What it is suggesting in the lead is that those who pay higher fees are likely people who want to hide their txs? But isn't this a self-contradictory statement? I mean, what better way to call attention to yourself than to pay a fee abnormally higher than the average?
As far as I interpreted the article, the mechanism would work the following way:
- Alice has BTC from an illegal source.
- She contacts mining pool owner Bob to launder the money. They agree that Bob will send Alice the money from a "clean" address and Bob retains a fee/commission.
- Alice sends the transaction privately to Bob (without broadcasting it). Bob includes it in his blocks, and if he mines a block, he gets the fee. Bob then sends the money to Alice.
So Alice has achieved what she wanted: Her money isn't linked anymore to the illegal activity. Her transaction with the big fee won't be a problem because she can delete all the keys linked to suspicious addresses and transactions once she has the money again.
The mining pool also can "wash his hands" and say that he cannot be blamed for high fees sent by users to him. How to prove that the transaction was never publicly broadcasted? Not totally impossible, but extremely difficult; One would have to investigate backups of the mempools of all big mining pools, for example ...
However, if this was occuring several time with the same miner, then the pool could become suspicious and get investigated. But if it's not done regularly, then there is nothing that can be proven.
Thanks for explaining this, because I did not get it, the first time I have read it.
Now, let's dissect this method and see if this is the most affective way to do this.
Even though these tx's are not publicly broadcasted, it is still reflected on the Blockchain, right? So why would you deliberately leave an indestructible evidence of your crime on the Blockchain?
There are more affective methods to do this, with off-chain databases that can be destroyed, for example : Mixer services / online Gambling sites / Dark markets on Tor.. etc.