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Comment by olalonde | Hacker News Reader

The article's viewpoint relies on accepting AML regulations and financial surveillance as beneficial. In my view, CZ is not a villain; he ran a popular business without defrauding customers. There were no victims. His wrongdoing lies in not taking his "police" role seriously enough. As per AML regulations, he had a duty to investigate customers and de-platform those that he considered criminal, all without due process of course. However, he chose not to strictly adhere to this role. Yes he broke laws, unethical laws that do more harm than good. I don't know to what degree CZ was motivated by personal gain vs principle but I don't believe he deserves the "Bond villain" label.

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> There were no victims.

"Terrorist Financing. Binance failed to report to FinCEN transactions associated with terrorist groups including Al Qaeda, the Islamic State of Iraq and Syria (ISIS), Hamas’ Al-Qassam Brigades, and Palestinian Islamic Jihad (PIJ).

Ransomware. Despite being one of the largest receivers of ransomware proceeds, and transacting in millions of dollars of ransomware proceeds from attacks involving at least 24 different strains of ransomware, Binance failed to report these transactions.

Child Sexual Abuse Materials. Binance never reported transactions with websites devoted to selling child sexual abuse materials, including Dark Scandals."

The problem with this line of reasoning by itself, is that it justifies some policies we like but also other policies we don't like. (For example, almost no one wants background checks or KYC laws for buying a computer.) Assuming we're not cartoonish totalitarians, we counterbalance the concept of indirect victimhood with some other concept of privacy or liberty or something. But that's where all the hardest questions come up.

Finance is in a somewhat unique place in that we hold them responsible for their customers. If a bank doesn't ask any questions and as a consequence provides service to known terrorists that's against their perceived (and codified) obligations. Yet the we allow anyone to ride the subway, to get a telephone connection, or to have their home hooked up to electricity. If your internet provider terminated your contract because you download files from Syria or regularly upload large files and trigger their risk analysis that would be seen as outrageous. Yet that is exactly what we expect of finance companies.

The US government also issues cash.

Cash does facilitate crimes. Yet we consider that a cost or a bug, one we're willing to accept in exchange for its benefits. Cash itself is clearly a neutral tool, yet even it is regulated if transactions exceed certain thresholds.

You say it’s a unique place, but here’s the thing: it actually undergirds all of those other services.

Telephones/internet/elecricity are quite hard to regularly get without access to the traditional banking system. Possible, yes, but very annoying. Which is the point.

Some would argue it is only because of the security of the banking system that these other utilities are allowed to be “””free”””.

I think if you want to sell chemicals, explosives, or guns, you're going to have to keep records on your customers, and may have to do some level of vetting before the sale, depending on the product and jurisdiction within the US.

> Finance is in a somewhat unique place in that we hold them responsible for their customers. If a bank doesn't ask any questions and as a consequence provides service to known terrorists that's against their perceived (and codified) obligations.

Is this really unique? Because afaik, if you were “just a taxi driver doing their job and not asking questions”, you could easily end up being charged as a getaway driver.

"Terrorist Financing, Ransomware and Child Sexual Abuse Materials": none of those crimes were committed by Binance. And I bet those actual criminals all used cash or WhatsApp at some point. Maybe even McDonald.

I think people dismiss how much AML regulations are directly linked to preventing crime from being efficient. There’s a reason that scammers ask for gift cards, and it’s not “just” because of traceability reasons (mules have always been a thing)

Countries have varying levels of fraud and organized scams, and I think stuff like AML compliance flows play a bigger part than people appreciate

Yes, and one could argue that banning end to end encryption and doing preventive monitoring of all communications would render crime even less efficient.

I think it’s just natural that in a democratic society people fall on different parts of the spectrum when it comes to thinking of what the correct trade-off should be.

Recently Lyn Alden posted how her wire transfer to her family in Egypt to cover some mortgage payments got blocked. I mean, if a celebrity (in some circles) with known family ties to Egypt experiences this, what chances do we mere mortals have?

Making a 10k payment to an African country basically lands you in AML red “don’t do business with” lists. And sure enough, maybe most people doing this are financing terrorists, what do I know. But I think there’s a meaningful debate to be had here.

This argument did it for me.

