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Comment by pavlov | Hacker News Reader

The magnitude of the crimes that Binance has enabled is being insufficiently reported, IMO.

Bloomberg at least bothered to get the details:

https://www.bloomberg.com/news/articles/2023-11-22/binance-l...

Binance admitted that they enabled funds to be sent to Hamas, ISIS and Al-Qaeda, in addition to Russian-occupied Ukrainian territories, Russian darknets, tens of millions of dollars in ransomware, North Korean hackers, and more than 1,000 child porn transactions.

The most heinous crimes and atrocities in today's world are being funded with cryptocurrency.

At this point, somebody will jump in with: "So what, cash dollars are being used by Hamas too!" — yes, of course. But moving a million dollars in physical cash is much harder. Crypto companies like Binance have built their entire business models around evading the systems that exist to prevent money laundering and terrorist funding. And the criminals have certainly been paying attention. The entire crypto ecosystem is severely tainted by this association.

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The key question for me now is: once you subtract all the plainly unethical transfers, securities-laws-runarounds, pump and dumps, and wash trading, how much of a business is left? Secondarily, is that ‘total remaining market cap’ larger or smaller than the total value of VC funding in the ecosystem?

Binance had 4.17 trillion trading volume in the past 7 days

I could generate $4.17 trillion in trading volume with myself if the cost of a transaction is updating a row in a database. This statistic doesn't mean anything in isolation

Well, to everybody else, trading volume means between different entities, so your loophole probably isn't all that relevant

What if you own both entities? And you also own an exchange where the trading happens, so you give them both special Black Friday deal: 0 transaction cost for the next 12 months.

I don’t really mess with crypto anymore, but back when I did, literally every transaction I ever made was with myself. I literally never spent any on a good or service.

What you're describing is called wash trading.

Which was 99.9% of the NFT market. I wonder how much of it is the crypto market. Probably not much lower.

I read that exchanges inflate these numbers in different ways, so it can be very misleading.

Apparently sometimes this goes very wrong [0].

[0] https://news.ycombinator.com/item?id=36610006

If you and me traded 1 dollar between us 4.17 trillion times (all electronic, we could probably do more), we would have the same trading volume.

And what part of the economy did that facilitate?

The SEC lawsuit, which alleges (among other things) Binance as having lots of wash trading on their platform, still hasn't been resolved.

Using statistical methods, for BTC, ETH, LTC, and XRP, Binance wash trading was estimated at >50%.

https://www.nber.org/papers/w30783

You can see other pairs on Binance that are clearly more. For example, GAS is the 9th "most traded" token on Binance. It claims ~$100M in daily volume, but there's not even $1M in liquidity between +/- 2% of spot. That is almost certainly all wash trading.

https://www.coingecko.com/en/exchanges/binance

Binance volume numbers are not believable.

Trading volume should not be confused with real transactions.

> ... once you subtract all the plainly unethical transfers, securities-laws-runarounds, pump and dumps, and wash trading, how much of a business is left?

Coinbase, a HN unicorn, probably knows? Their KYC/AML is top notch (which is a PITA for honest people btw). They know how many USD actually entered and whom send them. They may have had insiders accused of pump and dumping but AFAIK Coinbase hasn't been accused of pump and dump.

Coinbase has now been chosen by BlackRock to keep the Bitcoin backing the BlackRock ETF in custody: I take it if Bitcoin ETFs are accepted, and if BlackRock and Amundi and I don't now who else start launching Bitcoin ETF, we may begin to see what's left?

Someone else who may know: that weird dude who is behind MSTR: he basically bought 158 000 Bitcoins at an average price of $29 K USD and he plans to buy much more. (if you want to long or short Bitcoin, you can do so on the MSTR stock for it basically follows the ups and downs of Bitcoin).

What's left, for all we know, could be much more than what's already in (I've got no crystall ball though).

The one thing that I'm sure of is that it's not all fraudulent.

For example an estimated 25% of all people in argentina have cryptocurrencies: I doubt one person out of every four there is a criminal!?

Switzerland: if there's one country where its citizens really don't strike me as criminals it's Switzerland. 20%+ people owning cryptocurrencies there.

