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Comment by throwaway290 | Hacker News Reader

You can't fix this with technology. If the government declares having money as illegal the only solution is to change the government. Otherwise these technical loopholes only help that government in the first place. Lack of laundering controls is how Russian dirty money create nice global lifestyle for Putin's henchmen and friends. If they were truly locked in, one would think twice before joining that gang.

> because any money they have might be "criminal"

Non-criminal money would be a minuscule percentage of the total because, the same way you use to change $500 for the lulz would be used in an organized way to move millions extracted with violence and theft by Russian government and other criminals.

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Apologies for saying it this way but this is a very naive take. How long did it take for the Vietnam to resolve in the 50s - 70s? How long did the Berlin Wall take to come down, or the Soviet Union to collapse? What about apartheid in South Africa? How long before Ukraine's population can live normally again?

"Change the government" is a process that even in the best cases takes decades to resolve. Children are born and grow to adulthood in these chaotic situations, and that's normally with outside pressure applied. No the tech won't resolve the core problem, but it will allow people to get bread and milk from within a hostile system until that core problem is resolved.

>> but it will allow people to get bread and milk from within a hostile system until that core problem is resolved

...my grandparents were naturalized citizens of Argentina and dealt with the same exact situations in the 1930s and 40s. The government got much, much worse before it got remotely better. Mostly due to the passions of people easily swayed by populists slogans about changing the government.

Do a thought experiment and understand that if there was crypto at that time to prop up the bad government it would never get better.

(And before you start, don't equate crypto with cash. Cash that scales without physical and geographical boundaries is not cash anymore, any lessons you can draw from cash being used throughout humanity's history won't apply.)

I'm not sure I get the point. You mean international crypto flowing in to prop up a bad government? There was plenty of crypto going into Ukraine during the Maidan revolution and since from Russia; unless you believe there was more coming from America, I don't see how the form of money transfer would be a decisive factor.

Many Argentines believe that in the 1940s it was Nazi gold transported by submarine that held up the Perón. Does that justify seizing gold from some family's safe deposit box halfway around the world?

> You mean international crypto flowing in to prop up a bad government?

No. I mean laundering. That's what started this subthread. Using dirty money to get clean money, goods and services where otherwise it would be difficult to do in a sneaky untraceable way.

I don't understand the analogy with Argentina and the point about crypto in Ukraine, feel free to explain, but only if it's not something orthogonal but an actual counter argument to me saying that whatever legitimate uses you see small people have for untraceable dark market of crypto dictators use it 1000x more perpetuating themselves and making the very same small people suffer more long term and corrupting the world.

Naive? Where did I say it'd be easy? I said that's the only way. These technical workarounds only prop up and help the bad government, which crypto fans vehemently ignore.

I'm not sure how citizens using crypto to buy bread and milk helps prop up bad governments? To be clear, in the kinds of governments I'm talking about here the people at the top are entirely and completely insulated from the day-to-day struggles of their population.

Most will have offshore accounts hidden in various shady or neutral jurisdictions that will ensure they live out the rest of their days without issue (see Zimbabwe, Nazi Germany, or recently Sri Lanka). They could even wipe out large swathes of their population completely and it would still do nothing to destabilise the government (again, see Soviet Union, Nazi Germany, Khmer Rouge, the list goes on)

> I'm not sure how citizens using crypto to buy bread and milk helps prop up bad governments?

I can tell you real people there aren't buying bread and milk with it.

But anyway, the same mechanism you imagine being used for buying bread and milk can be and probably is used to buy war drones.

Actually it's much easier to give cash in exchange for bread and milk than bother with crypto but it's much more difficult to get a large amount of cash from Russia to Iran intact than to send them some crypto

>> Non-criminal money would be a minuscule percentage of the total because, the same way you use to change $500 for the lulz would be used in an organized way to move millions extracted with violence and theft by Russian government and other criminals.

I want to respond to this point because it is a key difference between the societies governed by oligarchy (extremely rich criminals, no middle class, 99% poor) versus those that still have a middle class. You are right that in Russia, $500 for lulz is nothing compared to the money flows of the criminals. It is commonly assumed by most Russians I know that the American and European world also operates on this principle, and that law enforcement here simply does what the money tells them to do. This is actually not true, at least not close to the extent that it is true in gangster-run countries. Law enforcement in America and Europe does what the middle class wants them to do. This means that they do interdict extremely wealthy criminals from time to time, and ultimately our society is not governed by them.

In any case, the largest flows of money in Europe and America are legitimate business flows; things like cocaine and prostitution, organized crime are miniscule compared to the profits of legal drug companies - whose owners are the American middle class shareholder, farmers in Kansas.

