[2020-07-06] 4th Amendment Does Not Protect Bitcoin Data, 5th Circuit Court Rule

o_e_l_e_o

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Quote from: figmentofmyass on July 27, 2020, 04:50:55 PM

Quote

Participants would share addresses on the board and, if another member claims an address, the two entities could then share data P2P to keep personal information out of the reach of hackers.

I can't find any more details about this, but to me this sounds like Coinbase (for example) will list all the addresses used by all their customers, and if another exchange detects a match with an address used by one of their customers, then the two exchanges share all the details of said customer with each other? Surely this can't be right?

This is an incredible invasion of privacy and an incredible security risk, and I'm going to assume there will be no way to opt out of it.

bbc.reporter

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@figmentofmyass. This might be a major issue. It appears that private information of all users might be downloaded in Coinbase's blockchain analytics project without being a Coinbase user and sell them to the government.

figmentofmyass

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Quote from: bbc.reporter on July 26, 2020, 09:20:49 PM

Does anyone have a Theblockcrypto subscription? Please share the whole article hehehe.

nope, but coindesk reported on this a week ago: https://www.coindesk.com/crypto-exchange-group-eyes-bulletin-board-system-for-fatf-compliance-coinbase-exec

some of the more notable tidbits:

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BitGo and Coinbase are members of the working group.

Participants would share addresses on the board and, if another member claims an address, the two entities could then share data P2P to keep personal information out of the reach of hackers.

The Gemini, Kraken and Bittrex exchanges are said by The Block to also be participating in the Travel Rule working group.

when you dig into the requirements of the rule, the privacy implications seem rather alarming. it sounds like exchanges will be openly sharing customer AML/KYC data with each other without informing customers. maybe this isn't a major issue within the "working group" since they are all exchanges that mandate KYC anyway. if they were to share KYC data in this manner with services where customers haven't verified identity (bitmex, kucoin, binance etc) it would be rather disturbing.

unfortunately, the exchanges are just gonna roll out new privacy policies and no one is gonna bother reading them anyway.

bbc.reporter

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Does anyone have a Theblockcrypto subscription? Please share the whole article hehehe.

It appears Coinbase is leading the development of a user information exchange for exchanges located in America. The regulators pets Brian Armstrong's head with satisfaction.

Coinbase and other crypto exchanges are designing a P2P system for sharing user info under FATF rules

A working group including U.S. crypto exchanges is working on a joint solution for complying with Financial Action Task Force rules on sharing customer information.

The effort is said to have been begun by Coinbase, resulting in a plan to exchange data via a peer-to-peer “bulletin board.”

A white paper on the proposed solution will be published in the coming weeks, according to Coinbase.

Source https://www.theblockcrypto.com/daily/72293/coinbase-exchanges-fatf-travel-rule-solution

figmentofmyass

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Quote from: bbc.reporter on July 17, 2020, 08:19:50 PM

What exchanges are operating under a jurisdiction with a legal framework that supports and protects a free and open exchange or with less strict policies? Exchanges licensed in Malta or Switzerland?

no way. malta is part of the EU and switzerland is part of the EEA, so both are subject to the AMLD5.

the seychelles seems to be popular for exchanges that allow unverified trading. i'm not sure how easy fiat banking is from a seychelles-based company though. singapore, the british virgin islands, and hong kong also come to mind.

bbc.reporter

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Quote from: o_e_l_e_o on July 15, 2020, 03:01:17 AM

Quote from: bbc.reporter on July 14, 2020, 10:08:05 PM

What centralized exchanges act like the bitcoin police and what supports the free and open exchange of bitcoin?

I can't answer that since I don't have an intimate knowledge with all centralized exchanges, particularly since I don't use a single one. Although as figment points out above they are simply operating within a legal framework which has been imposed on them, I would still argue that any exchange which will lock your account for how you spend your own money is not an exchange we should be supporting.

At some point all centralized exchanges could be forced to comply with various laws and regulations, and police your deposits and withdrawals. The only way to avoid this altogether is to avoid centralized exchanges.

What exchanges are operating under a jurisdiction with a legal framework that supports and protects a free and open exchange or with less strict policies? Exchanges licensed in Malta or Switzerland?

figmentofmyass

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Quote from: o_e_l_e_o on July 15, 2020, 03:01:17 AM

I can't answer that since I don't have an intimate knowledge with all centralized exchanges, particularly since I don't use a single one. Although as figment points out above they are simply operating within a legal framework which has been imposed on them, I would still argue that any exchange which will lock your account for how you spend your own money is not an exchange we should be supporting.