I can understand the "there are no use cases besides speculation" argument.

But I cannot understand the "all the people using cryptocurrencies are criminal" one.

When you've got several countries in the world where at least one out of every five person did at least try cryptocurrencies, there is something.

You're confusing trading volume with market cap. These are different things.

I always wondered why the US didn't crack harder on these exchanges (and crypto in general) and my conclusion is that the government has a second agenda for these.

Either because they can trace the money path more easily (than physical money) or that they are using it for their own covert ops.

That's why the US Naval Research Lab made Tor open source.

The only problem is the right hands aren't getting paid off.

The Reinsurance Industry doesn't work in Lloyds, Macau, basically a PO Box in the Caribbean because they're moving millions and billions of dollars FOR CHARITY.

So Binance didn't commit the crimes? The were just a conduit for funds between criminals? Kind of like the bank branches in Miami FLA that used to bank for drug dealers?

> The most heinous crimes and atrocities in today's world are being funded with cryptocurrency.

Just for kicks: according to several sources (IMF, CIA world factbook, UN, ...), the percentage of the world's GDP tied to criminal activities is 2% to 5%.

2% to 5% of the entire world's GDP. We're in a $100 trillion+ world GDP.

So 2 to 5 trillion USD are tied to criminal activities.

The most heinous crimes and atrocities in today's world are, sadly, not very different from the most heinous crimes and atrocities from 15 years ago.

And 15 years ago they had nothing to do with cryptocurrencies.

There's no way to launder 2 to 5 trillion using cryptocurrencies. These amount are just way too big.

> But moving a million dollars in physical cash is much harder.

A million? Criminals have to move 2 to 5 trillion USD yearly. Cryptocurrencies are insignificant and helpless here: the amounts are way too big.

Moreover most cryptocurrencies uses aren't fraudulent (you have to be dumb to leave tracks in Bitcoin or Ethereum public ledgers, as shown by TFA once again) and most crimes do not involve cryptocurrencies.

What about priorities? As in: going after the actual crimes instead of a totally insignificant source of funding of said criminals?

2 to 5 trillions, yearly, tied to criminal activities. Ponder that.

If 90% of those trillions go through cryptocurrency platforms, wildly justifies closing them down. Or at least implement drastic Know-Your-Customer rules. But at the same time, if those platforms are also only used by people who bypass taxes, then there is no legit usage left for those platforms. Might as well leave them open and investigate each customer.

90% of those trillions go through a combination of cash, Wells Fargo, and JP Morgan Chase.

A lot of crime is obviously very local. The 2-5% of GDP number is irrelevant in this context.

> “What about priorities?”

Yeah, whataboutism is the primary line of defense for crypto.

It’s possible to do multiple things at once. If we shut down this environmental disaster of a virtual casino that’s used primarily by the criminals, it won’t take away anything from all the other efforts to fight crime.

You don't like crypto don't use crypto. No need to poison the well for others...

> moving a million dollars in physical cash

who says it's physical?

> The entire crypto ecosystem is severely tainted by this association.

I don't understand the impetus to view it as a taint.

The fact that crypto can be used for things that the state wishes to prohibit is strong evidence that it is effective and politically neutral - and those are exactly the features it is striving for.

The desire to stamp out war and terrorism and violence is laudable, and I certainly agree on the importance of decreasing the influence of the groups you suggest. But attempting this by creating a complex, closed-source, global, locked down monetary and economic system has collateral damage - in the form of easy money available for imperial ambition - that is worse than the problem it is purporting to solve.

Surely if we all believe in the basic decency of people, and of our universal desire for peace and understanding, we can deprecate institutions of terror by means other than handing over limitless economic power to the state?

In a democracy, those limitless powers are limited by voters. The government can only pass laws and implement regulations that are acceptable to a democratic public. To the extent that voters want to move their money freely around the world, they also want policies that prevent the transfer of money to terrorists or child molesters. These powers are not limitless at all. They are limited through democracy.

Crypto is therefore a way to work around the wishes of the majority of others. That’s anti-democratic. It’s not freedom so much as it is tyranny.

This is the best argument I’ve heard to date for regulation in a democracy.

