Topic: Is this a good method to un-kyc bitcoin using Lightning network? (Read 158 times)

Mostly it doesn't happen but there's a slight chance for that in that case you want someone to blame for has to be a centralized entity and all those centralized entity has KYC as mandatory so now we have given the option of accepting the privacy that comes with the risk or don't bother to reveal your identity.
Phoenix is a non custodial wallet so it should be safe as long as you keep your recovery seeds safe. About holding coins on channel it is technically possible but it's not meant for that purpose, it is to enable to micropayments more practical and instant.

FYI, Fixedfloat can still ask you for KYC when they suspect a user for wrond doings so you can't consider them as completely non KYC like DEX.

Hi,


I don't plan to mix KYC-ed with non-KYC, that's why I mentioned that even after proceeding (either using LN transfers+fixedfloat or Monero, as other user suggested too), I plan to leave the coins coming from Binance in a wallet totally separated from my official non-KYC coins*, because I'd still consider the outcome (from LN or Monero) "non-kyc-ish" coins. By the way, if I start moving my btc from Binance to another wallet, I'd continue with the next step only once all my btc leaves Binance and my balance there is $0. It won't be their business what I do with my money afterwards. Why a bank would freeze my money? I have never funded Binance using a bank transfer or credit/debit card. I have only used their built-in P2P, so I have traded internally with other users. 

*I already started buying non-KYC btc from DEX+P2P and that btc is stored in another wallet, so, for me, these are my only official non-KYC coins.

Now I'm sure it's not a good idea to use my official non-KYC coins to provide initial funding to an LN wallet (therefore I won't mix them with the ones coming from Binance), so I'm considering the route suggested by another poster (Binance=> swap=>LN=>Wallet/HW)

I'm exploring the Monero option too, but I see that there are lots of DEX exchanges with bad reputation in reddit for scams or people losing money (at least those able to trade XMR). I have found that Tradeogre and Robosats are a bit better positioned on this matter, in case I use the Monero option.

I don't understand what's the point to mix KYC-ed coins, sooner or later Binance will flag your account or your banks will froze your money because they will ask you where are your coins goes to.

I'd choose to separate KYC-ed coins and un-KYC coins, I only invest small amount of money in centralized exchange and I invest a lot money to buy Bitcoin from DEX or no KYC P2P.

If I use your method, it just wasting fees for multiple times, instead I use mixer or Monero.

But you are describing the opposite path of the previous user, I think? I was told to do a swap in Binance (via fixedfloat) to get LN and sent it to an LN wallet (such as Phoenix)

As I mentioned before, I feel a bit afraid of the coinjoin system due to its nature. An option would be to do coinjoin after the btc arrived to Phoenix (in that case I should do another swap (LN-onchain) and do it from Wasabi wallet (but I think Wasabi does not support LN).

Hi, thanks for your input.


I'm just afraid the these kind of services, AFAIK, could mix my coins with coins somewhat flagged for due to heavy crimes by its owners, so I don't want to be put in the same bag of a much more serious investigation tracking these coins (I know I could also be banned by a CEX, but this is not a big deal since I'd never send back the btc to them; I guess a DEX won't ban coinjoined/mixed coins).


I see. I still don't know all LN transactions details, but it seems that the action of leaving a channel "open" or "closed" after a transaction also matters here and could contribute to at least limit the traceability. I haven't read enough about that topic though.


Thanks for this suggested path. In that case, the on-chain btc on Binance will be swapped and I'd get LN in Phoenix (for example). Should I consider Phoenix a safe option to store not an enormous, but decent amount of sats? (if I don't have an HW yet). I don't plan to spend LN for spending, so essentially I would hodl in LN instead of on-chain. I guess LN was not exactly designed for hodl, but frequent transactions, although I assume the security factor remains the same.

Binance has an option for withdraw Bitcoin in Lightning Network, but I've never tried this.

It does not help to achieve non-KYC coin because you can not get it from a centralized platform that know your identity and has all data of your activities on their platform, deposit, trade, withdrawal.

You can try with a following procedure

Binance > on-chain > your non custodial wallet > non-KYC exchange to convert BTC to Monero (XMR) > withdraw your Monero (on-chain) > and convert your XMR to BTC on another non KYC exchange > withdraw BTC to your non custodial wallet.

