Cash was a private, p2p currency before it was basically replaced with corporate, permissioned and surveilled credit.
Bitcoin is pseudonymous p2p money but the ledger is public. Obfuscating bitcoin to prevent 3rd parties from seeing your balance is not money laundering.
Cash is still currency.
> Obfuscating bitcoin to prevent 3rd parties from seeing your balance is not money laundering
No, but it's reasonably suspicious. And if whatever service you use to "mix" your money is connected to crime, it's not unreasonable for you to have costs involved with defending yourself.
If I'm sending crypto to a friend, they can see my account balance, and my entire account history. It's perfectly reasonable for me to want to hide this.
I ran into this exact use case a few years ago, and ended up depositing into a centralized exchange, immediately withdrawing it to my friend's account, essentially using the exchange as a "mixer".
"I've created a public ledger, only to realize it's a public ledger."
But I digress.
I never said there aren't reasonable reasons to want to mix. Just that it's also reasonable to cast that activity as suspicious.
It's not an enforcement priority to parse through just yet, but both bank compliance departments and law enforcement are buying Chainalysis et al's mixer decloaking data for a reason.
I agree. The problem I have is that the federal government is making it illegal to obfuscate the source of funds, in this case by going after mixers, the most reasonable way to obfuscate your identity when making transactions.
So you agree there may be valid, legal, usecases for this technology for Americans?
The fact of the matter is Americans used to have a degree of financial privacy and the state is in the late stages of revoking it. Far more crime is done with USD than Bitcoin.
Duh? It would make sense that the de-facto currency for the IMF and state-level actors is more widely-used/abused than a nerdy toy network.
The volume of crime will always be larger on volumemetrically larger markets. Imagine the criminal-per-1000-users ratio of Bitcoin or Monero; now you're talking about something that no state-controlled fiat can match. That's why the government wants KYC, and they make a damn good case for it all things considered.
The government considers a man with cash as an enemy because bureucrates loves to see all your transactions on his computer and especially his favourite milestone is an ability to block some transactions. Government is just a stationary thug and it has no other goal except of collecting as much taxes as possible.
You were speaking the truth, right up until you got to this line. Governments are beholden to the people, you wouldn't be able to adjust taxation legislatively if taxation was an authoritarian function of the state. Don't accuse the government of being a "stationary thug" when it's the politicians you elect that vote on these issues. If you legitimately believe what you said, you've bought into a defeatist ruse.
In reality, a government's greatest plausible obligation is to protect it's people, and that's what crypto regulations do. You can be as sardonic about it as you want, but tax and sanctions evasion is a crime and crypto exchanges will be treated as aides and abettors as long as they choose to deal in crypto.
I have not observed any example of this anywhere. I suppose you have bought into etatism ruse.
Yes, but cash can also be used for money laundering.
If you operated a cash mixing service which was designed to hide the origin of the cash, and it was used to conceal criminality, you would be just as liable as operating a bitcoin mixer.
> Obfuscating bitcoin to prevent 3rd parties from seeing your balance is not money laundering.
Correct, but operating a service that does this which ends up obfuscating criminal money is money laundering.
The equivalent to what is happening with cryptocurrency would be then to prosecute the director of the United States Mint. After all, she is almost certainly aware that physical cash is used for money laundering, but despite knowing that, she continued to run an organisation that produced more of the cash, allowing these criminals to continue money laundering. It is irrelevant that there are legitimate uses for physical cash - we just won't mention that, and focus on how much money laundering happened using cash that her organisation produced. The indictment would almost certainly be able to include evidence that money laundering using such physical cash helped Russian oligarchs and North Koreans.
But that argument is ridiculous. The creators of a technology which is helpful to the law-abiding public and also criminals should not be held responsible for the use of that technology by criminals (in cases where they actively incited criminal use, which might be the case here, it is a bit different). Should kitchen knife manufacturers be held liable if someone stabs someone with one? What if it can be proven that the knife manufacturers knew that statistically, given their size, someone would almost certainly use one of their knives for criminal purposes - or that criminals actually were - but they continued producing knives? As long as they aren't inciting that use case, they shouldn't be held accountable.
What if paper manufacturers learn that criminals are using their paper to create plans to commit crimes. Should they be held liable even if they don't incite the criminal usage, just keep making paper knowing that it is happening?
What about car manufacturers if people are using their vehicles as getaway vehicles? Bus companies that help criminals get to and from the scene of the crime (knowing that some are criminals, but not which exact individual in any specific case)? Supermarkets and water companies who sell food and water that help keep criminals on the run alive?
In my opinion, generally speaking prosecutors should only ever take on such cases if there is strong evidence that the people behind the technologies know that a specific person is going to use the technology for crime, and they help that specific person, or they actively promote the illegal uses.
And the proper order of events if for there to be a public discussion on whether something should be illegal, with legitimate consultation, and a decision made by democratically elected lawmakers, and there should be advance notice of the new law. Instead, in the case of cryptocurrency, prosecutors are trying to take a very tortured implementation of existing laws to twist something different into being illegal. Conspiracy laws are out of control if they don't even require talking to or knowing the people who are allegedly part of the conspiracy. Likewise, the money transmission angle used against mixers doesn't really pass the common-sense test; they are smart contracts that take funds in to one wallet, and spit them out to another wallet, but it is almost always the case that the input and output sources are owned by the same person. Transmitting is supposed to be tranferring from one person to another - you could technically set the output address to go directly to someone else, but that argument would apply to pretty much any smart contract ever. The intent of mixers is privacy, not money transmission.
So essentially they are using basically made-up charges to try to de facto make something illegal that democratically elected lawmakers have not come to a position on, and which doesn't make much sense.
Ok, so we all are well aware of the illegitimate use cases for which crypto mixers are used - in vast volumes daily.
What are the legitimate use cases for which they are commonly used?
Meanwhile we know that these mixers are being used enmasse to sell exploitative content, fund terrorist organisations, evade tax, run scams, hacks, the list goes on, and on, and on, and on.
If I have the risk of running into both these problems with the existing financial system, why not use Bitcoin? The problem is if I'm using Bitcoin, and want dollars to buy something from a vendor who doesn't accept it, I have to use a potentially hackable exchange that will then have my on-chain and personal information.
If I want a separation from the rest of my on-chain funds from those I send to an exchange, it's only logical to use a mixer. Even if I were Bitcoin only, I'd still want this level of privacy (unless all my transactions were digital and my on-chain identity was pseudonymous to all).