Comment by 323 | Hacker News Reader

Comment by 323 | Hacker News Reader

Another famous bitcoin exchange, BitMEX, was also investigated for AML/KYC violations and the owners were arrested. One (Arthur) got 6 months of house arrest. There were no other allegations (no financial fraud).

> Among Binance's arguments: A criminal prosecution would wreak havoc on a crypto market already in a prolonged downturn.

The famous "Too Big To Jail" argument. Worked for US banks. Even the US General Attorney agreed with this view:

> Attorney General Eric Holder, the top U.S. law-enforcement official, finally admitted this week that bank executives truly are above the law and may commit crimes with virtual impunity.

> Appearing before the Senate Judiciary Committee, Holder acknowledged under questioning by Republican Chuck Grassley of Iowa, the ranking member, that the megabanks are too big to jail. “I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them,”

https://www.marketwatch.com/story/holder-admits-mega-banks-a...

These are generally (although not always) victimless crimes. I don’t know the specifics of that case or the severity of it.

There could be second order victims.

Bank accepts drug money breaking AML and you say it is "victimless crime", but a lot of people are dead because of drug usage or drug wars.

In our case, crypto exchanges not doing AML can facilitate crypto hacking or ransomware.

Every grocery store creates second order victims by feeding criminals.

The beauty of that argument of course is that no causal links need to be proven, and no agency or ownership of their actions needs to occur for the ‘victims’?

That’s like saying the copper miners are somehow responsible for war deaths because copper is an essential component of ammunition, and if they just figured that out and didn’t sell or allow their products to be sold to ammunition manufacturers, we’d have world peace.

Money laundering is not victimless unless you can prove that none of the people using the service are using it to hide a crime with a victim. We know that's not the case for cryptocurrencies because they caused the ransomware industry to boom by making it easy to get real money from the victims — if they had to use the traditional banking system there are multiple chokepoints which made it much harder to get and keep significant sums that way.

Breathing air is not a victimless crime unless you can prove that none of the people breathing the air are using the oxygen to help their bodies harm a victim.

> if they had to use the traditional banking system there are multiple chokepoints which made it much harder to get and keep significant sums that way

And no one at all would be able to sneak money through banking system if the government just executed anyone using a bank!

> In the same sense that breathing air is not a victimless crime unless you can prove that none of the people breathing the air are using the oxygen to help their bodies harm a victim.

No, in the sense that when you are telling people to leave an existing process which has safeguards you are then taking on the responsibility for not causing a regression in the level of protection.

Breathing air isn’t a good comparison because it doesn’t have the primary purpose of evading oversight. More appropriate comparisons do: cash, wire transfers, store credit, etc. all have restrictions to curtail criminal activity because we know that it is otherwise inevitable. Unless you can show that all use of cryptocurrency is benign we have to assume that it will follow every other financial system in human history and be used for a mix of purposes, and thus require the same mitigations.

> Unless you can show that all use of cryptocurrency is benig

So prove you're innocent.

Yeah no thanks. I hope crypto finds a way to totally squash warrantless search of your documents (AKA KYC) to engage in finance.

No, proving that you have adequate protection. Banks don’t need to show that every transaction is legit because they do show that they have processes for dealing with crime (try anonymously depositing $50k in cash).

Cryptocurrency does not have those safeguards and is famously popular for all kinds of criminal activities so it’s hard to take seriously the assertion that it’s all victimless and doesn’t need the same countermeasures.

Depositing $50k in cash is not evidence of a victim. There should be no government imposed search without probable cause a crime has occurred thus it should be illegal (for government) to stop the anonymous deposit outside further evidence.

That one can transfer $50k worth of something like XMR, seemingly anonymously, is the entire point. You get your 4th amendment rights back.

Again, this thread started with someone asserting that money laundering didn't matter because it was victimless. My position is that this is absurd because not only is there no evidence showing that cryptocurrency transactions aren't used for crimes with victims, there is considerable evidence of real harm just from the ransomware use.

If you want to argue that your bank checking ID is an illegal search, feel free to contact your elected representative.

No they responded that "AML/KYC violations " (the allegations they responded about) were "generally (although not always) victimless crimes."

The violation wasn't money laundering the violation was not putting into place state mandated guards to impose AML compliance and the appropriate (arguably unconstitutional) searches.

Yes, this has been covered extensively. Money laundering is a crime primarily committed to cover up other crimes. It’s “victimless” in the sense that driving the get away car or fencing stolen goods is – and if you remember the example I gave earlier of ransomware, there are categories of crime which would not be committed if non-KYC cryptocurrencies didn’t exist because they would not be cost-effective.

> Money laundering is not victimless unless you can prove that none of the people using the service are using it to hide a crime with a victim.

Is there a presumption of innocence or guilt? Which do you prefer?

That's the wrong question: this is in response to someone making the broad assertion that cryptocurrency money laundering is victimless (or almost always so) and thus doesn't need to be held to the same standards as conventional banking. We know with high certainty that this is not true.

It's also important to consider that “innocence or guilt” is not the right framing here because a bank verifying ID is not an accusation of crime but making sure that the information is available should accusations arise.

Apologies for the late reply.

Was someone making the assertion that money laundering using one medium is (generally) victimless while money laundering using a different medium is not?

Can you explain or clarify for me why you believe that is the argument made? I re-read the thread back to original post and I don't understand why you say so.

I was referring specifically to this claim:

> These are generally (although not always) victimless crimes.

That claim seems wildly incompatible with what we have seen with ransomware, the scale of money going to countries like North Korea or Russia, people’s holdings being stolen, etc.

My position is that cryptocurrencies should be held to the same standard as everything else, and found the argument that the improved rigor is unnecessary due to low harm rates unconvincing.

Okay, I think I understand. What you're saying is that the rate of criminal activity related to this payment medium is sufficiently high that the cost of total surveillance of all financial transactions is justified.

Where I take issue with this is where you call for "the same standard as everything else". The surveillance of cryptocurrency right now is actually very pervasive.

I've seen the theft of millions of dollars in fraudulent wire transfers (I mean 1M+ per incident) in the traditional banking system over and over and over again, no cryptocurrency involved whatsoever. And contrary to what people often say, it's not actually an option for victims to reverse such transactions.

Thus, I personally doubt this surveillance is effective in preventing theft. We are better off spending the resources to harden against these attacks in the first place. I don't think it's worth it overall to engage in the pervasive surveillance of cryptocurrency or traditional bank transactions, unless the goal is something else, such as collecting more taxes or preventing flight of capital, which is what I believe the real fear about cryptocurrency is.

And notwithstanding the above, I have to ask, is it really a good idea to presume guilt and require permission for people to transact with each other in a general sense? And if you do believe this is for the greater good, why not expand the scope of it? Why not put cameras in all of our homes? We have the technology to implement this now, so why not?

There can be a presumption of harm at times.

Child endangerment, for example. You can be arrested for leaving a pistol in a child's crib, even if they don't shoot anyone with it. Causing the potential danger is the crime.

I presume a gun in the hands of a federal employee is a potential danger and thus these government employees are violating endangerment law by engaging in armed enforcement of KYC/AML laws.

Banks should have the presumption that collecting KYC information like addresses/names recklessly endangers the children of their clients by exposing their information to officers with guns who are known to harm children when serving warrants.

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