Topic: Bitcoin is a hot target for criminals and money launderers. (Read 5062 times)

I don't think they are better at laundering money. Even though it is possible to melt down gold (for example), most gold bars are identified by serial number and somewhat kept track of. This will somewhat reduce the fungible level of gold as some people may not want to accept a gold bar that is involved in nefarious activity.

Yes of course bitcoin is the prime sector todays so called criminals and money launders are targeting the most.

Precious metals may be better for laundering money, but can they be transferred across the globe? ISIS (or any other agency) can get bitcoins from a place half way across the globe. Might not be possible to do that with precious metals.

To engage in a war, you have to

1. Buy lots of weapons
2. Remove large parts of the productive workforce (the workers) to use as soldiers.
2a) EDIT: Change the remaining productive capacity from consumer goods to war goods.
3. Tax the people
4. Confiscate land, buildings, ships, planes and vehicles
5. Loan money from the people of the country
6. Print money

When this is done, the people are hungry, freezing and sick.

The war will just die out due to lack of resources.

7 But wait... then there is banks. They can lend money to buy more weapons, and foodstuffs to the people. (Example now is IMF that lends to the Kiev government, demanding the donbas people crushed).

Bitcoin takes away points 3, 6 and 7. And with wealth hidden in bitcoin, much of 4 also. And if people understand the cost of war, and that loans probably will not be paid back, 5 also.

This is why bitcoin can change the world, if widely adopted.

There always lies another dark world whether or not bitcoin existis.They are making bitcoin a target as we all know the simplicity and anonymity that lies while moving your money so easily where ever you want and buy whatever you like and do whatever you want.

Bitcoin may not work as well yet, but isn't the eventual goal total adoption?  If it reaches that point, accepting it for payment won't be a problem.  And whether bitcoin would be used to buy, say, weapons, or whether it would be used to transfer money so terrorists can buy weapons doesn't really matter.  Bitcoin would still be a much more convenient way to transfer money than fiat or precious metals.

As for defining terrorists, maybe the term is sometimes applied incorrectly, but a terrorist is someone who uses violence to cause terror, usually for some kind of particular goal.  If you're detonating bombs in buildings, subways, etc. to scare people, you're a terrorist.  It doesn't matter whether you think you're doing it for some noble cause or not.  When it's part of a war (or police action or whatever other BS term you want to use for it), it's usually a little different.

If it costs less to accept bitcoin then credit cards then companies will likely pass along some of this savings to their customers. When customers pay less of a price for the same product they will buy from that store more. As a result the store will have higher profits because they accept bitcoin. It will be a never ending cycle.

the concept of something is a thing which is to vague, as you could talk about it as a thing. Example: Bread, you can touch, you can smell, you can taste. God, you cant, but people talking about smelling God, touching God or even tasting God. The problem is here the logic. Bitcoiners are more rational guys, like geeks, more as esoterik believers of energy fields. So I would say, your arguments having an Syntax Error.
 
Just my 50 satoshis.

I am not sure how accurate your stats are but the principle is correct. Merchants are the ones who ultimately need to pay for this fraud and these costs are almost always passed on to consumers. This is why the price you pay with a CC is not transparent as there are "hidden" costs to the products consumers buy.

Well from something I've heard ISIS had looked into using bitcoin, but the issue with Bitcoin is not many people accept it vs accepting state issued currencies. Also if Bitcoin was/is/will be used for funding wars/terrorism it will probably be in the form of a temporary transfer of money, not using it to directly buy, but I can only speculate. Also remember terrorism is a subjective term used by the state to denote violent groups that they don't fund/suppor. Remember the Mujahdeen("freedom fighters"), and the Vietcong("terrorists")?

Precious metals I believe are a better way of laundering money than Bitcoin currently as you can open anonymous safe deposit boxes almost anywhere, and Precious metals have certain price stability to them, and more people are willing to exchange fiat for precious metals vs Bitcoin.