> banning e2ee would render crime evem less efficient

Yeah, don't care if criminals use something that helps us all protect ourselves and reveal or be vulnerable only to disclose that which we CHOOSE. Like, the real choose, not Apple's "choose" what we want or you can't use everything

Can't have it both ways

So you...agree...right?

No, you can't say you want encryption even if bad guys use it but then say crypto is bad because bad guys use it

That is nowhere near what I was saying, I'm saying that this is the quote that resonated most with me because it tries to take away yet another thing that protects us all, not just criminals, businesses, and criminal_businesses

In case you're referring to the Apple thing—umm, ya they can. They have the NoDataCollected checkmark designation in the AppStore's Privacy Nutrition Labels. Anything they make is offefed/made 3rd party also and is therefore evidence they could have collected no data but consciously choose to design things in such a was that they are being disingenuous when they say they only collect the absolute minimum amount of data required for functionality

We don't dismiss it. We know it makes life hard for criminals. We just don't care. It's still the financial arm of warrantless global surveillance. It's the government working around its due process restrictions by getting private corporations to do the dirty work. As such, it should absolutely be opposed and resisted on principle.

The USA was literally founded upon principles like these. Look how far from the ideal it's fallen. If you're gonna sacrifice freedom for security, might as well go all the way and become a fascist state.

I'd call the alternative (unlimited wealth and power for the criminal organizations because the government can't touch it) a far worse outcome. It's always about moves and countermoves.

There's no such thing as the perfect system. So we have to settle for something that at least works most of the time.

It's a politico-technological arms race. Government makes laws, people make technology that gets around the laws. With every iteration, they need to increase their tyranny to maintain the same amount of control over the people. The result is either an uncontrollable population or a totalitarian state.

The only question is: how much tyranny are you willing to tolerate before the government becomes worse than the criminals you want to stop?

That’s not really the case. The government mostly just makes one law that says “hey, bank, it’s your responsibility to know your customer and their source of wealth and God forbid you can’t when we come asking”.

I wonder what proportion of all Americans have actually had any kind of material interaction with KYC/AML. My guess is it’s approximately none of them.

> I wonder what proportion of all Americans have actually had any kind of material interaction with KYC/AML.

Impossible to know since it's illegal to tell someone they're the subject of such extrajudicial investigations. Even knowing about the existence of such laws makes them assume you're a money launderer because of your "technical knowledge".

https://news.ycombinator.com/item?id=38180477

The alternative is to require a warrant, which has so far been a pretty good system.

Also AML is very ineffective despite massive surveillance. It harms consumers more than terrorists

https://www.tandfonline.com/doi/full/10.1080/25741292.2020.1...

This is because a lot of compliance is not optimised for maximum benefit (capture terrorists) but is just a tick boxing exercise.

There is also abuse. India is also using AML laws (forced by American led FATF) to crack down political opponents and human rights activists, as per Amnesty

https://www.amnesty.org/en/latest/news/2023/11/india-stop-ab...

> There is also abuse. India is also using AML laws (forced by American led FATF) to crack down political opponents and human rights activists, as per Amnesty

Similar situation here in Brazil. Former president got fined, people started donating money to him to nullify the fine and government started "auditing" those donors. They literally weaponized this AML/KYC bullshit into political persecution.

Of course. That’s an expected outcome if everyone just works within the system according to their incentives.

When it comes to the US, the country literally would not exist if the British had anything close to the modern governments’ abilities to control the money flows.

As in, the revolutionary period Patriot movement would’ve just been AML-ed to death.

Sure, AML might be beneficial if it had no cost. It does make crime slightly more inefficient. However, AML has a massive cost. It makes legal transactions inefficient as well. Billions of people are unbanked and underbanked, in large part thanks to AML. It forces money transmitters to carry out what amounts to extrajudicial punishment on people and industries deemed "at risk". The estimated global cost of compliance amounts to hundreds of billions of dollars annually. Imagine if all those wasted resources instead went to chasing terrorists & human traffickers for those actual crimes.

Here is on the cost of AML

https://www.tandfonline.com/doi/full/10.1080/25741292.2020.1...

We could also make traffic accidents go zero by putting a police at every crossroads.

