Cryptocurrency Turns to Cash in Russian Banks (2024)
krebsonsecurity.com
krebsonsecurity.com
They're a pretty interesting phenomenon. Some do KYC, some don't. Some are fully automatic and just need to be "topped up" occasionally, some are fully manual. They usually provide an easy on/offramp to/from crypto, but they usually have high fees and minimum transaction requirements on top of an unfavorable exchange rate. Sites like bestchange exist to aggregate all the different rates and slice a cut from the affiliate revenue.
It's nice to see how they work (or don't) from the legal side. In my mind they've always existed in a grey legal area, since some mini-exchanges openly proclaim their registration in e.g. the UK and some just don't say where they're headquartered.
They do work, but they've always felt a bit shady, and I've felt anxious using their services. Centralized exchanges are way better in regards to support and have a better exchange rate to boot.
I'm not sure why Krebs highlighted it either except as a smear (which he likes to do).
oh and pump and dump scams
Have you lost your creative muscle completely, or does the hate for cryptocurrency blind you to even be able to evaluate if this bad thing might come with benefits too?
Personally, sending money (legal money, no sanctions nor involving drugs) between South America and Europe got a lot better as people started to learn how to receive/send USDC for example. I think that's the biggest change in my own life between before and after cryptocurrency became more commonplace. So much money spent on fees with Western Union and all those shitty platforms, before you could send USDC in half a minute with minimal fees.
Yes, actively using it as a cheaper, faster and smoother means to send money to family back in South America for the last few years. Before that we were using Western Union, MoneyGram and all those other services that like to tack on fee after fee after fee.
fees for each trade. Fees for selling usdc for usd. Fees for just interacting with the chain in the first place.
What’s more is your transaction is in competition with other similar transactions based on how much fee you’re willing to pay, so the fees are extremely volatile.
But it is much much faster and imo less nerve wracking than waiting for western union.
I have a feeling you don’t do international transactions. It’s not a binary decision between Western Union and crypto.
Yes, technically that's true. But there is still (at least personally) a big difference between paying 5 EUR for sending a transfer of 100 EUR and then the receiving having to pay 5 EUR to withdraw it on the other side, and having to pay ~1 EUR in network costs when sending USDC, and then the receiver can use it without having to pay more.
> What’s more is your transaction is in competition with other similar transactions based on how much fee you’re willing to pay
This is a non-problem for basic transfers really, not even once during ~3 or more years have my transactions failed to execute or take longer than a minute or two.
Crypto is like buying a product online for cheaper, but instead of using Amazon or Walmart, you buy it from some random guy on Craigslist whose brother delivers it. Sure, it’s cheaper and lower fees, but if the product doesn’t show up you’re SOL.
I do like government regulation, and I think we (Spain/Europe) need more of it, especially around everything digital and also cryptocurrencies.
> And, you may not like paying insurance, since you’re probably ok with the risk of getting scammed, but there it is.
I don't mind paying/not paying for insurance. The transaction I do are between two well known parties that trust each other. If I could just get an IBAN and do a normal bank transfer, I'd do that instead. But alas, I cannot, so alternatives get used instead.
> Crypto is like buying a product online for cheaper, but instead of using Amazon or Walmart, you buy it from some random guy on Craigslist whose brother delivers it. Sure, it’s cheaper and lower fees, but if the product doesn’t show up you’re SOL.
Sure, if you're purchasing goods from strangers on the internet, I understand your example and agree. But all use cases are not like that, particularly not the one you're currently responding to.
The reasons I use USDC/cryptocurrency for doing these transactions is because it's easier, cheaper and faster. If banks could get international transfers (for everyone, not just select countries) in order, and I could as easily, fast and cheap do a normal bank transfer, I'd prefer that.
If the encumbrances were really just from middlemen, you don't need a cryptocurrency to solve that; you just need a cheaper middleman.
If we had cheap and fast international bank transfers with all countries, I'd just use my normal bank account.
I think the entire idea behind cryptocurrencies from the beginning was to have unregulatable currency.
That comes with good and bad, but for most people in most situations it’s not as useful as regular currency.
++++++++++++
>> You will not find a solution to political problems in cryptography.
> Yes, but we can win a major battle in the arms race and gain a new territory of freedom for several years.
> Governments are good at cutting off the heads of a centrally controlled networks like Napster, but pure P2P networks like Gnutella and Tor seem to be holding their own.
> Satoshi
++++++++++++
> It's very attractive to the libertarian viewpoint if we can explain it properly. I'm better with code than with words though.
> Satoshi Nakamoto
The problem with that is with sufficient surveillance and tracking a government could ban the use of non-approved currencies for tangible items, and enforce that ban by random audits where if you can't show that you used approved currencies that you can prove you acquired legally to pay for the tangible things you have you get tossed into jail.
As Jean de La Fontaine said in the 17th century, "A person often meets his destiny on the road he took to avoid it".
https://www.reuters.com/article/business/hsbc-became-bank-to...
Your link did not say anything about crypto, it didnt imply that HSBC was corrupt, it didn't indicate the cartels were funded by HSBC. All of those additional points were added by your conspiracy imagination
https://www.investopedia.com/stock-analysis/2013/investing-n...
>One memorable detail U.S. law enforcement noted was that Mexican drug cartel members employed boxes customized to fit the dimensions of an HSBC Mexico teller window for their daily cash deposits.
Oh no! If only HSBC had the power to implement tighter controls that wouldn't allow it to receive boatloads of money. Oh well, it's not like they know a lot about money laundering, tax evasion, or handling large sums of money generally.
P.D. other comment mentioned that money flow attracts criminals, and I interpret it as criminals working on HSBC, not cartels using their services.