At some point all centralized exchanges could be forced to comply with various laws and regulations, and police your deposits and withdrawals. The only way to avoid this altogether is to avoid centralized exchanges.

i really think that's the bottom line here. i don't think we should be presenting any centralized exchange as being safe from having funds frozen. while offshore exchanges like binance and poloniex are safer than coinbase or gemini in this respect, the regulatory atmosphere and site terms re any platform can change at the drop of a dime. and beyond that, any 3rd party trust is always a danger to your coins.

there is a tendency to single out this or that exchange for AML/KYC policies or whatever issue of the day, but i really think we should be emphasizing the danger of all centralized exchanges given the regulatory atmosphere. everyone should minimize the amount of funds they send to exchanges, withdraw ASAP after trading, and always approach with caution knowing these internal AML controls are always watching and waiting to flag your coins. always know where your outputs come from and act accordingly etc.

Harlot

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Quote from: bbc.reporter on July 14, 2020, 10:08:05 PM

Quote from: o_e_l_e_o on July 14, 2020, 12:34:48 AM

Quote from: figmentofmyass on July 13, 2020, 06:14:32 PM

like this---it's purely risk-based. something like this would never hold up as evidence in a court of law. it's just a company deciding a customer is risky and refusing to do business with them.

Yeah, fair point, and it kind of brings use to what we were discussing in this thread on privacy: https://bitcointalksearch.org/topic/m.54787543

As you say, this kind of probing that Coinbase does might not hold up in a court, and yet, Coinbase use it as evidence enough to deny people service, to lock accounts, and to freeze coins. It's also the exact same kind of probing that they are licensing out to the IRS, the DEA, and now the Secret Service.

Since they can't possible blacklist every coin which has ever been mixed, gambled, or is otherwise "unsavory" in their view, then their cut off for how far back they look is completely arbitrary and so easily bypassed as to make it meaningless.

I guess I'm just angry that Coinbase and other centralized exchanges are appointing themselves as bitcoin police and deciding how people are and are not allowed to use their coins. That's the opposite of what bitcoin was designed for.

What centralized exchanges act like the bitcoin police and what supports the free and open exchange of bitcoin? We should have this list available for the community in the exchanges subforum.

Having a list of these exchanges would be useless since even if we know they are in some kind of authority free operations at any point in time they may be required by the law to give out information against their own customers so it won't really matter if they don't have that kind of history or not. It always change and the authorities will always use the law to get every information they can from these businesses. The best way to avoid some kind of legal sanction from them is to not do anything illegal with these centralized services.

leea-1334

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Temporary forum vacation

Quote from: bbc.reporter on July 14, 2020, 10:08:05 PM

What centralized exchanges act like the bitcoin police and what supports the free and open exchange of bitcoin? We should have this list available for the community in the exchanges subforum.

I do not think there are any at all,,, or at least none who will care. The centralized anonymous services like casinos and mixers are the only ones in my mind who do this but even so,,, until they are forced to comply they will only do so till their powers allow. At the end of the day no one will protect you if they have your identity and can give it up in exchange for freedom.

o_e_l_e_o

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Quote from: bbc.reporter on July 14, 2020, 10:08:05 PM

What centralized exchanges act like the bitcoin police and what supports the free and open exchange of bitcoin?

I can't answer that since I don't have an intimate knowledge with all centralized exchanges, particularly since I don't use a single one. Although as figment points out above they are simply operating within a legal framework which has been imposed on them, I would still argue that any exchange which will lock your account for how you spend your own money is not an exchange we should be supporting.

At some point all centralized exchanges could be forced to comply with various laws and regulations, and police your deposits and withdrawals. The only way to avoid this altogether is to avoid centralized exchanges.

bbc.reporter

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Quote from: o_e_l_e_o on July 14, 2020, 12:34:48 AM

Quote from: figmentofmyass on July 13, 2020, 06:14:32 PM

like this---it's purely risk-based. something like this would never hold up as evidence in a court of law. it's just a company deciding a customer is risky and refusing to do business with them.

Yeah, fair point, and it kind of brings use to what we were discussing in this thread on privacy: https://bitcointalksearch.org/topic/m.54787543

As you say, this kind of probing that Coinbase does might not hold up in a court, and yet, Coinbase use it as evidence enough to deny people service, to lock accounts, and to freeze coins. It's also the exact same kind of probing that they are licensing out to the IRS, the DEA, and now the Secret Service.

Since they can't possible blacklist every coin which has ever been mixed, gambled, or is otherwise "unsavory" in their view, then their cut off for how far back they look is completely arbitrary and so easily bypassed as to make it meaningless.