> whose owners are the American middle class shareholder, farmers in Kansas.

The top 10% of Americans own 90% of the shares. If by middle class you mean “above the labor class, below the ruling class”, then I … still dont agree because the 0.1% ruling class still own a disproportionately huge % of those shares!

Also farmers are disproportionately immigrant labor who have no wealth and own no shares. Bill Gates owns 7% of all USA farmland but I wouldn’t call him a farmer.

> Also farmers are disproportionately immigrant labor

Huh, this statement is so weird to me that it was a "lightbulb moment" about what words mean to different people online. I wonder how much misunderstanding this causes. I'm guessing your background is urban and coastal? I'd love it if you'd share, I'm genuinely curious.

I would never use the word "farmer" if I was talking about an immigrant laborer picking fruit or whatever. I'd call them migrant laborers or pickers or farm workers.

In the standard dialect of people in the 90% of America designated "flyover country", they'd would use the word "farmer" to mean the people who own and operate farms. Generally a middle-class, small-business-owner type person. Likely educated in some mixture of agriculture, business, finance, real estate. They're highly financially savvy, as they have to manage selling futures vs taking the spot price for their crops balanced against storage costs, land rental agreements, machinery leases or repairs, tax and crop insurance complexities, not to mention the science of how to optimize yield on their specific land.

Calling the laborers "farmers" is like calling an uber driver a tech worker, at least in the dialect of English I speak.

I’m from the northern midwest (Michigan/Ohio) and Texas.

We call people who do the farming “farmers” and the people who own the farms “farm owners”. We acknowledge that a lot of even the white families who live on the farm that they farm no longer own their farms. They’re still “farmers” to us even though they don’t own their farmland.

In Texas we also have “Ranch Owner” vs. “Ranchero”. One of them has bullshit stuck on the outside of their boots, the other has the bullshit inside their boots.

My wife has some Indian-American friends who invest in farmland and laugh at the idea that they have “white sharecroppers”. It would be weird to call them farmers, but not call their “white sharecroppers” farmers.

I think your statement "We call people who do the farming 'farmers'" is accurate to my usage as well, perhaps with then some nuance to what work is "farming".

I didn't mean to imply that land ownership was central. But maybe "operating the business of a farm" is farming/being a farmer, whereas "doing labor on a farm" is not.

For instance, if person A owns 100 acres of farm land, person B rents that land and makes the decisions about what to plant, when to plant, when to harvest, how to manage the transportation and sale of the product, etc and person C is hired by B to do some work on that farm, I'd probably only call person B a farmer.

I am not talking about intra country flows though but specifically kleptocrats laundering dark money in the west.

Right, but what I am saying is that all the money laundering from oligarchs and drug lords is only a tiny fraction of the US economy. Enacting draconian controls on crypto or cash or any other harder-to-trace transaction, for the stated purpose of curtailing dark money, ends up being another form of taxation on the middle and lower classes. The ultra wealthy criminals will always find another way to launder their gains. Unpredictable side effects of removing cash include enormous housing bubbles caused by laundering through real estate, and stock bubbles... and these just serve as another transfer of wealth to the rich.

> money laundering from oligarchs and drug lords is only a tiny fraction of the US economy.

You can't have any way of knowing how much money in crypto is dark.

And of course economies of some of those dictatorships are smaller than some US companies, but if you are telling us that it doesn't matter if putin and friends can launder money through crypto to maintain power, kill more people and make us suffer while buying cozy life for themselves because that amount of money is not that large in the grand scale of US economy then good for you, I have nothing else to say.

>Money laundering

They don't need bitcoin for that. Smuggling money into the US (the by far largest global destination for laundered money) via crypto requires the exact same amount of criminal effort (false identities, mules,..) as smuggling money through regular bank transfers, because nowadays all crypto exchanges that are allowed to interact with US banks must establish the identity of their customers same as a regular bank.

So that leaves P2P trades. Their volume can be estimated (in fact: upper bounded, by adding all trades on the block chain and subtracting those corresponding to trades on known centralized exchanges.) It's about $200B per year.

As for money laundering, the range of estimates of global volume per year is pretty wide, ranging from $20B to $5T. If you compare research from the 90s and today, you'll notice that the estimates have not changed, meaning: similar methodology applied to current data will yield estimates that are close to the estimates from the 1990s, adjusted for inflation.

If the low end estimates are true, then money laundering is not a serious problem and using it as pretext for destroying civil rights is a joke, so let's go with the UN's reasonably big estimate: $800 billion - $2 trillion.

In that case, even if *ALL* P2P bitcoin trades were criminal, they would still only amount to 10%-20% of global money laundering.