If you aren't sure why cartels are being mentioned then I suggest you click the Reuters post were discussing. The one that talks about lax controls 17 years ago
https://www.justice.gov/sites/default/files/opa/legacy/2012/...
The Permanent Subcommittee on Investigations found that HSBC actively circumvented rules designed to “block transactions involving terrorists, drug lords, and rogue regimes.” In one case, “two HSBC affiliates sent nearly 25,000 transactions involving $19.4 billion through their HBUS [HSBC’s U.S. affiliate] accounts over seven years without disclosing the transactions’ links to Iran.”
US prosecutors said that deposits at Mexican branches were so frequent that drug traffickers used boxes that were designed to fit perfectly through the teller windows
http://www.hsgac.senate.gov/subcommittees/investigations/hea...
This has then led to the families of victims of the Cartel directly suing HSBC for allowing the gangs to launder billions, providing ‘systematic material support to the cartels’.
https://www.theguardian.com/business/2016/feb/11/families-of...
If HSBC were a country, it would be the fifth world economic power. At the time $1.9bn equated to just five weeks of the bank’s profits.
When the HSBC money laundering was revealed, what was TradFi's answer? Let's stop it, and crack down on it further.
What is the crypto answer? Oh, rules are still occasionally broken, so let's just scrap all the rules and launder all the money we can (and break sanctions, and so on).
I feel like you're (hopefully) talking about a specific case here where some exchange was exposed as actively ignoring activity they knew to be illegal. Could you share what story you're talking about here?
The point of crypto is that you can transfer it without any regard to any rules [1] (by virtue of the diffusion of responsibility due to decentralization enabled by permissionlessness enabled by Sybil resistance mechanisms such as PoW or PoS).
[1] Of course, if you hack the DAO that the people running the blockchain are invested in, they'll stop it, fix things, undo the hack. So there are some rules, but chosen by crypto bros, not old-fashioned things like legislative chambers or so.
Aha, you're talking about one part of the cryptocurrency ecosystem. There are other parts of the ecosystem that don't go willy-nilly breaking regulations just for the fun of it, probably Coinbase is one of the best examples of that.
So while your comment probably speaks to a lot of people, I don't think you can generalize that the entire ecosystem is out after breaking sanctions and launder money. You probably realize this yourself too, bit sad you don't include that in your comments though.
They do KYC and maybe even a bit of token AML and CTF. Then you can exchange fiat into crypto, send it to an unhosted (=self-hosted) wallet, and then do with the crypto as you wish without following any rules whatsoever, by design.
Furthermore, there are many less regulated parts of the cryptocurrency ecosystem that do not even abide by that modicum of regulation.
Look, any bank could trivially replicate 100% of the functionality of a cryptocurrency, or a stable coin, with a good old-fashioned database (even a distributed database, so you have all the frequently cited benefits of decentralization - nearly all). And then they'd be shut down, because they'd be in violation of all sorts of laws and enabling all sorts of crimes. (This is not a hypothetical: see what happened to Liberty Reserve, e-gold, and others that had this glorious idea prior to crypto. They were all swiftly shut down.)
So, while the entire ecosystem might not initially have set out to break sanctions and launder money and subvert other rules, that is the use case which the technology enables compared to pre-Nakamoto technology.
Look, guns are about shooting people. But at shooting ranges people are not shot. Nevertheless, guns are about shooting people.
Many cryptocurrencies are inalienable, so long as you preserve private access to your seed phrase.
Also, how about when your local currency undergoes hyperinflation? Would non-sovereign currency with global consensus based value be of potential use then?
In the real world, you need to exit crypto to realize the value of your holdings.
That’s the weak link in the anti-regulation argument. You can’t pay for food or housing in most places with crypto.
> Also, how about when your local currency undergoes hyperinflation? Would non-sovereign currency with global consensus based value be of potential use then?
How would crypto be immune to this? Most of the extreme large holders of crypto (financial institutions) are also exposed to fiat risk and would likely liquidate their crypto assets in order to keep staff paid and buy the dips in fiat.
Crypto is immune to this because it's not tied to the value of one sovereign currency, or any particular polity or another.
I am not talking about the utility of cryptocurrency to large financial institutions. I am talking about the utility to individuals as their nations gradually become insolvent and austerity fails to placate the robber barons, ultimately leading to currency collapse.
Look at the localbitcoins volume data for Argentina, for instance.
Your local fascist regime has a very simple and low tech answer: https://xkcd.com/538/
Still, fair point. All the more reason to care about privacy.
Thats....about it.
You're not going to find a good use case for it which does not include an adversary as part of the story. But that doesn't mean it's just for criminals. Or maybe it does because this is the sort of adversary that writes laws, but sometimes the criminals are the good guys.
For instance, if I wanted to set up a shadow government so that we had something to fall back on when we all stop paying our taxes in protest of the awful things our government is using that money for, it would involve a protcol where amending its constitution means getting the right set of cryptographic signatures together to publish an additional block on the chain that defined the constitution. Locking this sort of thing into a protocol prevents the kind of interference that we saw on Jan 6 2021 because if certification of change is distributed there's nowhere to attack.
This allows foreign entities to give money anonymously to the president and his family, yet with a convenient proof-of-donation side channel (you can just sign a message with the same private key that bought the coins).
It’s a novel way to collect billions of dollars in bribes globally. And the president is both immune to prosecution and directly controls the offices that are supposed to enforce laws against this, so there’s no risk.
However, when the rules/law enforcement are bad permissionless transactions are a godsend as cryto usage in Venizuela shows: https://www.americaeconomia.com/en/node/288189
Also, when the governments print money and debase the purchasing power crypto is indeed a better store of value than something like argentinian peso.
Freedom is messy, because the bad guys are also free to do bad stuff. But when the game is crooked, permissionless transactions are very important.