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Comment by A4ET8a8uTh0 | Hacker News Reader

"He was taken aback by what he saw: Many of this child abuse site’s users—and, by all appearances, its administrators—had done almost nothing to obscure their cryptocurrency trails. An entire network of criminal payments, all intended to be secret, was laid bare before him."

It is a weird story. On the one end, anyone using crypto by now should know, there is a trail following it ( there are means to obscure it, but a lot of ways to screw up too ). On the other, does that mean this investigation was a low hanging fruit?

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My experience with friends in law enforcement is that what defines the majority criminals is a lack of understanding of risk. That lack creates a strong sense of "I know how to get away with this."

I remember a story of a guy being busted who ran a business, bought his $500k house in cash, his half dozen trucks in cash, and yet paid almost nothing in taxes. The thought was, "I'll under-report my income, and pay everything all in cash so they can't trace anything!" Except for the fact that transactions over $10K get reported to the IRS, not to mention all of the property to various agencies which circle back to the IRS.

People who have a least a clue what could go wrong tend to also realize they probably aren't seeing other ways for it go wrong, as well.

Bank transactions over 10K get reported. If I roll into my local Chevy dealer and buy a $75,000 truck for cash, does that get reported?

> does that get reported?

Yes, absolutely. The same law that provides for banks reporting deposits and withdrawals over $10K also puts similar requirements on retail establishments that accept payments that large.

Although in practice they're probably buying a $9k salvage truck in cash, then paying mechanics in cash to fix it up to be a $75k truck.

The same thing happens with houses. Someone buys an absolute dumpster fire in cash. Then they pay contractors to fix it up nice, beautiful appliances, tiling etc. The house gets sold and the money ends up all in the white.

What do you think Chevy is doing with that 75k besides putting it in a bank of some sort?

IDK. The bank reports that the J. Random Chevrolet dealer deposited $75,000. The bank doesn't know where that came from. They don't know if it represents 75 $1,000 cars or one $75,000 car.

I used to work at a restaurant that regularly deposited more than $10,000 cash per day. We never filed any IRS reports for that, maybe the bank did.

The dealer does.

I bought a car a few years ago half cash, half financing. The dealer sent me a letter stating that they notified the IRS under their obligation to report cash transactions over $10K.

Can confirm. Also, paying for a new vehicle in $9500 installments over several days does NOT fool anyone.

https://fee.org/articles/why-its-time-to-revisit-the-1970-fe...

Used to be worth about $65,000. This will probably be a requirement when $10,000 is worth $1,000 of today's dollars--do nothing, and more and more stuff comes under reporting requirements.

Ridiculous that these things aren't inflation adjusted. I ended up paying the alternative minimum tax once, the old "millionaire's tax". Spoiler: I'm not a millionaire. If I was, millionaire isn't what it used to be, either. https://www.thebalance.com/alternative-minimum-tax-amt-who-h...

Even depositing / pulling out $2600 can earn you a SAR, although you'll never know because the teller can't tell you.

There is more than one selection bias in play.

1. Clued up criminals will choose crimes that are less risky.

2. The more ignorant the criminal is, the more likely they are to be caught.

3. When you are smart enough, there are legal ways to make criminal amounts of money.

Smart people either avoid crimes, or they avoid getting caught, or they do crimes with low penalties (some white collar crimes can have very high expected gains).

In order to use crypto secretly you have to heavily launder your money in a way that’s not easy or guaranteed to work.. and the laundering itself is a crime which isn’t so easy to hide.

People think it’s private because they are told so but actually it’s a public ledger where anyone can see what you’ve spent and associate you fairly easily by your behavior and links to not so secret crypto addresses.

We've been getting increasingly involved in crypto investigation discussions, and largely:

- money side is getting more anonymous, e.g., monero / tornado

- ... in theory. Money crime still often using less anonymous schemes and often at exchange points, so chainanalysis-style companies still make sense, though decreasingly so IMO. A lot of the startups have shifted to verifying contracts, or providing (dubious) KYC risk scores, and interesting to consider why.

- For our customer base (half of which are sec/fraud/crime teams)... what's happening is the criminal platforms + participants have broken (digital) operational security. So it is more about offchain data (app logs, ...) and sometimes combining onchain<>offchain data. So not too different from our projects tracking malware/phishing/misinformation/etc via OSINT techniques (IP addresses, unmasked metadata, ...), or detecting account takeovers on their websites

- ... more new, IMO, in this space is areas like graph neural networks that have the potential to act smarter & more automatically, e.g., understanding behavior. Very early days here though, so interesting times !

Not really. You buy mining resources to mine it as opposed to purchasing already mined bitcoin.

There’s rarely any paper trail between buying GPUs/ASICs and the mining itself. That’s why these currently sell above the amount they’d be profitable mining with. Because illicit actors are willing to pay a premium for anonymous crypto.

Where can you buy GPUs/ASICs with crypto? Or are you just talking about the buyers? If the sellers get spooked I'm not sure it matters if buyers are safe.

> In order to use crypto secretly you have to heavily launder your money in a way that’s not easy or guaranteed to work.. and the laundering itself is a crime which isn’t so easy to hide.

Or you use Monero, which as far as I know is not illegal, let alone a crime.

I don't think it was low-hanging at the time (2017). They had to figure out how to trace the bitcoin chain to unmask users. They also had to cast a wide international net with different jurisdictions and rules to get the people arrested by their locality.

Now having a clearnet IP address over Tor website, as well as converting straight to fiat using standard exchanges is about as low-hanging as it gets.

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