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Comment by TheColorYellow | Hacker News Reader

I don't get how Account B gets to the point of extracting value from the illiquid asset after purchasing?

Seems like they either, 1) sell periodically or as the assets value appreciates, but this is generally unreliable and tough or 2) create a liquidity pool or yield farming opportunities

For 1, this isn't necessarily reliable but it seems like the most plausible popular case. For 2, given the previously mentioned challenge of the illiquid asset, how does it work to provide incentive in liquidity pooling and yield farming?

Note, that I'm less well aware of the mechanics of 2 so perhaps its also a fundamental ignorance issue.

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AccountB doesn't have to make more money as it directly or indirectly transferred all the liquid assets to AccountA (and many other people). In a liquidity pool kind of exchange, AccountB would have simply put all its liquid assets into the liquidity pool, in exchange for removing the illiquid asset into AccountB's custody. The liquidity pool maintains prices based on a ratio of two assets in the pool, so the illiquid asset would have quite how price after this activity. AccountA would have just sold its holdings of the illiquid asset back into the liquidity pool at a coincidentally favorable time. AccountA can also have been a liquidity provider, and when they unbundle their liquidity pool share it will have more of the liquid asset and less of the illiquid asset. Many possibilities, permissionless.

If it must be said, AccountA is yours too and is just for reintegrating the illicit proceeds into the economy without trying to do something more convoluted like running a permissionless SaaS business with fake customers spending Monero for domain name lookups.

But, AccountB can attempt to make its assets more liquid again. You just go on Telegram and pump it in speculator groups, buy off some youtubers. How much are you laundering? You can keep a few thousand dollars in liquidity for negotiations. AccountB should also provide liquidity itself. Just launch a yield farm contract, copy and paste, change the input and output token address, redeploy, lock a substantial portion of the illiquid token inside of it (or pay off a more coveted yield farming project like Pancake or Polygon to list a farm and pay farmers in their token). Make the yield high.

> I don't get how Account B gets to the point of extracting value from the illiquid asset after purchasing?

My understanding is, accounts A and B are both controlled by the same person/group. Account A always deals with clean money and pretends to do speculative investing; account B uses dirty money to pump illiquid assets. An example scenario, as a simplified list of transactions:

  | Time | From    | To     | Amount     | Note                                      |
  |------+---------+--------+------------+-------------------------------------------|
  |    0 | Pocket  | A      | 10 $GOOD   | Initial investment.                       |
  |    0 | -       | B      | -          | Created account for criminal activity.    |
  |------+---------+--------+------------+-------------------------------------------|
  |   10 | A       | Market | 10 $GOOD   | Exchanged liquid $GOOD for illiquid       |
  |   10 | Market  | A      | 1000 $BAD  | $BAD at 1:100.                            |
  |------+---------+--------+------------+-------------------------------------------|
  |  100 | Victims | B      | 3000 $GOOD | Crime - e.g. ransomware payments.         |
  |------+---------+--------+------------+-------------------------------------------|
  |  150 | B       | Market | 3000 $GOOD | Buying up $BAD to generate interest and   |
  |  150 | Market  | B      | 1500 $BAD  | pump its value.                           |
  |------+---------+--------+------------+-------------------------------------------|
  |  200 | A       | Market | 1000 $BAD  | Buying back $GOOD for temporarily liquid  |
  |  200 | Market  | A      | 5000 $GOOD | $BAD at 5:1.                              |
  |------+---------+--------+------------+-------------------------------------------|
  |  500 | B       | Market | 1500 $BAD  | If $BAD didn't collapse, recovering some  |
  |  500 | Market  | B      | 100 $GOOD  | of more stable asset at 1:15; can be used |
  |      |         |        |            | to repeat the trick later.                |

In this scenario, criminals turned $3000 of dirty $GOOD in account B into $5000 of clean $GOOD in account A. If they were good with OPSEC, there's no connection between accounts A and B - from outside, it looks like the owner of account A got lucky speculating on crypto, and owner of account B was a dumb criminal that made a bad investment. Hell, if criminals are sure of their OPSEC, they could even go as far as paying taxes for their gains on account A, reinforcing the image that A is owned by some random, legitimate investor (but that could bite them hard if law enforcement realizes there's a connection between accounts B and A). Account B is never cashed out - it's used only for purposes of pumping illiquid cryptocurrencies, and eventually abandoned.

Yeah we would be talking about paying taxes and having a record of the funds for more social benefits in society.

AccountA is just a speculator. Stuff you speculate on right now has other accounts pumping it from funds that just appeared out of Tornado.cash, or were just swapped from Monero. There is no way to distinguish between you controlling those or someone else, and there isn’t probable cause from this behavior to investigate the accounts that appeared with funds from obfuscated sources. Just some OPSEC considerations.

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