Not only bitcoin, every type money is hot hot target for criminals and money launderers
criminals and money launderers is target everything that profitable for them

And some people think bitcoin created for bad purpose   
Banks can called money launderers too 

The biggest money launderer are banks, but this topic does not belong here

Bitcoin transaction does not fit into today's monetary system at all, regulate-from-bank-account method will not work. Currently the best authorities can do is to regulate the exchanges, once wealth entered bitcoin network, they can be totally free from regulation

on every 2000 dollars spend in creditcard 1 dollar is stolen by thiefs. just an idea that cc system is as well week. numbers for cahs?

With more merchants starting to accept bitcoin, legit trade is starting to consist of more things like computers, satellite TV service and household goods. This is a trend that will likely continue until the vast majority of bitcoin related trade is similar to the kind of trade you have at a shopping mall.

I agree that wars suck, and dollars do fund wars.  But how do you know that bitcoin doesn't fund wars, or that it won't in the future?  How do you know that people on the other side of the world aren't funding some of the wars going on in the Middle East and Ukraine?  Not to mention the potential use for funding terrorist activities...

Yes, you are probably right, but we also shouldn't fail to consider that what you call "legit trade" primarily consists of speculation and online casinos' transactions.

Nonsense. if that was the case they would not accept dollars.

Dollars fund wars.
Bitcoins do not fund wars.

War is in general a criminal act, few if any wars are in self defense, most wars are theft by a larger country against a smaller one because they can get away it.

but not because it if theft by a country  it stops being theft, it may not be theft under the law because that same country that doing the theft is the one writing the law, but if we were to hear from the smaller country the one that is on the losing end they would say it is theft.

That is why in the world an international court with power it is highly needed, not a symbolical one with absolutely no power.

Going back to Bitcoin, Bitcoin is much more transparent than the dollar, the rules are precise and well known by everyone, there is even a public ledger which is the blockchain, on the other hand the Dollars operates in a very closed way with no transparency.

So if you are a crook your currency of choice should be the dollar, plus in comparison to Bitcoin they are easy to counterfeit.

I would think this stat would likely make bitcoin look very bad. With that being said I think the overall percentage of drug and illegal related trade is still very low when compared to legit trade, and the illegal trade can be fought with law enforcement.

Probably true, given the total number of USD in circulation.
But it doesn't take away the fact that cash (fiat) is the most popular means of exchange for criminals.

What is more important here is the comparison between the drug trade amount effected in each currency relative to the total supply of this currency (perhaps, this is what you meant to say). And this comparison wouldn't be in favor of Bitcoin, as I can guess.

Probably a small amount as a percentage, but larger then the percentage that the BTC market cap is verses the dollar.

Why would they despise bitcoins?

All this is due to the advantages of bitcoin, if they despise bitcoin, then bitcoin is no longer necessary

The drug trade is estimated to be worth $400 Bn a year. What portion do you think is conducted through bitcoins?

All of these transactions were not from illegal activity, they are just transactions that should have been reported by the bank. It is likely IMO that over 99% of the transactions involved legal transactions (likely immigrants sending money home to their families) but the bank was fined because they did not report them so they could be looked at by the government.

 
I disagree. Fiat cash has and will be the most preferred way for transacting in the criminal world.
Cash is more anonymous than bitcoin.

Look at the numbers involved here.

http://www.globalresearch.ca/money-laundering-and-the-drug-trade-the-role-of-the-banks/5334205

”The identified problems included a once massive backlog of over 17,000 alertsidentifying possible suspicious activity that had yet to be reviewed; ineffective methods foridentifying suspicious activity; a failure to file timely Suspicious Activity Reports with U.S. law enforcement; … a 3-year failure by HBUS [a HSBC affiliate] , from mid-2006 to mid-2009, to conduct any AML monitoring of $15 billion in bulk cash transactions … a failure to monitor $60 trillion in annual wire transfer activity by customers …


And this is just one bank. 

Cash fiat is a target for criminals, however it generally will have a smaller percentage of total transaction volume of criminal transactions then what I would estimate that BTC has.

If who does what? 

So is every other fiat currency in the world.....

/Topic

Yes, if they are doing it wrong. When used properly (escrow/etc), bitcoin is incredible safe and credible. It is proven in the code and the whitepaper.

I don't know all the ins and outs of BitPay and Coinbase, either, but my guess is that they protect themselves from quick, small price movements using a greater spread between the buy and sell prices.  That and/or they may make sure that they match up buys and sells appropriately by locking in the price for a (probably short) period of time.  At least on Coinbase, they don't show you the market depth, so they can probably toy with things as they need to in order to make sure that they don't lose money.

