t see why this is downvoted as I also thought it was the most interesting part of the parent comment.

My understanding is that ethics courses for students of subjects like computer science are uncommon. Ethics courses for engineering are more common and for law or journalism very common (though the ethics taught for law and journalism is basically opposite).

Towards the end of my degree, some faculty at the university made some attempts to create an ethics course for mathematics students that talked about some issues they might face in industry (popular careers were finance, tech or going to “work for the civil service”)

2001 was about then, so you know other ethical things like worldcom and enron had happened.

> wow where did you go that taught tech ethics 20 years ago!? that's hard to find anywhere 20 years later

Maybe it’s become rare now, I dunno, but I also took a computer ethics course at my state university about 20 years ago.

to clarify: the case we were studying at the time is now 20 years old

but yes, was one of my favorite courses. It was basically acknowledging that we will continually be a few decades ahead of any legal framework so it gave us other frameworks to consider in our decision making process

sorry that doesnt answer your main question

> there was a time when IP blocking was enough to satisfy regulators but now they're basically saying there is nothing a company can do

Come on. KYC and AML laws are very well known and were put in place for a reason. When there are actual issues with regulation that could use reform and modernization, straw-manning negligence regarding the black and white parts that most of modern society unanimously agrees upon is always an odd tack.

This isn't about KYC and AML laws, this is about unregistered futures and swaps being merely accessible by US residents.

It is about KYC. This is how they get their foot in the door.

Yep, that's my exact point. That's what makes KYC such an important obligation from the firm's standpoint because the only way you can prove that you did everything within your power to obey it is to require it before the user is allowed touch any kind of asset on platform.

Why should non-US residents who are consumers of a non-US based service be subject to US KYC?

Because money laundering is a crime that doesn't recognize borders. If the US wants to take a strong anti money laundering position that is something I agree with.

It is hard not to when you see awful people taking over governments the world over and stealing completely insane amounts of wealth from the people.

This isn't nickel and dime crimes. These are insane crimes that do damage to billions of people on scales you can't even measure. These people should honestly face life imprisonment, but they never do.

How far does it go? Invade other countries to spread democracy and rule of law?

And how much privacy do you violate to stop bad actors? You're okay with AML laws, which are a form of warrantless financial mass-surveillance, so how about wiretapping all communications as well?

How about prohibiting end-to-end-encryption, and public access to strong cryptography? As money becomes wholly digital, you will need warrantless mass-surveillance of all communication to maintain warrantless mass-surveillance of all financial transactions.

And who protects the world from the US when they inevitably play kingmaker in a foreign country again? Quite a few despotic regimes saw their beginnings in US meddling.

You're getting downvoted but you're right. Ideally, we'd live in a world where highly sophisticated multinational cartel like entities don't regularly abuse markets to launder their ill gotten gains and finance their operations.

Perhaps your downvoters (and mine too) in this thread would like to argue that it's a slippery slope akin to surveillance to accept AML laws which a priori purport to protect us from the effects of these crimes while only taking freedom further away and creating more space for despotic selective enforcement. I'm sympathetic to this argument, but only to a point. Another side to this argument is that AML laws should be resisted not just because they are right or wrong, but because they are ineffective.

My problem is while I may have sympathies to these ideas in theory, in practice, proactively addressing, enforcing and prosecuting money laundering is something just about every government has a vested interest in doing because governments fund themselves through taxation. I can understand the desire to limit government AML overstep and surveillance, but wouldn't that simply mean that we leave AML enforcement and surveillance to the private markets? Would it mean we somehow reform society so there would be no nee for money laundering in the first place because we've eradicated criminal enterprise in the first place?

I'll be the first to admit I don't have an answer for you. I'd say I wonder if the downvoters do, but I think we both know the answer to that.

My thoughts on the matter is that the US and other governments deputized financial intermediaries to perform surveillance and pre-emptive enforcement.

This is merely a convenience they’ve gotten in a coincidental electronic transfer system that required those intermediaries. They didnt have it before and they wont have it after. These governments have not been granted any additional rights over money flows and as the intermediaries become unnecessary, it will be prudent for them to remember bot to waste public resources grasping for the convenience of warrantless surveillance. Their ability to implement seamless automated anti money laundering procedures and enforcement evaporates, and they would be better off unburdening people now instead of trying to push for a right they never actually had. They’ll have to create new tools to deter and prosecute whatever behavior they are actually trying to stop.

Did you know the US is the biggest money launderer jurisdiction in the world?

This does not bode well for your moral high ground

Don't be pedantic. It's /exactly/ about KYC. The spirit of preventing unregistered futures and swaps being "merely" inaccessible by US residents is to /prevent/ money laundering. That's the whole point of registering.