I guess I'm just angry that Coinbase and other centralized exchanges are appointing themselves as bitcoin police and deciding how people are and are not allowed to use their coins. That's the opposite of what bitcoin was designed for.

What centralized exchanges act like the bitcoin police and what supports the free and open exchange of bitcoin? We should have this list available for the community in the exchanges subforum.

figmentofmyass

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Quote from: o_e_l_e_o on July 14, 2020, 12:34:48 AM

I guess I'm just angry that Coinbase and other centralized exchanges are appointing themselves as bitcoin police and deciding how people are and are not allowed to use their coins. That's the opposite of what bitcoin was designed for.

i understand. i just don't see this as a bitcoin issue per se, more so an issue of burdensome government regulations, especially re money transmitters. i really miss the old wild west days---BTC-E was my exchange of choice for many years---but it's just unrealistic to expect exchanges to uphold those ethics at this point.

it's FATF rules (and national legal reinforcement of them) that brought the risk-based approach to money transmission years ago. crypto exchanges have merely been brought into the fold of existing regulation. i don't see exchanges as appointing themselves anything---they are just unwillingly implementing an expensive and burdensome solution to overreaching laws. no company wants this. they just don't want to get shut down by the FBI or get 9 figure fines from FINCEN.

the same logic applies to coinbase re gambling transactions.

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You must establish and implement written policies and procedures that are reasonably designed to identify and block or otherwise prevent or prohibit payments related to unlawful Internet gambling that are restricted by UIGEA and are processed through your facilities.
https://www.federalreserve.gov/supervisionreg/regggcg.htm

i mean, they can just ignore these laws of course, but they would also get massive fines from regulators. not a very profitable move. i assume shareholders would not like this approach......

o_e_l_e_o

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Quote from: figmentofmyass on July 13, 2020, 06:14:32 PM

like this---it's purely risk-based. something like this would never hold up as evidence in a court of law. it's just a company deciding a customer is risky and refusing to do business with them.

Yeah, fair point, and it kind of brings use to what we were discussing in this thread on privacy: https://bitcointalksearch.org/topic/m.54787543

As you say, this kind of probing that Coinbase does might not hold up in a court, and yet, Coinbase use it as evidence enough to deny people service, to lock accounts, and to freeze coins. It's also the exact same kind of probing that they are licensing out to the IRS, the DEA, and now the Secret Service.

Since they can't possible blacklist every coin which has ever been mixed, gambled, or is otherwise "unsavory" in their view, then their cut off for how far back they look is completely arbitrary and so easily bypassed as to make it meaningless.

I guess I'm just angry that Coinbase and other centralized exchanges are appointing themselves as bitcoin police and deciding how people are and are not allowed to use their coins. That's the opposite of what bitcoin was designed for.

bbc.reporter

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Quote from: jseverson on July 13, 2020, 02:41:01 AM

Quote from: bbc.reporter on July 12, 2020, 08:31:34 PM

I assume their blockchain analytics data analysis might begin on their own users' transactions. Where will they begin?

Well they did say they use it internally for regulatory compliance:

Quote

It added: "Coinbase Analytics data is fully sourced from online, publicly available data, and does not include any personally-identifiable information for anyone, regardless of whether or not they use Coinbase. Coinbase Analytics is a blockchain analytics product that we use internally for compliance and global investigations. It's an important tool to meet our regulatory requirements and protect our customers' funds. We developed Coinbase Analytics with technology from the Neutrino acquisition."

They flag users here and there, so we at least know their methodology isn't as black and white as "this batch came from a mixer, so ban." That's probably still not a good thing for users though, since it means Coinbase probably knows more about them than they think. That being said, I'm sure all the other large exchanges use an analytic service of sorts -- they're just less likely to report their findings to authorities lol.

It is a conflict of interest between Coinbase and its users, I reckon. Brian Armstrong owns an exchange that sells the privacy of its users to government agencies through his own blockchain analytics company hehehe.

figmentofmyass

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Quote from: o_e_l_e_o on July 13, 2020, 08:14:03 AM

Quote from: jseverson on July 13, 2020, 02:41:01 AM

That's probably still not a good thing for users though, since it means Coinbase probably knows more about them than they think.

Absolutely they do. They probably know more about you than your average fiat bank.