I agree that under the vast majority of circumstances, exchange value loss shouldn't be a problem.  So let me explain a little better.  I wasn't into bitcoin during some the craziest run ups and crashes last year, so I don't know how robust the exchanges are.  But in the stock and futures markets, for example, during times of exceptionally high volume (e.g., flash crashes), I've heard that the computer systems can become overwhelmed, which can lead to much longer order execution times and possible system crashes.  Didn't Mt. Gox have major issues during one of the run ups/crashes earlier last year, such that it took minutes or hours for orders to be executed?  If that kind of thing happened during a major crash--if it took an hour to execute your trade, or worse, the severs go down--you could easily lose 10-20% or more of the exchange value of your coins.  The odds are very small, but the loss potential is pretty high.

Not necessary somebody associated with bitcoin. Anybody with money could be blackmailed. The payment route will be through bitcoins. Whether you give bitcoins that you own, or buy bitcoins and then transfer them, the criminal really doesn't care.

If someone is known to be associated with bitcoin then the theft of their identity could be used to blackmail them into giving coins in exchange for their identity back.

If you stay pseudonymous, no point in stealing your identity. 

Bitcoin users aren't a hot target for identity theft, though.

These people don't care whether you are a bitcoin user or not. Only the payment method is bitcoins. Anybody with a computer is fair game. 

Bitcoin users also a hot target for scam artists and hackers.

Just heard a company get infected by trojan and the hacker demand bitcoin payment.

I agree that privacy is important, but why would I care whether the government can trace my transactions?  I'm just an average guy--one of 300M people in the US.  I don't do anything illegal, so what difference does it make?  No one else cares what I do.

Edit: Actually, that's not true.  Companies care what I do so they can spam me.  If I want anonymity for anything, it's so that companies don't know how I spend my money.  I don't care about the government.

I'm not exactly sure how they do it now, but I believe BitPay used to take data from the top 3 leading exchanges in terms of price, rule out the third, then average the top two (I always thought this was strange since ruling out the third would be unnecessary if you just looked at the top two, so I'm guessing there's a chance I misunderstood something).

I suppose there may be a window with a duration of a few seconds during which extreme volatility still might lead to a nasty surprise for the merchant, but I'm not so sure about this.  Whenever I send BTC to my BitPay account, I usually receive notice of my deposit credited as USD within about 3-5 seconds (via both an SMS text and an email).  I'm not sure what happens during these few seconds, but the window for risk seems *exceptionally* small, if there is one.  And, in the event of some technical difficulties on BitPay's end, I'd imagine they would eat the loss if such difficulties were to occur.

Merchants also have the ability to set the ratio of BTC they retain.  They could, for example, choose to receive 100% of the converted BTC value in USD, or they could choose to retain 100%  BTC, or any ratio inbetween.  This would allow a merchant to cash out manually at the time they choose, though I don't see how this would give you any more advantage at avoiding loss due to volatility than by letting BitPay do the conversion automatically.

I think the chances of accepting a bad check would far outweigh the chances of loss due to volatility while using a payment processor.  There will always be a hypothetical scenario for risk involved with accepting any currency, but this method of accepting payment seems less risky than many others.

I generally agree, although I would point out that there's still some risk.  I don't know all of BitPay's terms and conditions (or Coinbase's), but I'm guessing that they can't guarantee the exchange rate if they have technical difficulties.  On the surface, this would seem like a very minor issue that would likely have little impact, even if it happened, as it would likely be short-lived.  However, the greatest chances of having such problems usually occur during times of exceptionally high volume, such as during a crash.

Cash can be used for the wrong purposes too. Bitcoin is just a tool, and like all tools it can be used for good or evil. Businesses are not at any more risk of being victimized by theft and fraud as long as they take appropriate precautions.

Do you really believe that the government should be able to trace your transactions? I don't. I believe in privacy rights, my money is my money to do with as I wish, without the government looking over my shoulder, until I am proven guilty of a crime.

If he were given a choice, he would cease to be an Indian peasant the same very moment.

You will never know until you give him the choice. 