Finally: The total BTC market cap is ~$400B, half of that has not been traded since 2015. Given the risk affinity of career criminal and the inherent volatility of criminal enterprise and given the historical rise of BTC, don't you think at least 10% of mone launderers would keep at least 10% of their money laundering transactions as crypto instead of cashing all of it out into USD? But they wouldn't keep them on exchanges. Looking at the blockchain data, it's difficult to make that work *UNLESS* only a small amount (less than $100B) money laundering happens via crypto.

You're only covering laundering bitcoin into USD. There are money other avenues like buying sanctioned stuff with crypto direct. Convert blood euros to monero and go.

> all crypto exchanges that are allowed to interact with US banks must establish the identity of their customers same as a regular bank

And that is good of course that some countries do it, doesn't prevent all scenarios but it makes some difficult.

> P2P trades. Their volume can be estimated

How exactly do you measure what is what on crypto with mixers and anonymous currencies?

> a small amount (less than $100B) money laundering happens via crypto.

You mean via Bitcoin? You know there are other coins.

the conversion (between crypto and fiat) is the problem. you can't convert more than a couple hundred euros without KYC.

>How exactly do you measure what is what on crypto with mixers and anonymous currencies?

you add up all the transactions on the blockchain and subtract all the transactions connected to wallets of centralized exchanges.

>you mean via Bitcoin? You know there are other coins.

"god of the gaps."

tl;dr: you originally claimed there is nothing we can know (and that therefore we should assume without evidence that money laundering via crypto is a huge problem). but there are a few things we can know.

> subtract all the transactions connected to wallets of centralized exchanges.

How do you figure which transactions are connected to wallets of centralized exchange with mixers and anonymous currencies?

> UN

Does UN have a crypto savvy anti laundering force to produce accurate estimates or they just pull numbers out of their backside?

As someone who grew up in a country where hundreds of millions of $$$ were stolen from the people by the government officials, and than transported illegally out of the country - I can tell you you're very naive about how openly these high-level international crime deals are done. What they did was simply load the money in an airplane and fly them to a small, corrupted country (Cyprus in this case) where the banks and the local government were in the deal for a cut. No need for bitcoins or any other technology that leaves easy to follow traces. Just paid everyone a cut, probably someone in the West too, since country was under UN sanctions at the time. And money was never recovered, nor anyone got prosecuted for it, of course.

As a Russian I can tell you and everyone else drawing parallels with the past forget there were no sanctions at the scale as currently applied to putin and there were no crypto at the time.

If there were strict sanctions in place, they would not be able to fly to cyprus as you say. And if there was crypto, they would be far more efficient at doing what you describe because they don't even need to pay for the planes and a bunch of people to move cash (people who steal it and can leak the information).

And people called me naive in this thread. The real or faked naivety of crypto pushers is what knows no limits...

>And if there was crypto, they would be far more efficient at doing what you describe because they don't even need to pay for the planes

They would however need to find people that can sell bitcoins to them.

Let's say a corrupt dictatorship wants to turn their $1T of criminal/stolen assets into BTC. How are they gonna do that?

> They would however need to find people that can sell bitcoins to them.

I hope you don't think they'd go around writing "zdrastvuite zis is putin can you sell some bitcoins" with strong slavic accent :)

> Let's say a corrupt dictatorship wants to turn their $1T of criminal/stolen assets into BTC. How are they gonna do that?

Give somebody ruble in exchange for bitcoins. Maybe even have a handy russian in charge of a crypto exchange (that's probably what got localbitcoins shut down in the first place).

Remember how they made it impossible to store or withdraw lots of foreign currency? I bet it helps demand for ruble. Pegging ruble exchange rate probably helps too, remember how after rising to more than 100 rub somehow dollar is now worth 60 rub (only in Russia of course, good luck selling ruble anywhere else).

> If the government declares having money as illegal the only solution is to change the government.

I see people from developed nations talking about "changing the government" like we are one french revolution away from prosperity.

There are two problems with that:

- The people need to fight the military. It's not like it's the XIX century where you can face a army with some weapons and horses. Go fight a tank and some drones.

- More often than not, power vacuums are filled with an even more ruthless government that wants to exploit the same corrupt dynamics like the previous one, but for them and their cronies and not the previous government ones.

> Go fight a tank and some drones.

And by pushing for crypto you are helping them obtain those tanks and drones. What now?

> More often than not, power vacuums are filled with an even more ruthless government

That's why democracy is important

> And by pushing for crypto you are helping them obtain those tanks and drones. What now?

Governments have access to many more mechanisms of wealth transfer and commerce than any average person does. The only special thing about crypto is that it's also available to the general public.

> That's why democracy is important

And who is gonna enforce democracy? Remember, we are talking about a new governing body that came to power after kicking out the previous one. And governments "elected" that way tend to be less democratic that governments chosen by the standard process of democratic elections.