If I withdraw cash from my bank, I can go and spend that on gambling, drugs, and prostitutes, and my bank have no idea. My bank know how much I have withdrawn, but they don't know how much I have in my wallet, they don't know when or where I spend it, they don't know where any new money is coming from. Their monitoring capabilities are limited to one transaction deep.

that's just with cash though. i would agree that cash is superior for black market transactions, particularly those that might warrant FBI or similar attention.

yet we live in an increasingly cashless world. with debit/credit cards, paypal, venmo and the like, financial institutions know exactly how/where your money was spent and what your balance is. the dots can be easily connected in a law enforcement investigation.

when coinbase tries to analyze blockchain activity, at best they are applying probabilistic/heuristic models. they don't know much of anything. for example, if i withdraw outputs from coinbase and 3 hops later they end up in an exchange or casino or DNM, it's impossible to know whether or not those outputs changed hands up to thrice before arriving there. and once swept by a centralized service, that's generally the end of the trail. they apply risk-based models to account for that re AML compliance, but that still doesn't provide the sort of insight into account holder activities that electronic banking does.

Quote from: o_e_l_e_o on July 13, 2020, 08:14:03 AM

Coinbase, on the other hand, are known to probe several transactions prior to a deposits and several transactions after a withdrawal. The exact number seems to vary depending on how "suspicious" or otherwise they think you are, but there are reports of users having their Coinbase accounts banned for gambling with 4 or 5 transactions between withdrawing from Coinbase and depositing to a casino.

like this---it's purely risk-based. something like this would never hold up as evidence in a court of law. it's just a company deciding a customer is risky and refusing to do business with them.

o_e_l_e_o

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Quote from: jseverson on July 13, 2020, 02:41:01 AM

That's probably still not a good thing for users though, since it means Coinbase probably knows more about them than they think.

Absolutely they do. They probably know more about you than your average fiat bank.

If I withdraw cash from my bank, I can go and spend that on gambling, drugs, and prostitutes, and my bank have no idea. My bank know how much I have withdrawn, but they don't know how much I have in my wallet, they don't know when or where I spend it, they don't know where any new money is coming from. Their monitoring capabilities are limited to one transaction deep.

Coinbase, on the other hand, are known to probe several transactions prior to a deposits and several transactions after a withdrawal. The exact number seems to vary depending on how "suspicious" or otherwise they think you are, but there are reports of users having their Coinbase accounts banned for gambling with 4 or 5 transactions between withdrawing from Coinbase and depositing to a casino. Once you make a withdrawal from Coinbase, they know how much you withdrew, how much you are holding in total, when you spend, where you send it to, when you bring in new money, where that new money is coming from, etc.

buwaytress

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Quote from: hatshepsut93 on July 12, 2020, 11:33:01 AM

And they also can sell your data to other parties secretly, so even if the judge ruled otherwise, there would still be no good reason to trust exchanges and other centralized companies with your personal data.

Maybe someone views this as negative news, but it should really be something that we knew all along - there's no privacy where there's centralization.

I don't think they had my trust even 20 years ago, they'll never get my trust today or tomorrow. Was always just never keen to give away my details if I didn't have to (unfortunately I do have to for at least 1 place to reliably and legitimately trade my coin now), so imagine my lack of shock when things like these come to light =)

That people keep getting surprised by this shouldn't happen. Fool me once...

jseverson

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Quote from: bbc.reporter on July 12, 2020, 08:31:34 PM

I assume their blockchain analytics data analysis might begin on their own users' transactions. Where will they begin?

Well they did say they use it internally for regulatory compliance:

Quote

It added: "Coinbase Analytics data is fully sourced from online, publicly available data, and does not include any personally-identifiable information for anyone, regardless of whether or not they use Coinbase. Coinbase Analytics is a blockchain analytics product that we use internally for compliance and global investigations. It's an important tool to meet our regulatory requirements and protect our customers' funds. We developed Coinbase Analytics with technology from the Neutrino acquisition."

They flag users here and there, so we at least know their methodology isn't as black and white as "this batch came from a mixer, so ban." That's probably still not a good thing for users though, since it means Coinbase probably knows more about them than they think. That being said, I'm sure all the other large exchanges use an analytic service of sorts -- they're just less likely to report their findings to authorities lol.

bbc.reporter

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Also Coinbase hehe.

I assume their blockchain analytics data analysis might begin on their own users' transactions. Where will they begin?

Crypto exchange Coinbase is providing its blockchain analytics software to the U.S. Secret Service, according to a public record obtained by The Block.

The Secret Service, which is part of the U.S. Department of Homeland Security, is charged with conducting financial crime investigations in addition to protecting the nation's top leaders.

The record shows that the Secret Service awarded a four-year contract to Coinbase in May in order to use its blockchain analytics software, called Coinbase Analytics. The contract is worth $183,750 in total and ends on May 9, 2024.