Try with some non KYC exchanges for BTC and XMR.
https://kycnot.me/?t=&q=&xmr=on&btc=on

How does it turn out that BTC becomes un-KYC if it's from Binance?
I don't think your plan will work to make your BTC clean or just to turn your BTC from Binance to cut the trace once you withdraw. Your plan is pretty complicated. Even lightning network doesn't have a database to record all of users transaction data, but how about your partner (the wallet itself, I guess)?

I would suggest buy BTC on a non-KYC exchange or decentralized exchange rather than doing this because the lightning network is a bit buggy and it is still experimental.
If you don't want to experience these bugs, like stuck transactions due to node failure or channel closure during a payment, then better use a decentralized exchange to buy non-KYC BTC.

If you are looking for decentralized exchange, check this one: https://kycnot.me/

Does Binance allow you to pay a lightning invoice? If so, then generate one in fixedfloat, choose LN-BTC <-> BTC conversion, and receive the bitcoin on-chain after you pay.

However, this is far from a recommended way to get "non-KYC" coins. If you want to "un-KYC" your coins, just receive them to a coinjoin-supporting wallet like Wasabi Wallet or Ginger Wallet and use the coinjoin feature. Alternatively, sell your coins for fiat, and then buy coins from Bisq (decentralized exchange).

Instead of doing all these, why not just try a mixer?

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Using LN for this specific task doesn't guarantee you the privacy that you expect, still the destination of your funds can be deduced if not tracked either you are moving via LN or on chain from Binance since Binance knows the node ID from the invoice you generated.


It is not necessary to move via onchain since Phoenix wallet allows you to generate the LN on it's own will let you to save the withdrawal fee and no, moving via LN doesn't give them control over your funds it just give them the logs.


Like I said Binance can know the destination of your funds to some extend so either way you won't get the complete privacy and mixing the coins received from Binance with your non KYCed funds is bad idea, it's just better keep them separately and only use the KYCed coins in this process to enhance your privacy.

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Fixed float will swap your bitcoin with someone else's so why not just bring it to up the order

Binance=> swap=>LN=>Wallet/HW that is much better and saves you two steps.

Hi there, some newbie questions,

I have reading a lot about the LN as an alternative to coinjoin and get non-kyc bitcoin. I have some sats in binance and, if I understand well, this setup should work:

binance > (on-chain) > phoenix > (LN) > breez (LN) > fixedfloat (on-chain) > Blockstream Green > (on-chain) HW

my doubts about the above method:
1- is it really necessary to use on-chain to transfer from binance to phoenix? should I use the LN option already offered by binance? (I'm afraid that, somehow, using LN from binance will give them more control over my future transactions).

2- I guess that, if I move on-chain from binance to phoenix, the initial fund required by phoenix to open a channel would be subtracted from this transfer. But, if it's better to use the LN option from binance, I would fund phoenix's channel creation with an external transfer from a non-kyc wallet and non-kyc bitcoin I have. Could this action "compromise" my non-kyc wallet/bitcoin because technically I would "mix" non-kyc with kyc bitcoin? The same could apply to breez, since I would need to fund it with my non-kyc bitcoin (although I don't know if the LN transferred to breez [in my above example] will be already non-kyc enough. I included breez in the equation in case another hop is useful here).

3- Once fixedfloat finishes to exchange breez's LN and I get on-chain bitcoin in Green, should I have peace of mind? Moving that bitcoin to a HW is not an immediate necessity, I just included it in the equation in case I want to do that. If Green will be a safe place for that btc, I just plan to hodl, but if someday I want to spend some of these funds, I would use Green's LN function to do a LN transfer to a completely different LN wallet (e.g. WoS, or a 2nd breez in my 2nd phone), and spend from there.

4-I don't have a super large sum of bitcoin on binance, but my moving plan would include at least 3 transfers: a 1st small one (~20 usd), just to check if the system works fine; a 2nd with half of my btc and a 3rd one with the other half (with a few days of spacing between transfers from the CEX, and several hours of spacing for the on-chain-LN-LN-on-chain route). Is it reasonable?

Please note that, even if the result of this process is getting a non-kyc bitcoin, I'm paranoid enough to consider these funds "non-kyc-ish", so that's why right now I have an external non-kyc mobile wallet (the one mentioned in [2]), always funded through P2P via DEX, and I never want to mix these bitcoin (my "official" non-kyc btc) with the ones coming from binance. I plan to use a HW for the non-kyc in the future, so, in the long run, I expect to have a HW for my non-kyc, and Green for my "non-kyc-ish" (or, if deemed necessary, a 2nd HW).

Thanks in advance for your thoughts on this.