Kicking out a government resembles a coup scenario, and if the next government doesn't want to be democratic, you are SOL.

>The only special thing about crypto is that it's also available to the general public.

>And who is gonna enforce democracy?

This is the most important, sane comment I've heard all night. Far too many here are arguing for a police state. What's especially ugly is that they don't even realize they're arguing for one.

> Governments have access to many more mechanisms of wealth transfer and commerce than any average person does. The only special thing about crypto is that it's also available to the general public.

So what exactly other mechanisms do they have that are not sanctioned or radioactive? Duffel bags of cash, like another comment suggested? Please don't be ridiculous about a serious topic.

> Kicking out a government resembles a coup scenario, and if the next government doesn't want to be democratic, you are SOL.

Yes, that's a bit of a gamble. Perhaps another democratic country could help establish a democratic government (it worked in Ukraine) instead of doing the opposite of that and providing technology that enriches the authoritative one.

>what exactly other mechanisms do they have that are not sanctioned or radioactive?

how did they do it before 2010? how did e.g. the soviet union do it?

First we shouldn't underestimate the gravity of sanctions and mood. Pepsi was in USSR since 1971, now they are halting operations even though they are not sanctioned. Putin is just that radioactive

Second let's think where USSR got in the end. Current Russian government should go the same way but any way around sanctions helps it.

The French Revolution might not be the best example, but it did finally find itself a coherent set of human rights and managed to stop at a point that advantaged the majority of the poor, elevating them to the middle class. That itself is an extreme outlier in the history of revolutions.

Hmm. It seems to me that laws and technology have failed to stop that gang. I'm not sure that stopping evil oligarchs - when you cannot - is a good argument for preventing smaller people from saving their money.

> It seems to me that laws and technology have failed to stop that gang

Laws and sanctions actually hurt them. Law-immune technology is their enabler. If I could choose between a way to send money to my family in Russia the same way that sustains those criminals and not having that way but knowing that putin's gang is being starved of money, I'd choose the latter because the first option is a dead end.

> I'm not sure that stopping evil oligarchs - when you cannot - is a good argument for preventing smaller people from saving their money.

The theoretical benefit promised to the "smaller people" is far outweighed by the harm it does sustaining those dictatorships, both to the same smaller people and the world. A few honest hundred bucks here and there does not justify millions that prop the regime and kill more people.

Sorry if this is inconvenient truth but cryptocoins are helping that regime much more than they are helping people that have to endure it.

> The theoretical benefit promised to the "smaller people" is far outweighed by the harm it does sustaining those dictatorships

I have to disagree, as I am a small businessman and I have seen how liberating crypto was for people in small countries. Let me ask you this: What is worse for ordinary people: rich criminals stealing through Bitcoins? Or rich criminals running a country and banning your use of your own money?

If you think Putin or his catamites are surviving on BTC exchange, you're crazy. Berlin is still paying Euros for his fucking oil and gas.

The argument that free means of exchange should be wiped out because they are used by criminals, is the argument that has been used by criminals for hundreds of years to steal from everyone else.

> Berlin is still paying Euros for his fucking oil and gas.

Realize he is also vehemently losing tanks and people right now and supply of money is critical for this sort of fun. Then try to imagine being putin or one of his friends and spending those euros anywhere without the magic of crypto dark market. Good luck!

Those guys are not above any working way of financing their activities, especially now that the west is suddenly less easy to transact with, and they have perfectly crypto savvy people working for them.

For the record, the "zlato" in Bitzlato (one of the largest players at localbitcoins) is Russian for "gold", and the guy running it was Russian operating from China.

I'm sorry if it sounds dark and shatters your dreams of legally unencumbered entrepreneurship but it's just the way it is.

No, this is one way of laundering money, but it is the same as cash. If Bitcoin doesn't exist, you don't think they can carry Euros over the border to China in a truck? Next day those get spent at some Louis Vuitton store in Paris. The Ruble they're paying the soldiers with isn't being propped up with Bitcoin.

Did you just make an argument that crypto is useless, because we have cash?

Realize that the very things crypto is "solving" compared to cash is exactly why it is so attractive to this kind of laundering: scale.

You can run a business on cash. You can't launder millions in cash with elegant ease. You need to pay for figurative duffel bags, vehicles to transport them, countless drivers and handlers who tend to steal and leak information.

This is a strange narrative. Bitcoin was released in 2009. Putin's gang had no problem getting money before 2009. How do you think dictatorships have funded themselves throughout all of human history?

If you follow the news, actually serious sanctions that are actually enforced, london laundromat closure is all-new stuff

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