Step 1: Company registers with BitPay.

Step 2:  Nothing.  In one step, the company has now avoided any issues with potential fraud, theft, and even price volatility.

Conclusion: "Risk" is a poor reason for a merchant to decide not to use BTC because payment processors like BitPay eliminate the risk.

The last first thing a peasant in India would want to do is to invest in the US stocks!

One of the things it could do is broaden the investor base.
Somebody sitting in rural India could invest in US stocks, which is not possible now.

Interesting article.  I'm having a hard time imagining the advantages and disadvantages of cryptosecurities, but I guess there are still a lot of details to be fleshed out.  So I'm really not sure yet what issues it would solve.  But, as he points out, it would eliminate high-frequency trading...at least probably.  I could see someone figuring out a way to do it anyway, but it would probably be very difficult.

Byrne has long complained about investors using various loopholes in the financial markets to improperly boost profits at the expense of public companies and the overall economy—with Overstock even going so far as to sue some of the biggest names on Wall Street

http://www.wired.com/2014/07/overstock-and-cryptocurrency/

Ok.  I tried a quick search but couldn't find it either.  I agree that crimes in the financial sector have become systemic.  But that's the problem: they're systemic.  No one in power tries (or wants) to stop them.  Many are ignorant of them, true, but a lot of people do know about them.  The problem is that they can't do anything about it.  Better transparency or not, I think they would still exist.  So if bitcoin becomes as mainstream as other major currencies, I'm not sure how it won't be used for a lot of similar things.  Bitcoin would prevent some types of manipulation, but not all.

He really didn't get into detail but I'd think having a ledger for anyone to see plays a role as far as transparency is concerned.  I can't seem to find it online or I'd post a link but the program was on Fox and I believe the show is "The Independents".

I'm not saying I disagree that there are many crimes taking place in our current financial system, but what crimes was he talking about?

Bitcoin is a hot target I will not deny, but I don't see that being different than anything else that can also be classed as a hot target for criminals. Fair enough it may be easier for them to purchase illegal goods and even scam people using bitcoin but people are getting scammed using other currencies as well.

The CEO of Overstock was on the news and he made a comment that really made an impression on me.  It's not a exact quote but basically he said "there will no doubt be crimes taking place Bitcon economy but the amount of crimes we have in our current financial system are far worse and there is no comparison which is the better model".  I butchered the quote but that was the basic point he was trying to make.

People don't get that these crimes are taking place in the fiat market at an alarming rate.  Bitcoin will stop many of these massive crimes from taking place leading to an overall better system.  Saying criminals target Bitcoin is a silly feat tactic.  They target anything of real value and that includes Bitcoin.

I think more bitcoins got aggregated at exchanges, and the movement of coins inside the exchange (for example, from one account to another) doesn't get reflected on the blockchain. But surely there can be other explanations as well.

Sure bitcoin can be used by criminals, but as has been said by a number of people so can lots of other things. The key question is do the positives outweigh the negatives? The answer for bitcoin is that they absolutely smash them. Bitcoin is overwhelmingly good despite the issues that have been raised.

One thing though - the pseudonymous argument made time and again is a little lukewarm. the block chain may record everything that happens, but in practice it does not allow for the effective tracking of laundered money. This still makes it much better than cash given cash is truly anonymous, but the fact that bitcoin is much easier than cash to move in large amounts across borders cancels this out in my view.

Don't get me wrong, I LOVE bitcoin, but I think we are better off acknowledging its imperfections and stressing that they pale in comparison to all the benefits.

Does anybody monitor the Estimated transaction volume in btc? By blockchain.info Estimated transaction volume decreased more than twice YTD. What is the reason for that?

So we are accomplice in crime? It very possible we have been received some stolen btc from someone which is proceed from one to another address, but how can we know the btc is stolen?

These are the primary reasons why most merchants and businesses have not yet adopted Bitcoin:

- The spending value of Bitcoin is volatile.
- There is still a considerable amount of uncertainty regarding the government's stance on Bitcoin.
- Many people do not understand how Bitcoin works. This is especially important if those people comprise the majority of a merchant's customer base.