Source https://www.theblockcrypto.com/post/71261/coinbase-is-selling-blockchain-analytics-software-to-the-us-secret-service

Harlot

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Quote from: o_e_l_e_o on July 12, 2020, 12:59:01 PM

Quote from: Harlot on July 11, 2020, 04:03:27 PM

-snip-

Note the difference. The news article suggests that Gratkowski was already a suspect, had searched his house and equipment, found a Coinbase account, and subpoenaed Coinbase for his account history. In reality, they had no idea who the suspects were, and used Coinbase to specifically identify people. While the implication is that the Coinbase records were simply another piece of evidence for them to use, in reality, Coinbase identified by name and address an otherwise unknown person to law enforcement.

Make of that what you will.

Technically you are right but the thing is Gratkowski is still wrong using that argument that transactions done with Coinbase is private since we all know that KYC and AML procedures apply in custodial wallets and these documents and information can be pulled out anytime by the authorities not only by the IRS for legal purposes such as this one where he bought child pornography. If bank records and transactions can be subpoenaed I don't know why he thought or even his lawyer made Bitcoin transactions through Coinbase be private since they aren't covered by some kind of secrecy privilege.

o_e_l_e_o

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Quote from: Harlot on July 11, 2020, 04:03:27 PM

-snip-

The quote you've shared from the court documentation tells quite a different story from the bitcoin.com news article (although assuming known scam site bitcoin.com would be a reliable source of information was probably naive on my part).

The bitcoin.com article states:

Quote

Now the Federal Bureau of Investigation (FBI) searched Gratkowski and found illicit materials at his home and they subpoenaed Coinbase for transaction records.

Whereas the court documents state:

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Once they identified the Website’s Bitcoin addresses, agents served a grand jury subpoena on Coinbase—rather than seeking and obtaining a warrant—for all information on the Coinbase customers whose accounts had sent Bitcoin to any of the addresses in the Website’s cluster. Coinbase identified Gratkowski as one of these customers. With this information, agents obtained a search warrant for Gratkowski’s house.

Note the difference. The news article suggests that Gratkowski was already a suspect, had searched his house and equipment, found a Coinbase account, and subpoenaed Coinbase for his account history. In reality, they had no idea who the suspects were, and used Coinbase to specifically identify people. While the implication is that the Coinbase records were simply another piece of evidence for them to use, in reality, Coinbase identified by name and address an otherwise unknown person to law enforcement.

Make of that what you will.

hatshepsut93

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Quote from: buwaytress on July 10, 2020, 07:20:48 AM

The secondary lesson is that Coinbase and any other regulatory compliant service will be obligated to turn over your data to the state or enforcement. We have known this for years.

And they also can sell your data to other parties secretly, so even if the judge ruled otherwise, there would still be no good reason to trust exchanges and other centralized companies with your personal data.

Maybe someone views this as negative news, but it should really be something that we knew all along - there's no privacy where there's centralization.

Harlot

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Quote from: o_e_l_e_o on July 11, 2020, 03:36:04 AM

Quote from: Harlot on July 07, 2020, 10:48:31 AM

Yes I know about his argument with Coinbase being a private services but not unless we are talking about off-chain transactions happening in Coinbase he is wrong to make this an argument as still their transaction goes through Blockchain.

We are talking about off-chain transactions. He deposited to an address on Coinbase, and later paid an illegal service out of a different address on Coinbase. There would probably have been no clear link simply from looking at the blockchain between his deposit and withdrawal, as the first would be to an individual deposit address, while the latter would have come from Coinbase's collective hot wallet.

Presumably without Coinbase's compliance law enforcement were unable to make a definitive link between the two, which is why the went to the effort to subpoena Coinbase.

According to how the Feds discovered the illegal transaction they have analyzed Gratkowski as one of the customers in the website using Blockchain.

Quote from: http://www.ca5.uscourts.gov/opinions/pub/19/19-50492-CR0.pdf

Federal agents used an outside service to analyze the publicly viewable
Bitcoin blockchain and identify a cluster of Bitcoin addresses controlled by
the Website. Once they identified the Website’s Bitcoin addresses, agents
served a grand jury subpoena on Coinbase—rather than seeking and
obtaining a warrant—for all information on the Coinbase customers whose
accounts had sent Bitcoin to any of the addresses in the Website’s cluster.
Coinbase identified Gratkowski as one of these customers. With this
information, agents obtained a search warrant for Gratkowski’s house. At
his house, agents found a hard drive containing child pornography, and
Gratkowski admitted to being a Website customer.