Everything that involves privacy could potentially go around the wishes of the majority, yet everyone has the right to it (so they say) which is guaranteed by democratic laws nowadays.

We all know, for example, that terrorist groups plan their attacks on platforms that use e2e encryption, are you suggesting to end privacy for all to be able to catch a bunch of terrorists? Because there is no gray area in all of this, you either have it or you don’t.

So it all boils down to the sole franchise of the vote as the only way to bring societal change.

That's not something that the information age is going to afford, and I thought that - pause given by threads like this notwithstanding - the foundations of hacking and cyperspace independence were meant as a surface on which to build something better.

I don't think that the world's poor and disenfranchised can afford to wait around for generation after generation while we try to figure out how to inspire change in international finance by using only the debilitated and purely symbolic tactic of voting.

> In a democracy, those limitless powers are limited by voters

I just want to point out that, empirically speaking - if you hold the US and Europe states to be democratic institutions - this is observably false. Voting has not achieved limitations unto halting empire, predation, and extraction.

What an obscenely naive view of how politics works in even democratic countries (and this is not to speak of the majority of the world's countries that are either not democratic, partly democratic or "democratic" but heavily corrupted by insider money and special back scratching.) Yet because it's ostensibly and sometimes partly genuine, you think it should brook no resistance? You really think that all permitted activity should simply follow expressions of voter will as if they weren't regularly misled by emotional manipulation, corruption, bribery and idiotic popular beliefs?

Imagine for example how noble voter will felt about homosexuality in most of the western world 40 years ago. Should all those lgbt people have just neatly folded away their sexual needs and preferences until one day they became legal? No. They found private ways of sometimes, Oh gosh, breaking laws. This can apply in many contexts without being immoral by default.

Somehow however in your curious worldview, crypto having its bad uses means it should all be banned and is somehow an expression of "tyranny" (truly, wtf?) but democratic will despite its numerous flaws, holes and opportunities for corruption should be inviolable?

Somebody moving their funds from some dysfunctional "democracy" to a safer place, or protecting their assets from disintegration because of X new government being riddled with corruption and state-level theft doesn't negatively affect my freedom. A worldwide state effort by both formally transparent countries and deeply corrupt countries painting themselves as participants in "transparency", to crush all forms of private financial transactions and personal financial security outside their controlled lines most definitely might affect my freedom, and yours one day maybe.

To entirely rely on this deeply mixed, highly dubious range of systems for handling votes and public will as a means of protecting a basic right to privacy and free use of one's person and property (yes even the economic kind) is ridiculous.

To tell people who right now have need of something like crypto at least as a concept that they're the ones threatening global freedom and causing tyranny is laughable. It's blinkered, narrow-minded and deeply privileged nonsense passing as a rational argument. Just because your life doesn't make you need economic privacy doesn't mean that the majority of the world living in far from ideal economic conditions can be ignored for needing that very option.

And enough already with the smearing of things with arguments around child abusers, terrorists and blah blah. Just about everything people use to do something private in any way could be used to promote some abuse. Should for example privacy of communications also thus be banned as "tyranny"? How many disgusting cynics keep using these same tired garbage arguments for any intrusion they care to covet?

I'll jump in with so what, banks are doing it too. https://www.investopedia.com/stock-analysis/2013/investing-n...

Moving a million dollars by wiring it from your HSBC account is actually much easier than doing it with crypto.

edit: and in the HSBC case the CEO didn't even lose his job!

Much easier, maybe? But also much easier to track. And at least to some larger degree banks follow KYC.

> But also much easier to track

Why is this true?

Banks in the US must follow kyc and other forms of reporting.

*Much easier to stop, much harder to track. A bank doesn't have a publicly auditable ledger the way crypto does, it can only be traced with the assent of the bank and their policies vary.

The distinction matters.

Yes because we see so much value from a public auditable log. It’s much easier to send crypto to a mixer and conceal origin/destination and much easier for the average Joe to do it.

The very origin of funds being from a mixer taints it.

I think these groups would be doing it with banks (like they did before?) instead of crypto if banks were much easier.

You imply they migrated to use crypto and stopped using traditional banking. No evidence that it is the case.