The fact that Bitcoin can be used for fraud and illegal dealings is not a deterrent for businesses to start accepting it. That has never stopped a business from accepting fiat. That has also not stopped many businesses from accepting payment from credit cards and from Paypal and other payment processors. In fact, a lot of businesses have to deal with chargebacks worth hundreds of thousand of dollars daily.

You need to do more research before you get back on the podium.

International black market is said to be around $10 trillion.  Crypto Currencies at the moment is $11 billion.  Do the math.  All the money laundering is done in $Fiat cash, not Bitcoin.

You don't even have to send 50 coins.
All you have to do is share a private key. 

Lol, are you serious? well, you can use monero 

That's why cash is also "a hot target for criminals and money launderers", though not without drawbacks as mentioned above (checking serial numbers, using special chemicals and so on to distinguish between notes).

I believe you mean cash, not simply fiat.  But anyway, cash can be traced by the serial numbers on the notes.  Although I don't know how much that's actually done.

In any case, it's not just about what you can and can't do, but how easy it is to do it.  If I want to send $10k to someone on the other side of the world to fund a terrorist operation, it's a heck of a lot easier to buy a few bitcoins and send those than it is to physically transport that much cash.  And just because we can trace bitcoins, that doesn't mean that it's easy to do, or that someone really watches for "suspicious" transactions.  If a $30k wire transfer is initiated, someone will probably pay attention to it.  If someone sends 50 bitcoins, no one will pay attention or care.

You can't legally pay in cash when dealing in large amounts.

I'm a criminal myself. what can i do?

And since cash is often used for illegal purposes, government are exerting themselves to restrict cash operations. In many countries (including the USA) you can't pay in cash for, say, home or buy other expensive goods with cash. Thus the flow of large amounts of money can be easily traced.

your point that bitcoin is used in fraudulent transaction is really only true for online transactions. Cash is still preferred for in person crimes. Also cash is often used for very illegal purposes but people still use cash without question.

I don't even know what the best way to respond is.

**Fiat** money is the most anonymous you can get, Bitcoin is a semi-anonymous (Aka pseudo anonymous) system that allows for lots of transparency when it comes to watching transactions.

Bitcoin can be traced, kind of, but it is much harder to trace cash.

Terrorists can use Bitcoin, but guess what? We can watch where it goes.

Criminals can try to launder, but people are still watching...

Greedy people will jump onto Bitcoin, because stuff like that happens with everything. Bitcoin isn't made to support greed. If anything Fiat money is.

Please learn before you make stupid posts.

They're not talking about stealing bitcoins from people's wallets.  They're talking about how it's a lot easier to launder money or pay for illegal goods and services using bitcoin because it's harder to trace than something like a wire transfer or credit card payment.

it makes a criminals job easier to get away with the stolen money but makes it much harder to get it in the first place because they cannot simply pickup a bunch of cash they need to somehow crack the password to the private keys the contain the bitcoin.

This is indeed a big problem that's hindering adoption.  According to a recent Coindesk article (http://www.coindesk.com/real-reason-banks-dont-like-bitcoin/), the risk of involvement in criminal activities is a major factor that's keeping banks away from bitcoin and bitcoin businesses.  The potential for making criminal activities easier will also affect how governments end up regulating it.

Yes, but not all scammers are born equal. So fiat allows to easily spot down the low-grade scammers by the high-grade ones. On the other hand, Bitcoin doesn't tell between them, that is why it is loved by the former and hated by the latter.

Some would say it is a good thing. Like it allows people to buy LSD which would be otherwise inaccessible to them.
Other might say the governments have far too much power and want the people to have their liberties and free market back.

Btw, buying stuff with cash is much more safe and hence the governments are pushing for digital world only, bitcoin is easily traced so I think they like it as well.

There are many ways people can protect themselves...though still even today people fall for simple social engineering or "click for for $1,000,000" which turn out to be viruses.
75% of the crimes made by Bitcoin can be prevented simply by using 2auth on their online wallet, or by not using an online wallet at all.

Can't you people tell that the OP is a paid opinion maker  There are many of them on this forum. They have to keep repeating the same messages so that it gets hammered into subconscious.
There are also many new forum visitors and the old threads the opinion makers created about terrorism, money laundering, etc. are too buried. So these characters just make new threads to remind the
newbies that bitcoins are dangerous.

