Topic: Irrefutable evidence that mixers alone are unsuitable for money laundering! - page 2. (Read 204 times)
August 31, 2023, 04:30:57 AM
Most of the business which are in money laundering are no longer using these Mixers. They have much better options to use rather using Bitcoin. They can simply buy XMR (Monero) and use that as it's a private blockchain. No transaction can be tracked. And then you can even use Monero to then get it converted into real fiat money. And yes, that's true. Mixers alone are no longer suitable for money laundering.
August 31, 2023, 03:49:16 AM
As you rightly say, the big money laundering, of significant amounts, is done via international transfers and corporate networks. This has been known for a long time. Added to that is the problem that when a judge begins to investigate and finds evidence, he has to send international requests to the countries through which the money has passed to provide information. That if they do it, although nowadays almost all of them usually collaborate, but even when they do it the process takes a long time, and justice is not fast by itself.
As far as cryptocurrencies are concerned, I understand that if you want to launder large amounts you will have to do much more than pass (part of them) through a mixer.
As far as cryptocurrencies are concerned, I understand that if you want to launder large amounts you will have to do much more than pass (part of them) through a mixer.
August 31, 2023, 03:34:48 AM
A few days ago I watched this video https://www.youtube.com/watch?v=R5FSXCYrlt0
It is about a former DEA agent who cracked down on money laundering rings. Pretty much all of them being in cash.
So he explains that criminals in one country have a ton of money they need to get out of the borders, and how the criminals will bring large sums like 500K, 1 million, and stuff like that to a contact person, who then gives them a location to get different kinds of blank checks and IOUs which they can write for themselves (making them look like a normal payment) that can be redeemed for money. Nowadays they are probably using Amazon, Google Play and iTunes gift cards.
Then these notes are deposited with some bank under an LLC. Then they loan that money to another LLC in another country via the bank and use the notes as collateral. That other LLC loans it out again to yet another LLC in another country, and this happens a few more times till it eventually ends up in the destination country, where the heads and brains of the ops are.
It has come to my attention that people are claiming that crypto mixers are used exclusively for money laundering. Well let's examine how money laundering in crypto would look like.
So, let's say you hacked an exchange or you scammed some really big people, and now you want to save the money before the police zone in on you. You can already send crypto across borders and without a ton of shell companies^, so a professional money launderer would probably do something like this:
- They would get rid of undesirable coins like USDT: Go to several exchangers and DEXes (decentralized exchanges), giving each of them fractions of the undesirable cryptocurrency, to sell for another kind of crypto.
So anything that could be blocked, or has low liquidity and vulnerable to a flash crash, or is too traceable, is sold for XMR/BTC/ETH/LTC or something else.
- The money is split into different addresses because carrying the entire amount in one address puts a huge target on your head for anyone on the internet to see.
- Maybe you use a mixer to obfuscate the origin of the coins. Most people who do that won't send them to an exchange for cashing out after that because exchanges usually seize mixed coins or reject them.
- For other addresses, perhaps you cash them out (as dollars or gift cards) in person or in small amounts on non-KYC accounts or maybe using KYC accounts verified via identity theft and buy a mansion/Lamborghini/private jet before you get busted by feds.
^Keep in mind though that the less legal entities involved, the easier it is for the governments to bust a money laundering scheme. This is true whether you use cash or crypto.
All of this together is obviously money laundering, however using only a mixer to anonymize the coins is not usually desirable because the whole point of money laundering is to make the money look clean. It is easy to identify addresses belonging to a mixer even if you cannot untangle the source of the transactions, so this will automatically "taint" the coins in the eyes of custodial services when you go to cash out.
Basically the only workflow in which you only use a mixer is if you sweep somebody else's wallet after you hack it, and have no desire to exchange the coins for something else. Apparently, this is what NK's hacker group has been doing for a long time.
But even then, eventually, they will want to spend it, and will illegally trade the stolen crypto for gift cards en masse somehow.
So, how do they cash out, how do they buy missiles and other weapons that they want? Obviously they cannot cash out in USD, because not only will exchanges reject cash outs worth hundreds of thousands of dollars even with the coins being mixed, their weapons suppliers are from countries that do not deal with USD.