Some criminals may have easier access to crypto facilities than banks hence activity, or cost is lower that way for the initiated, yes. It doesn't mean volumes of teinted activities is anywhere as big via crypto than it is via fiat.

Common sense could take a guess, but there can't be much certainty as illegal activities happen aren't made in plain sight in either route.

It sounds like typical propaganda against cryptocurrency.

To be clear I'm 100% for cash, but also it is impossible to ignore all those fabricated narratives against crypto about financing everything currently wrong.

Crypto is real threat for banks and states and they'll do everything to hold their monopoly in financial system.

> Russian-occupied Ukrainian territories

Regular Russian credit and debit cards‡ now work there, thanks to the magic of NSPK. I don't think Crypto had any significant market share there.

‡ Including the ones which were previously branded MasterCard and Visa, these no longer work internationally obviously, but domestically they didn't skip a beat thanks to aforementioned NSPK

> But moving a million dollars in physical cash is much harder.

I mean, Tzahal moved 40 millions a month from Qatar directly to Hamas-controlled checkpoints for years, so i guess it depends.

Similar story:

Cash App

https://hindenburgresearch.com/block/

This doesn't stop with kicking Binance out of the US, though, right? It's a step in the right direction for making it harder for criminals to access US dollars, but the liquidity of moving crypto around is still there and the ability to cash out into other fiat currencies is still present.

I have no idea how difficult it is to turn varying fiat currencies into dollars, though. Presumably challenging when dealing with large sums and trivial with small sums?

https://archive.is/YvkhM

^this.

What good are sanctions if you can easily get around them?

Why are there sanctions? What’s the objective of sanctions? … What happens if sanctions fail? Whats the worst thing to happen? …

Everyone has been paying attention: the world of capital controls has been gone for 10 years and we let public figures play with themselves proclaiming the opposite. While they already knew that transaction whitelisting was a waste of taxpayer dollars and an impossible waste of private sector resources to do.

What you’re actually seeing is that everyone is using crypto as a public utility. Everyone as in all types of parties.

Crypto exchanges are not actually capable of pretending to play this game. Third party software has been created to attempt to flag transactions with an obvious sanctioned source, but the user unlinking that source is very easy. Binance reduced friction so much that users didn't bother doing that apparently either. Binance’s aspirations grew so big that they couldnt be just a website and server not incorporated anywhere. But basically every other centralized custodial exchange is the same.

It is simply not possible to play along with the state’s deprecated path of policing transactions. The most compliant exchanges will simply automate mountains of paperwork to FinCEN, the suspicious activity reports that the GAO points out are not read at all. Binance is in trouble for simply not doing that because the government doesnt really have a tool to police this either.

Many people have made this observation. Many people that made this observation are 10 years older now, have seen their own state fall apart and provided a convenience to the governance organization and people in that area. That’s how crypto propagates. The concept just waits until the human discovers a friction, and then flips them and all the nearest humans like nodes in a graph.

This understanding increases confidence in crypto from people that matter more than the pearl clutching people worried about “but criminals!” that don't matter, as it is predictable how more capital enters crypto from all sources around the world over time.

Its all quite relative, are we supposed to care that a Chinese citizen circumvented China’s capital control using crypto. Is a Chinese citizen supposed to care that someone on the US OFAC list can access international finance? in each country’s sphere both are “criminals”, but are they? Don't we value the freedom of the Chinese person escaping oppressive capital controls of their administration? Crypto supersedes this concept and debate, deprecating the need to debate it at all, capital flows.

These kind of court cases are instruction manuals to everyone that was on the fence. People that didn't have an example of anyone using crypto for goods and services or converting it to local currency now do. All they see is the exchange getting in trouble, nothing changing, and everyone including people on the OFAC list not getting in trouble or their assets frozen. More nodes flipped.