People are not dumb, at least when it costs this much. AML exists for a reason, which I believe is collecting intel for three letter agencies to ensure USA’s continued dominance over the rest of the world.

The Bank Secrecy Act, under which he was charged, is of extremely dubious constitutionality (https://www.coincenter.org/broad-ambiguous-or-delegated-cons...), and it certainly violates the spirit of the Bill of Rights.

> it certainly violates the spirit of the Bill of Rights.

Sadly the list of acts that violate the spirit of the BIll of Rights is really, really long.

More than 200 years of Supreme Court decisions show there's no one "the spirit" of the constitution we can consult via Ouija Board on Capitol Hill. There are many, and they often disagree.

Fortunately, we have institutions where they can duke it out. And where we can fight about what the decisions mean.

Also Binance and Mr Zhao were not found guilty helping or funding terrorists, only breaking anti-money laundering laws. Despite years of investigation DoJ did not find definitive evidence that Binance would have helped criminals or terrorists, only evade sanctions.

In the case of HSBC, when there was more direct evidence of serving Mexican drug cartels, no one did jail time https://www.democracynow.org/2012/12/13/matt_taibbi_after_la...

>"... a popular business without defrauding customers. There were no victims"

I believe it's been proven that Binance traded against its customers and manipulated token prices on its platform. That kind of thing is completely forbidden in the world of traditional stock exchanges and brokers.

That makes Binance customers victims of their manipulations. When Binance made profits from trading on its own platform, it came from the pockets of its customers.

Crypto exchanges are less like stock exchanges and more like casinos where the house is guaranteed to win in the long run in bets made by customers. Maybe that's the deal that Binance's happy customers signed up for, but I don't think regular retail investors could be expected to understand that's how it works.

> I believe it's been proven that Binance traded against its customers and manipulated token prices on its platform.

Can you cite this? I'd like to read more about it.

> Crypto exchanges are less like stock exchanges and more like casinos where the house is guaranteed to win in the long run in bets made by customers.

I agree. Binance skims so much money from every transaction it's not even funny. Truth is a company in their position doesn't even need to run a dishonest operation in order amass vast amounts of money. They just need to let it happen.

> Maybe that's the deal that Binance's happy customers signed up for, but I don't think regular retail investors could be expected to understand that's how it works.

Well it sure as hell wasn't for lack of warning. I've told people not to get into the shitcoin casino. To their faces. They still got into it. I simply don't have a lot of sympathy for these people when they get liquidated.

How are stock exchanges not also guaranteed to win in the long run due to the bets of their customers?

That's the entire business of both types of exchanges, collect fees on every trade that the users make (besides some newer stuff like the robinhood model).

> The article's viewpoint relies on accepting AML regulations and financial surveillance as beneficial.

You might want to check the last section of the article:

> We are a nation of laws. I’d support reforming some of them; a lot of the AML/KYC regulatory apparatus harms individuals who have done no wrong. Much is not well-calibrated in terms of societal costs versus occasionally facilitating a Bond villain’s self-immolation.

> However, in the interim, one cannot simply gleefully ignore the laws because the opportunity to do so allows you to become wealthy beyond the dreams of avarice. [...] I do not know if we’ll ever have a world with this scale of crypto businesses without the crime. The crime was the product.

The crime is the product because that's what's left after the media makes it sound like everyone using crypto is either an idiot or a criminal, so most businesses avoid it because they don't want to be labeled as either.

I think the “Bond villain” label is more to point towards the way of doing the operation. Which is pretty fitting imo, from the point of view of being everywhere and nowhere at the same time.

There's "morally OK", and then there's "love your neighbor". If a road is used to traffic an ambulance saving a life and also a kidnapper, the hands-off road builder is "morally OK". But, in the world we really want to live in, if the road builder has some reasonable means to disallow road usage for kidnappers (excuse the hypothetical), they, in love of the victim, should.

There's no reasonable way to stop criminals from using fiat currency or cryptocurrency. It's all a costly security theater.

I wonder if someone could create a blockchain currency that is much more transparent than fiat; one that criminals would hate.

I'm pretty sure "Bond Villain" is primarily intended as a pun.

> His wrongdoing lies in not taking his "police" role seriously enough.

I'm absolutely incredulous at this statement.

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