So definitely it is an on-chain transaction based on how the discovery went down since they have been tracking this website and have linked the Bitcoin address and traced it to the customers who have paid them using Blockchain. So yeah it would have been better if the judge said it about blockchain being a public record and the authorities have just used Coinbase to verify if the transaction was legit.

o_e_l_e_o

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Quote from: Harlot on July 07, 2020, 10:48:31 AM

Yes I know about his argument with Coinbase being a private services but not unless we are talking about off-chain transactions happening in Coinbase he is wrong to make this an argument as still their transaction goes through Blockchain.

We are talking about off-chain transactions. He deposited to an address on Coinbase, and later paid an illegal service out of a different address on Coinbase. There would probably have been no clear link simply from looking at the blockchain between his deposit and withdrawal, as the first would be to an individual deposit address, while the latter would have come from Coinbase's collective hot wallet.

Presumably without Coinbase's compliance law enforcement were unable to make a definitive link between the two, which is why the went to the effort to subpoena Coinbase.

bbc.reporter

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@buwaytress. The main lesson should not apply on everything. There are many borderline cases that make bitcoin very useful hehe.

Also, the United States of America was founded by a group of people who did the most illegal shit versus the British. Treason hehehehe.

buwaytress

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Actually, I thought the main lesson here is: don't do illegal shit, and certainly don't participate in universally criminal activity.

The secondary lesson is that Coinbase and any other regulatory compliant service will be obligated to turn over your data to the state or enforcement. We have known this for years.

Also, using bitcoin even without coinbase won't protect you from enforcement if you're a bad guy. Man deserves to sit in jail.

Harlot

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Quote from: o_e_l_e_o on July 06, 2020, 01:55:13 PM

Quote from: Harlot on July 06, 2020, 07:25:04 AM

The problem is Bitcoin transactions are even if not handled with a custodial service will still be recorded in Bitcoin's blockchain which all transactions are shown publicly, it is just unfortunate that the judge didn't go to this route but instead point out that Coinbase is a financial institution where they can legally obtain particular transactions of a person.

His argument wasn't that the transactions themselves were private - obviously this is not the case since every transaction is publicly recorded on the blockchain. His argument was that his Coinbase account history was private.

This guy is currently in prison, which is obviously where he belongs, but the case does highlight the fact that centralized exchanges are anything but private. It is so utterly naive to think that Coinbase, the exchange which hands over their customers' data to the IRS to harass for taxes, the exchange which employs software developers who aided dictators in torturing and murdering citizens to help spy on their users, the exchange which sells their customers' data to third parties, the exchange which has a partnership with the DEA and other three letter agencies to help them analyze blockchain transactions, would do anything other than immediately hand over all the relevant data. Coinbase are anti-privacy. Anything and everything you do involving Coinbase should be assumed to be public knowledge.

Yes I know about his argument with Coinbase being a private services but not unless we are talking about off-chain transactions happening in Coinbase he is wrong to make this an argument as still their transaction goes through Blockchain. Even before this case was on the news we have known very well that Coinbase is known to comply with the IRS when it comes to handing out their customers' transaction data in trading for AML purposes. His transaction was no different and the subpoena signed by the judge is valid.

philipma1957

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'The right to privacy matters'

This ruling is huge break for USA taxpayers.
The federal judge has decided coinbase is essentially a bank and that BTC is a virtual currency.

Thus he has given real ammo to fight IRS rulings that BTC is more like a property. ie stock.

It actually is a beginning and a First Federal USA court decision to call BTC currency and not property.

At op thanks for the case info.

One could go after all of IRS reporting rules on US tax returns based on this ruling.

Quote from: ?? on ??

Quote from: figmentofmyass on July 06, 2020, 02:23:33 PM

Quote from: ?? on ??

On a side note, this part of news is quite controversial

Quote from: https://news.bitcoin.com/4th-amendment-does-not-protect-bitcoin-data-us-fifth-circuit-court-rules/

The other two judges agreed with Haynes, and the court noted that unlike cellphone data, bitcoin transactions are not “an intimate window into a person’s life.” The panel also highlighted that cryptocurrency transaction data was not a “pervasive or insistent part of daily life.” Of course, even though the case is controversial, bitcoiners are unsure of how the case will affect other U.S. lawsuits going forward.

Image if you're doing something that could be controversial such as donation to non-profit organization. People would criticize or even terror you if you're forced to give up your bitcoin "data" and government publicize analysis result of the data.

don't use your coinbase account to participate in controversial (or certainly illegal) activities---that's the long and short of it. coinbase and other exchanges are essentially banks. that was actually part of the basis for this ruling. the 4th amendment does not protect banking records.

this ruling doesn't apply to your personal bitcoin transactions, and unless the government has cause to bring litigation against you (for example, the nonprofits you are donating to are classified as terrorist organizations) facts like that wouldn't come out in open court anyway.

