Topic: Bitcoin dirty money detection tools (Read 4192 times)

Can you please elaborate that?

I'm really curious about it. Do you think Pirate only mix tainted coins or he cleans them someway?

Thank you

It's a good idea to have tools that track stolen BTC for law enforcement purposes. It doesn't make much sense to confiscate them except maybe temporarily while investigated.

There is really no way to justify theft claims in most cases, therefore something of this sort is less than feasible.  It's all subject to trust in the previously controlling figure in their claim.  At least 'loss' is an easy claim as if at any point claimed lost coins are spent, the obvious fact is they were truly not, but stolen...

Could have something on the sort of the address that held them signing a note that the coins were stolen and others signing the claim in trust, but the infrastructure for such is obviously not implemented in BTC chain.  namecoin could be used to follow such, or really any sort of other pub forum.  But either way, attempting to quarantine stolen coins in most sectors of the market is extremely problematic.  Not terrible when Gox and the like do it, but if nodes start trying to block stolen transfers, things will clearly become problematic fast.

Example of the last comment if some are not yet seeing it:  A number of coins are stolen and end up being distributed heavily before discovery of the incident, someone with even 2-3 satoshi attempts a larger transaction including these coins they now own.  If a number of nodes at this point were to say these coins were known stolen and attempt to quarantine them, the 'thieves' have already profited and network users are impacted negatively.  Further to this point, if anything managed to get implemented on a large number of nodes, someone could 'Robin Hood' and distribute a large theft across a list of public addesses immediately, before any detection algorithms could identify and validate a theft and effectively destroy the network.

The only valid solution is to safeguard owned coins, and not to attempt firewalling cures on the network.  Obviously I've gone further than the previous queries here, but worth consideration.  These concerns could be mitigated by a client implementation with wallets acknowledging a trustnet of what coins should be purged from the network, but then we're just throwing away marketable coins, which is foolish at best.

This tool will be ready for everyone to use soon.  There are several other analysis techniques too (including the 'taint' metric), which will be rolled out after the core function is live.  Disclaimer: That's my blog. 

That is not the same. Mtgox doesn't block coins which have been used to buy drugs on Silk Road.
Banks will freeze you account if you receive funds from hacked accounts.

But I agree that it is hard to draw the line between dirty and clean coins.
At same point the most addresses will have been in contact with stolen coins (accidentally) since bitcoins are circling around and are traceable to their origin.

The 5 biggest thefts:
78k MyBitCoin
46k Linode
15k Bitcoin7
20k Bitcoinica
25k Allinvain Hack
= ~ 180k
So around 2% off all bitcoins have been stolen (maybe some twice but I only calculated the 5 biggest thefts). You can imagine how many wallets have been in contact with stolen coins.

Using exchanges defeats the core philosophy of BTC.  Buy and sell goods and services with BTC only and don't convert to fiat.

How can exchanges freeze accounts due to dirty coins? That's like banks freezing accounts because you deposited dirty money. Did you know 90% of US dollar bills have traces of cocaine on them? So should banks freeze 90% of their customers accounts? Things like this only hurt the innocent customers.

It's like having $20 bills with cocaine residue on them.

There's no such thing as dirty money.  If MtGox are being dicks about it don't use exchanges.  Keep your BTC to yourself and spend them directly.

From what I understand, not exactly.

I believe what can be done, is to break the coins down so small and distribute them so that if the community as a whole were to start "blacklisting" coins, transactions would almost come to a halt as so many accounts would have those small fractions of a coin in them.

In that scenario, I guess one could still try and track down the history, but it would be so labor intensive, who would do it?

The chain block cannot be reversed, so tracking the history, in most cases, would not help victims of dirty transactions.

It is an interesting question, and I am sure people much smarter than I am have thought up ways on both sides of a dirty transaction (I am assuming you mean stolen) to either clean or track cleansed transactions

Can dirty transactions be washed and pruned so that the exact history is lost?

I think there are mixing services that give you new, clean, coins.

Soon you'll be able to know http://toolongdidntread.com/bitcoin/coming-soon-an-exposed-bitcoin-network/
If you can track people probably you'll also be able to see "dirty" coins with it

I agree there really isn't any such thing as dirty coins, but there is such a thing as coins that will raise attention if I try and use them in the wrong places. In all innocence I could have been given coins that were stolen from the Linode heist or that other Bitcoinica heist. I want some mechanism to detect these. I believe some Bitcoinica coins were sent to the faucet so it's likely a very large number of people have a few of these without even knowing it.

If I knew the addresses that got robbed from Linode or Bitcoinica I can trace back the coins though the block explorer and find out how many I hold as a percentage of my total coins. Are there really no tools that can trace my coins back though the blockchain and tell me how many I have that were once part of a given address or transaction? If not are there any libraries or tools that I could build these tools from?

Next question is there a list of addresses or transactions of high profile robberies? This should all be public information but is it correlated anywhere?

Try selling them in an exchange which doesn't steal your coins. Or even try to sell them here on teh forum or Bitcoin-OTC. Yeah, rad, I know...

Well if you're a miner good luck paying the electric company the bill in bitcoins. If you have some dirty coins in your wallet from transactions you're doomed with MtGox.

Maybe in the future, who knows  

Doesn't cleaning them ruin their value? I thought collectors enjoyed the digital patina...of course it's good to protect them as best you can.

Then don't use exchanges which steal your money.    There is no such thing as dirty coins.

Mtgox taints stolen ones and freezes your account if you have some in possession.  I'm sure this is what he's trying to avoid.

But as I know I don't believe any exist publicly.

I always put my bitcoins in a pot of water and cleanser for 12hrs. They come out clean, every time!

There is no such thing as dirty bitcoins.

I'm sure MtGox most likely programmed that tool themselves.  They simply flagged possible bitcoins coming from "thief" addresses that they designated.

The tools themselves are not public.

If someone sells or sends me BTC what tools can I use to tell if they have been stolen?

Are there tools that can tell me what percentage of dirty coins I have in my wallet, or in any given address?


As MtGox is detecting and blocking transfers of stolen coins I assume these tools do exist somewhere.