> everyone is using crypto

You're in a social bubble.

all types off parties, not likelihood of individuals being involved

https://www.cnbc.com/amp/2022/03/31/cryptocurrency-news-21pe...

they’ve been doing this poll of 1000 people for years and the number goes up really high especially in slices of demographics, up to 50%

lol no

+ the SEC pretty much acting like a mob engaging in grand scale extorsion. The claim and demand for its chairman to step down was recently made by a congressman, not some crypto fanatic.

the aggregate direction definitely is not the state trying to stop crypto commerce

so love to see Congress trying to excise these unproductive elements of the government out while harmonizing business practices

It has seemed like a crackdown on the competing with traditional banking that is crypto as a whole given the tone and tactics of the attacks. Comments made about stablecoins being in a problem in essence, not just the shoddy cases. Exchanges that have been going on for over half a decade (coinbase, kraken) even with an IPO (coinbase) that must have been reviewed by the SEC back then, being treated like mismanaged entities infringing the regulations (which do not exist yet) with the same basic claim they are selling securities (which most crypto tokens are not).

As to the aggregate, there are more representative running a vendetta against than in the defence of crypto businesses. It's slowly, slowly, slowly changing.

!Remind me in 5 years

Any ideas why Binance didn't file a single SAR? Especially because they were hiring all these compliance people, ex prosecutors, ex FBI agents, etc so surely it would've come up. I'm surprised they didn't just game the system and file a bunch of useless ones.

why? they operate in many countries and the US wanted special treatment and to be paid attention to. its a hubris that is ingrained in US culture that isn’t prioritized by people that dont think about it.

they tried to firewall off the US with the Binance.us entity but that wasnt good enough

so now they see the best way to operate in the US without an impending problem is to kickback $4bn and sentencing the front man, this removes ongoing uncertainty in that market and improved access to all that capital

many other countries have random paperwork nuances too, they just matter even less

binance tried to stack the deck with connected people, but it wasnt taking advice from them, they were just there and isolated with fat paychecks and BNB token grants. I think they just didnt think about SARs. They werent worried about self incrimination, they just didnt do it

> At this point, somebody will jump in with

At this point you need to jump up and point to:

1. Ordinary banks are not sued for absolutely the same thing, which probably occurs to much bigger extent in major banks which pass many times more transactions than Binance

2. Forget about Russian darknets, Russian mafia lives in London, and New York in the open to complete disregard of the same financial regulators.

3. It's practically impossible to catch people who can fake, or buy a passport to do small scale money laundering, but forget about the small fish.

BILLIONS of Russian money gets laundered through biggest US banks every day completely legally, through schemes known to all big banks, and financial regulators for decades.

> Ordinary banks are not sued for absolutely the same thing, which probably occurs to much bigger extent in major banks which pass many times more transactions than Binance

No? https://www.investopedia.com/stock-analysis/2013/investing-n...

https://www.justice.gov/opa/pr/jpmorgan-chase-co-agrees-pay-...

https://www.theguardian.com/world/2011/apr/03/us-bank-mexico...

The big question is if these things would be possible without crypto existing. History suggests they are, so I’m not sure if crypto really makes anything possible on that front that wasn’t before. Some of the largest terrorist attacks and most entrenched armed resistance movements took place pre crypto. I don’t think access to cryptocurrency would have made the vietcong significantly more effective for example.

No, the big question is what the overall percentage of dollar volume is being used for these crimes. Comparing to history is silly.

I would also assume that cryptocurrency makes moving money for crimes vastly easier. And I would also suspect a large amount of volume of transactions are illegal or gray in nature.

Say you have crypto sent to your little radical sect. Now what? You still need to figure out how to get weapons to where you are. These are tightly controlled of course and have to be smuggled or supplied in some way. That’s the real limiting factor. Money is hardly a factor, states can support whoever they want with an arbitrary amount of funding as we’ve seen between the various US/Iran/Russia proxy conflicts. Put it this way, a pile of crypto wouldn’t change the outcome of the syrian civil war. Might and muscle would, and that ultimately comes from states after a long chain of trying to obfuscate associations along the way.

It's not about a binary possibility of yes/no, it's about ease and frequency.

Crypto can mean an attack can be funded with 50x more money than had been possible previously, or 20 organizations can be funded where previously only 2 could have worked out the logistics.

Trying to frame this as a binary possible/impossible is the wrong lens.

Money doesn’t transmute into things like weapons. The issue is probably just getting arms to these groups at all. You could front them on debt or “foreign aid” all you want if you can get them arms and supplies. Crypto doesn’t solve that hard part of getting arms or people where they need to be to have a big effect.

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