Thanks for the insight, but that won't help people who have no idea how to protect their privacy or rights.

bbc.reporter

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Quote from: figmentofmyass on July 06, 2020, 02:23:33 PM

Quote from: ?? on ??

On a side note, this part of news is quite controversial

Quote from: https://news.bitcoin.com/4th-amendment-does-not-protect-bitcoin-data-us-fifth-circuit-court-rules/

The other two judges agreed with Haynes, and the court noted that unlike cellphone data, bitcoin transactions are not “an intimate window into a person’s life.” The panel also highlighted that cryptocurrency transaction data was not a “pervasive or insistent part of daily life.” Of course, even though the case is controversial, bitcoiners are unsure of how the case will affect other U.S. lawsuits going forward.

Image if you're doing something that could be controversial such as donation to non-profit organization. People would criticize or even terror you if you're forced to give up your bitcoin "data" and government publicize analysis result of the data.

don't use your coinbase account to participate in controversial (or certainly illegal) activities---that's the long and short of it. coinbase and other exchanges are essentially banks. that was actually part of the basis for this ruling. the 4th amendment does not protect banking records.

this ruling doesn't apply to your personal bitcoin transactions, and unless the government has cause to bring litigation against you (for example, the nonprofits you are donating to are classified as terrorist organizations) facts like that wouldn't come out in open court anyway.

Also, with or without a 4th amendment, when the government knocks on their doors and pressures them to comply or else a takedown, I reckon it always ends in compliance that sacrifices some of its customers to save the business.

In chess it is known as the gambit hehehe.

o_e_l_e_o

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Quote from: figmentofmyass on July 06, 2020, 02:23:33 PM

did you really expect coinbase to defy court orders to turn over data to the IRS?

No of course not, and that's exactly my point. No centralized exchange is going to care more about your privacy than they do about anything which could hurt their bottom line. This is an extreme case involving a subpoena, but many exchanges will hand over your data for far less. Coinbase are the worst for it since they are quite literally working with the DEA and IRS, but anything that you do on any centralized exchange is fair game. Anyone who expects anything in the way of privacy or protection from a centralized exchange is fooling themselves.

You see people on this forum and elsewhere not infrequently suggest using centralized exchanges like Coinbase as "free mixers", since your deposits and withdrawals go to/come from different addresses. I would suggest any coins you pass through centralized exchanges become less private, not more.

figmentofmyass

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Quote from: ?? on ??

On a side note, this part of news is quite controversial

Quote from: https://news.bitcoin.com/4th-amendment-does-not-protect-bitcoin-data-us-fifth-circuit-court-rules/

The other two judges agreed with Haynes, and the court noted that unlike cellphone data, bitcoin transactions are not “an intimate window into a person’s life.” The panel also highlighted that cryptocurrency transaction data was not a “pervasive or insistent part of daily life.” Of course, even though the case is controversial, bitcoiners are unsure of how the case will affect other U.S. lawsuits going forward.

Image if you're doing something that could be controversial such as donation to non-profit organization. People would criticize or even terror you if you're forced to give up your bitcoin "data" and government publicize analysis result of the data.

don't use your coinbase account to participate in controversial (or certainly illegal) activities---that's the long and short of it. coinbase and other exchanges are essentially banks. that was actually part of the basis for this ruling. the 4th amendment does not protect banking records.

this ruling doesn't apply to your personal bitcoin transactions, and unless the government has cause to bring litigation against you (for example, the nonprofits you are donating to are classified as terrorist organizations) facts like that wouldn't come out in open court anyway.

Quote from: o_e_l_e_o on July 06, 2020, 01:55:13 PM

It is so utterly naive to think that Coinbase, the exchange which hands over their customers' data to the IRS to harass for taxes, the exchange which employs software developers who aided dictators in torturing and murdering citizens to help spy on their users, the exchange which sells their customers' data to third parties, the exchange which has a partnership with the DEA and other three letter agencies to help them analyze blockchain transactions, would do anything other than immediately hand over all the relevant data. Coinbase are anti-privacy. Anything and everything you do involving Coinbase should be assumed to be public knowledge.

gemini, kraken, bitflyer, etc would do exactly the same thing if subpoenaed in this case. no USA-based exchange executives are going to risk being held in contempt of court (read: go to jail) just to save their customers' privacy. Cheesy

did you really expect coinbase to defy court orders to turn over data to the IRS? i'm just being realistic here.....

o_e_l_e_o

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Quote from: Harlot on July 06, 2020, 07:25:04 AM

The problem is Bitcoin transactions are even if not handled with a custodial service will still be recorded in Bitcoin's blockchain which all transactions are shown publicly, it is just unfortunate that the judge didn't go to this route but instead point out that Coinbase is a financial institution where they can legally obtain particular transactions of a person.