Binance has a history of lax KYC [1]. For a global exchange to not risk blowing up means to gain affirmative proof of a user's legal identity, jurisdiction, tax residence. If you try and use an IP ban to loophole around having to add a robust KYC flow into your product, don't be surprised when a major governmental authority (and the general public) remain generally unconvinced that you did your best to be above ground.

[1] https://cointelegraph.com/news/binance-sued-for-allegedly-fa...

US registered futures and swaps have a KYC/AML component and obligation.

The CFTC's case is about Americans accessing unregistered futures and swaps, and with this case they have created no latitude for any company to exclude Americans so that they would never establish jurisdiction.

The point is that this AML/KYC "debate" is a complete red herring. It is inherently a component eventually, but not really. Even if they did force AML/KYC before any kind of trading, then it's still Americans trading unregistered futures and swaps. So you see, unless the CFTC says "we're coming after you because of the lax AML/KYC" then its not about AML/KYC. Could they force AML/KYC and then say "ah you're American you can't trade", sure. Could an American use a fake ID and the CFTC uses that to establish jurisdiction, sure.

So the productive thing here would be for the CFTC to be more collaborative and say exactly what the exact threshold a non-US organization can have to be in a safe-harbor with the CFTC.

So because someone might use a fake ID you think Binance shouldn't be responsible for doing it in the first place?

I don't have any opinion on that

I have an opinion that the productive thing here would be for the CFTC to be more collaborative and say exactly what the exact threshold a non-US organization can have to be in a safe-harbor with the CFTC

How would this be a conduit for money laundering if you can't withdraw USD? Your still just stuck with crypto; I'm not sure how it gets you any closer to "clean" money.

hi, I started this subthread. it is very easy to money launder with crypto and isn't the crux of my argument. my argument is simply that this case is about unregistered futures and swaps being traded in US jurisdiction, and that its not about aml/kyc.

to your question, "if you can't withdraw USD?" is very limiting and seems based on heavy misconceptions about both money laundering and a limited idea of utility of crypto, not sure where to start there. the other person's response talks about reintegration which is a very accurate tip of the iceberg. layer and reintegration is much easier with crypto.

And how is it easy to convert crypto back into cash in the money laundering process. As far as I can tell, that's actually rather tricky.

Its not and for you to write that you didn't really visualize what I described

At the bare minimum you should realize that any KYC’d individual can convert billions of dollars of crypto to US Dollars in a day without moving the markets more than a few percent

and after that you should realize that classifying a transaction as clean is not difficult

But if you don't want any transaction associated with anyone’s identity it is simply more time consuming, eventually you are still getting to a KYC’d individual that can receive a wire transfer in dollars at any meaningful amount in a day

And finally, you can try to reread what I wrote earlier, jot the steps down on a napkin if you need to, its not that complicated you are just starting from a place that assumes an omniscient state and a culture of stigmatizing the movement of money, and thats just flawed

based on your comments, this all seems pretty pointless. why mess with binance when you could just use a distributed service like coinjoin. Seems like money laundering is easy!

> And finally, you can try to reread what I wrote earlier, jot the steps down on a napkin if you need to

give me a break bud. talking down to people makes me assume you're clueless.

I just collected one million AED (~270k usd) from a localbitcoins exchanger. This cost me nothing, the guy didn’t even ask for my name.

In Europe I could sell cryptocurrency for cash at a price several % above market value, people are desperate to get rid of paper money.

It’s only a bit challenging if you want money in your bank account.

Great question. So money laundering consists of several phases -- placement, layering and integration. In particular, even if you can't withdraw USD, there's an enormous amount of movement you can conduct on platform which contributes to the layering phase. Even if you don't place or (to your point) integrate it on platform, you can still get quite a bit closer in the process.

So using it as a BTC mixer essentially?

Yep. Ironically, BTC mixers seem like they'd be quite poor at the job of actually mixing because unlike more sophisticated looking layering activity, it doesn't actually mimic legitimate transaction activity which could otherwise slip under the radar. On the contrary, it sticks out like a sore thumb and because the blockchain is immutable, has been used by the authorities to trace less sophisticated actors.

> For a global exchange to not risk blowing up means to gain affirmative proof of a user's legal identity, jurisdiction, tax residence

Financial stability is totally orthogonal to KYC. Exchanges that allow leveraged trading protect themselves via margin requirements.

Sorry, I regret my word choice there. I did not mean "blowing up" in the colloquial definition (from financial instability), but rather from regulatory infractions.

As far as I know leveraged trading isn't accessible to Binance users without KYC.

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