So what they use is a special kind of exchange, one that is created specifically for money laundering and allows customers to cash out using the currency that is desirable. KYC checks on these exchanges are basically lax or non-existent. It is important to remember that these seemingly "legitimate businesses" are actually shell companies set up specifically for money laundering, in violation of international law, and must be included in any discussion of how people are washing crypto.
These exchanges are usually in east europe, russia, or somewhere else with lax laws. There's been a few instances of interpol and other orgs taking down these exchanges and arresting their founders, on the news.
Here's the Oxford dictionary's definition of money laundering:
So if you have obtained the money by scamming people, hacking wallets or services, malware, blackmail, or other types of theft, then that is money laundering.
To conceal the origins of illegally obtained money can be done using a mixer, however a mixer is also a legitimate business in the sense that (most*) were created to solve a very important problem: How to preserve the privacy of your bitcoins on a public blockchain?
*A few mixers were explicitly created with the intention to facilitate money laundering for darknet sites, such as Helix. But most, including the one on my signature AFAIK, are not created with this intention and purpose.
Last, I want to mention that the former agent in the video has also pointed out that cryptocurrency is not appealing to criminals for money laundering because the price always fluctuates and is volatile. Except for stablecoins I guess - but not the centralized ones like Tether that can be seized. But the other reason not mentioned why it is unappealing to criminals is because the blockchain is public** and everyone, including prosecutors, can explore it. So if a mixer is taken down for whatever reason and is de-obfuscated, the criminals will also be burned.
**Except for Monero, ZCash shielded addresses, Litecoin MimbleWimble addresses and derivatives. But I've never seen an XMR mixer or ZCash mixer or LTC mixer, because the obfuscation is already done inside the protocol? Does that mean was should copy governments' stance when they say: "privacy coins like Monero are mainly used for money laundering"? Because the mixer for BTC is technically equivalent to the blockchain of one of these coins.
That is why cash is still prevalent in the underground for money laundering, and crypto will continue to be unattractive for money laundering use in the near future.***
It is also why you cannot use a mixer by itself to launder money: Most people you want to buy from don't accept crypto so it must be converted to some other money with another service. Weapons manufacturers and most real estate agents and car dealerships won't be accepting crypto for a long time, either. Especially not using any sort of gift cards.
***If you live in the USA though, pretty much every activity involving crypto is a minefield you have to navigate anyway, so there are additional hazards in using crypto exchanges and other services like mixers, but these are mainly tax and IRS-related issues, not federal and FBI-related issues.
edited for spelling
Disclaimer: This post is for educational purposes only and is not intended to help anyone facilitate any illegal activities. This content is probably useless if you are a criminal trying to launder money anyway, so I'm not responsible for any result that happens from the content of this post.
It is about a former DEA agent who cracked down on money laundering rings. Pretty much all of them being in cash.
So he explains that criminals in one country have a ton of money they need to get out of the borders, and how the criminals will bring large sums like 500K, 1 million, and stuff like that to a contact person, who then gives them a location to get different kinds of blank checks and IOUs which they can write for themselves (making them look like a normal payment) that can be redeemed for money. Nowadays they are probably using Amazon, Google Play and iTunes gift cards.
Then these notes are deposited with some bank under an LLC. Then they loan that money to another LLC in another country via the bank and use the notes as collateral. That other LLC loans it out again to yet another LLC in another country, and this happens a few more times till it eventually ends up in the destination country, where the heads and brains of the ops are.
It has come to my attention that people are claiming that crypto mixers are used exclusively for money laundering. Well let's examine how money laundering in crypto would look like.
So, let's say you hacked an exchange or you scammed some really big people, and now you want to save the money before the police zone in on you. You can already send crypto across borders and without a ton of shell companies^, so a professional money launderer would probably do something like this:
- They would get rid of undesirable coins like USDT: Go to several exchangers and DEXes (decentralized exchanges), giving each of them fractions of the undesirable cryptocurrency, to sell for another kind of crypto.
So anything that could be blocked, or has low liquidity and vulnerable to a flash crash, or is too traceable, is sold for XMR/BTC/ETH/LTC or something else.
- The money is split into different addresses because carrying the entire amount in one address puts a huge target on your head for anyone on the internet to see.