My point is that bitcoin's structure and nature is affecting its adoption and use by the general public. I agree with you that the payment system offered by bitcoin is more secure than any other payment processors out there, but the mere fact that it's also used for shady transactions and any other fraudulent works make it unappealing for those who might use it. Fiat can also be used for this kind of transactions, but using it is very easy to trace.

Another uninformed post...

Bitcoin is not anonymous; it is pseudonymous. It offers more transparency than fiat does. Can you tell me how many criminal hands have touched that dollar in your wallet? Bitcoin can tell you how many times a coin in any address has moved. Is your problem related to the fact that you don't know who the owners of the past addresses are? The last time I checked, I don't know who that store cashier who gave me my change was. Should I spend the next 2 years locating that person to find out if that person is a criminal? Fiat is the most anonymous form of currency. Why do you think illegal drug and gun sales are cash-only transactions?

Bitcoin also offers greater protection to the merchant than any other digital payment processor can. Chargebacks are impossible, which means that theft and fraud are irrelevant in a legitimate merchant-based transaction. How could a merchant be victimized by a customer if the merchant always gets paid first? If the merchant is allowing the customer to pay later, then that's an issue with the merchant's business practices and not with Bitcoin. If you were a cashier in a store, would you let a customer that you've never seen before pay for goods with an IOU and a maybe-not-fake ID?

How many times has all of this been discussed before? 10 million? 20? 50? Maybe more than Bitcoin's entropy set for addresses?

Yes, very good point and something to worry really.
If we want that Bitcoin become mainstream and globally accepted by the merchants, we have to find solution for this issue.
I think in the future we will have to accept some kind of limited control over Bitcoin users and give up concept of 100 % anonymity, if we want that bitcoin really become globally accepted, the same (for example) as some digital exchangers already did (STP, payza etc.)

Convert fiat-bitcoin and bitcoin-fiat is hard and noisy on exchanges.

And with blockchain, one identified address linked to some of the bandits can be enough to compromise all operation.


Plus 10B is way too low to the big crime guys around the world, and the small ones are too dumb to know and use bitcoins.

Criminals and money launders adapt to innovations.
Our crime investigation units should too.

So what ? Did anyone claimed that Bitcoin would take greed out of humans ?


Here we go... 


Oh yeah ? It's the exact opposite. Bitcoin help making transactions transparent to everyone.
Central bank and government are the cause of most criminality in the world.
The FIAT money is The Biggest Scam In The History Of Mankind.


Please learn about FIAT money and Bitcoin before talking about it.

Thanks.

Donot overstate the drawback.Merchants are still benefiting from providing BTC payment. Don' you see more and more companies are accepting BTC payment? Such Dell, America Airline. It will attract customers with low transaction fee compared to the conventional payment Visa, American Express, MasterCard. There is no charge back.

I didn't invest in Bitcoin earlier for this very same reason. As a result, I lost on the lifetime opportunity to become rich.

As for anonymous transactions, Bitcoin isn't 100% anonymous, if anything, criminals that have a clue on technology would use XMR. So XMR has a place, so Bitcoin can be the "clean" coin and XMR can be the TOR of the cryptocurrencies.

Yes, anonymity and decentralization makes a criminal's job easier. Faster adoption is hindered by these two concepts; merchants and businesses must be intelligent when they use bitcoin as a form of payment to their goods and services because there are many, many, many, greedy people in the world of bitcoin alone.

There was crime and greedy people before bitcoin also. You cant say bitcoin made them, but that its easier for them now, yeah, it probably is.
But i agree with you that this is pretty big reason why bitcoin isnt more adopted, altho i love the idea of decentralisation, some measures must be taken to protect the innocents from being scammed.

Bitcoin's concept of anonymity is a hot target for the greedy. Its structure helps criminals do their criminal acts. They can easily participate on illegal transactions without being traced (or a high possibility of not being traced) by the authority. Decentralization also helps them in accomplishing some serious thefts and laundering because nobody has the power to freeze their money unless they're traced by the government. This is just one of the many things why merchants all over the world doesn't accept the idea of using bitcoin into their business. It seems to risky for them to touch knowing that there are many possibilities that they can be victimized by theft and frauds.