His argument wasn't that the transactions themselves were private - obviously this is not the case since every transaction is publicly recorded on the blockchain. His argument was that his Coinbase account history was private.

This guy is currently in prison, which is obviously where he belongs, but the case does highlight the fact that centralized exchanges are anything but private. It is so utterly naive to think that Coinbase, the exchange which hands over their customers' data to the IRS to harass for taxes, the exchange which employs software developers who aided dictators in torturing and murdering citizens to help spy on their users, the exchange which sells their customers' data to third parties, the exchange which has a partnership with the DEA and other three letter agencies to help them analyze blockchain transactions, would do anything other than immediately hand over all the relevant data. Coinbase are anti-privacy. Anything and everything you do involving Coinbase should be assumed to be public knowledge.

Kakmakr

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Quote from: bbc.reporter on July 05, 2020, 10:21:48 PM

There is a lesson here for criminals hehehe. Never use Coinbase or any exchange or any bitcoin centralized service to make payments directly to a child pornography website. Are you stupid?

According to the ruling of a three-judge panel from the Fifth Circuit courts, the American government’s Fourth Amendment does not apply to bitcoin transactions used in a crime if they stem from virtual currency exchanges. Richard Gratkowski was charged with allegedly making payments to a child pornography website, and sent bitcoin (BTC) to the web portal via his Coinbase account.

Specifically, Gratkowski leveraged the 2018 Supreme Court ruling from Carpenter v. the United States. That particular case deemed cellphone data was personal and protected by Fourth Amendment protections.

However, Judge Catharina Haynes used an old Supreme Court decision from 1939 called the United States v. Miller. That particular ruling said that bank records are not protected by the Fourth Amendment. Judge Haynes ruled:

Coinbase is a financial institution, a virtual currency exchange, that provides Bitcoin users with a method for transferring bitcoin. The main difference between Coinbase and traditional banks, which were at issue in Miller, is that Coinbase deals with virtual currency while traditional banks deal with physical currency.

Read in full https://news.bitcoin.com/4th-amendment-does-not-protect-bitcoin-data-us-fifth-circuit-court-rules/

The thing that worries me the most about your post is not the ruling but rather what you said... " There is a lesson here for criminals hehehe. Never use Coinbase or any exchange or any bitcoin centralized service to make payments directly to a child pornography website. Are you stupid? "

Are you into child pornography? Why do you want to learn lessons from this and why would you want to teach people better ways to pay for child pornography?

The real lesson to be learned from this, is not to buy or pay for something that is illegal .... that includes child pornography. I do not like regulated exchanges with all these KYC/AML requirements, but if they can be used to catch these monsters, then I am fine with that. Wink

Harlot

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His argument was straight out wrong to begin with, Gratkowski stated that his Bitcoin transactions are private and is violating his right to the 4th amendment. The problem is Bitcoin transactions are even if not handled with a custodial service will still be recorded in Bitcoin's blockchain which all transactions are shown publicly, it is just unfortunate that the judge didn't go to this route but instead point out that Coinbase is a financial institution where they can legally obtain particular transactions of a person.

bbc.reporter

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There is a lesson here for criminals hehehe. Never use Coinbase or any exchange or any bitcoin centralized service to make payments directly to a child pornography website. Are you stupid?

According to the ruling of a three-judge panel from the Fifth Circuit courts, the American government’s Fourth Amendment does not apply to bitcoin transactions used in a crime if they stem from virtual currency exchanges. Richard Gratkowski was charged with allegedly making payments to a child pornography website, and sent bitcoin (BTC) to the web portal via his Coinbase account.

Specifically, Gratkowski leveraged the 2018 Supreme Court ruling from Carpenter v. the United States. That particular case deemed cellphone data was personal and protected by Fourth Amendment protections.

However, Judge Catharina Haynes used an old Supreme Court decision from 1939 called the United States v. Miller. That particular ruling said that bank records are not protected by the Fourth Amendment. Judge Haynes ruled:

Coinbase is a financial institution, a virtual currency exchange, that provides Bitcoin users with a method for transferring bitcoin. The main difference between Coinbase and traditional banks, which were at issue in Miller, is that Coinbase deals with virtual currency while traditional banks deal with physical currency.

Read in full https://news.bitcoin.com/4th-amendment-does-not-protect-bitcoin-data-us-fifth-circuit-court-rules/

Topic: [2020-07-06] 4th Amendment Does Not Protect Bitcoin Data, 5th Circuit Court Rule (Read 421 times)