- Maybe you use a mixer to obfuscate the origin of the coins. Most people who do that won't send them to an exchange for cashing out after that because exchanges usually seize mixed coins or reject them.
- For other addresses, perhaps you cash them out (as dollars or gift cards) in person or in small amounts on non-KYC accounts or maybe using KYC accounts verified via identity theft and buy a mansion/Lamborghini/private jet before you get busted by feds.
^Keep in mind though that the less legal entities involved, the easier it is for the governments to bust a money laundering scheme. This is true whether you use cash or crypto.
All of this together is obviously money laundering, however using only a mixer to anonymize the coins is not usually desirable because the whole point of money laundering is to make the money look clean. It is easy to identify addresses belonging to a mixer even if you cannot untangle the source of the transactions, so this will automatically "taint" the coins in the eyes of custodial services when you go to cash out.
Basically the only workflow in which you only use a mixer is if you sweep somebody else's wallet after you hack it, and have no desire to exchange the coins for something else. Apparently, this is what NK's hacker group has been doing for a long time.
But even then, eventually, they will want to spend it, and will illegally trade the stolen crypto for gift cards en masse somehow.
So, how do they cash out, how do they buy missiles and other weapons that they want? Obviously they cannot cash out in USD, because not only will exchanges reject cash outs worth hundreds of thousands of dollars even with the coins being mixed, their weapons suppliers are from countries that do not deal with USD.
So what they use is a special kind of exchange, one that is created specifically for money laundering and allows customers to cash out using the currency that is desirable. KYC checks on these exchanges are basically lax or non-existent. It is important to remember that these seemingly "legitimate businesses" are actually shell companies set up specifically for money laundering, in violation of international law, and must be included in any discussion of how people are washing crypto.
These exchanges are usually in east europe, russia, or somewhere else with lax laws. There's been a few instances of interpol and other orgs taking down these exchanges and arresting their founders, on the news.
Here's the Oxford dictionary's definition of money laundering:
Quote
the concealment of the origins of illegally obtained money, typically by means of transfers involving foreign banks or legitimate businesses.
So if you have obtained the money by scamming people, hacking wallets or services, malware, blackmail, or other types of theft, then that is money laundering.
To conceal the origins of illegally obtained money can be done using a mixer, however a mixer is also a legitimate business in the sense that (most*) were created to solve a very important problem: How to preserve the privacy of your bitcoins on a public blockchain?
*A few mixers were explicitly created with the intention to facilitate money laundering for darknet sites, such as Helix. But most, including the one on my signature AFAIK, are not created with this intention and purpose.
Last, I want to mention that the former agent in the video has also pointed out that cryptocurrency is not appealing to criminals for money laundering because the price always fluctuates and is volatile. Except for stablecoins I guess - but not the centralized ones like Tether that can be seized. But the other reason not mentioned why it is unappealing to criminals is because the blockchain is public** and everyone, including prosecutors, can explore it. So if a mixer is taken down for whatever reason and is de-obfuscated, the criminals will also be burned.
**Except for Monero, ZCash shielded addresses, Litecoin MimbleWimble addresses and derivatives. But I've never seen an XMR mixer or ZCash mixer or LTC mixer, because the obfuscation is already done inside the protocol? Does that mean was should copy governments' stance when they say: "privacy coins like Monero are mainly used for money laundering"? Because the mixer for BTC is technically equivalent to the blockchain of one of these coins.
That is why cash is still prevalent in the underground for money laundering, and crypto will continue to be unattractive for money laundering use in the near future.***
It is also why you cannot use a mixer by itself to launder money: Most people you want to buy from don't accept crypto so it must be converted to some other money with another service. Weapons manufacturers and most real estate agents and car dealerships won't be accepting crypto for a long time, either. Especially not using any sort of gift cards.
***If you live in the USA though, pretty much every activity involving crypto is a minefield you have to navigate anyway, so there are additional hazards in using crypto exchanges and other services like mixers, but these are mainly tax and IRS-related issues, not federal and FBI-related issues.
edited for spelling
Disclaimer: This post is for educational purposes only and is not intended to help anyone facilitate any illegal activities. This content is probably useless if you are a criminal trying to launder money anyway, so I'm not responsible for any result that happens from the content of this post.
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