Topic: KYC propagation beyond my ownership - page 2. (Read 399 times)

Why KYC is extremely dangerous – and useless.
If we do not about such danger from KYC, when we already did KYC some times on some platforms and realized its danger, it's too late. KYCed and you are known on those platforms and perhaps publicly too if data leaks happen.

Not KYC exchanges are reviewed on https://kycnot.me/

To answer your question directly:
- You will not be at risk of prosecution if you can quickly prove that you did not broadcast/were involved with the transaction
- You will need to provide details about the recipient and your relationship with them to the extent of being able to save yourself.
- Not cooperating may land you with penalties or punishment, or under watchlist.

You are right that the risk is posed in this situation. You must not only be cautious of who you are sending to, but what they do with the coins...sometimes, you might be questioned many transactions down the chain if no one can be identified up until you.

This is the danger of KYC...even though you did nothing wrong, you will be inconvenienced (inconvenienced, at best).

You don't really need to worry about that if you buy it from P2P trading you're probably going to be fine even though you get Bitcoin is linked to some illegal transactions, Maybe at some point, if your using a certain platform the worst case scenario is they are going to freeze your money, but in my experience, it doesnt really make sense since there will not be enough evidence to support there claims if you actually link to the transactions. I mean there are a lot of mixers out there maybe they could ban all of the transactions that came from illegal mixers but surely it's going to be a big issue for their platforms.

Also, your KYC doesnt really link to your Bitcoin so you don't need to worry about it, there are only a limited amount of Bitcoin so no one really knows if your Bitcoin is linked to illegal transactions, and if yes there are already a lot of transactions happened on that BItcoin does it mean that all of that transactions are illegal. In my experience, just don't worry about it if you didn't really do anything that is illegal you have nothing to fear about it, unless if you actually have some illegal activities.

I think there is always a process to determine who is the person involved in that illegal activity.  The thing that the address changes, there is a hint that Bitcoin had already changed hands.  If you worry about this kind of event, you can use a mixer service so that you can clean the traces of Bitcoin even if your friend uses it for illegal activity.


I also view it that way but come to think of it, there is no proof that his friend is the one who owned that Bitcoin unless the address was also KYC'ed or have link to his friends identity.  I do not know if it will work in court but I now realized that sending Bitcoin to a non-KYC'ed address and that address is used for illegal things might bring problem to the KYC'ed source address.

I do not know how this holds ip in court but with every transaction in the blockchain a recorded hash is created, this will signify that a transfer of assets has happened and it has helped people be absolved of crimes in the past at least in the community and local friendship circle level, but my line of thinking is that if you can use it as an immutable and verifiable evidence for stuff like this, then that makes it all the more a capable form of evidence when shit hits the fan and you find yourself persecuted for crimes you didn’t commit, with only leads redirecting you to cops being anything but these transaction hashes I’m talking about.  

It depends on the level of the illegality committed by the receiver because if the receiver's wallet is flagged for money laundering or scam activities of means all connected addresses will also be looked at and investigated, but if the involvement of the address and its overall transactions volume have not exceeded a significant amount that could attract the investigator's attention you may easily be ignored.

But that doesn't mean you are totally avoided or off the radar, you are just overlooked, so you have to watch who you send your coins to and what they use them for unless on the p2p level where the transaction may be off the chain.

This is to demonstrate that centralized exchanges can jeopardize our privacy, and Bitcoin is anonymous, which is why we are urged to use the peer-to-peer manner of purchasing Bitcoin rather than centralized exchanges.

And, as many have mentioned, if you must use a centralized exchange, always mix your Bitcoin to maintain your privacy.

I don’t know where you’re from but if you buy something with Bitcoin p2p and you’re afraid of the situation presented in OP, think about creating a written agreement for the purchase. You should have there your (and the other peer’s) information, including your address and the receiving one. In case something goes wrong, you’ll at least have a signed document which is infinitely more convincing than a journal where you write down entries.

But since you’re this paranoid, and for a very good reason, I have a different advice.

Are you on a loss currently with your KYC-ed Bitcoins? What I’d do is I’d sell it back to an exchange, print and archive that transaction plus bank statements, withdraw cash and go somewhere I can buy BTC without needing KYC.

Afraid of the different price BTC will have by the time you’ll buy BTC? Do you have enough savings and will to “risk” doubling your holdings for a day or two? Let’s say you have 0.1 KYC-ed BTC, currently worth around $3k. Go get yourself another 0.1 BTC but without KYC. Now sell your KYC-ed BTC immediately and you’re care free.

There’s no point in having these fears, seriously! Don’t let these attacks on BTC catch you. There’s no such thing as taint. It’s just an attack to keep us away and scared.

This is indeed a fascinating and crucial question that I haven't pondered before. As an initial user, there is a possibility of being traced if you have gone through the KYC (Know Your Customer) process during your purchase. If you have concerns about such a scenario, you have a couple of options. Firstly, you can choose not to use KYC or opt for reputable instant exchanges that do not require KYC verification. Alternatively, you can consider utilizing local resellers to acquire Bitcoin or purchase USDT (Tether) and then exchange it for BTC. By avoiding KYC procedures altogether, you can mitigate the risk of potential harassment or unwanted attention.

No coins from decentralized exchanges are not flagged or tagged tainted and as such you can send your coins out from them to any wallet or exchange. The reason bisq and it likes was suggested for you was that if you can’t buy coins except from exchanges then do so with decentralized exchanges, this way nothing can be traced back to you because the exchange doesn’t have any information related to you. But for convenience reasons if you are scared the funds you are sending out will get you into trouble then the mixers are complete safe, although you might be worried about getting them out without having it tagged. There are just few centralized exchanges that do not accept coins from them. Other than that mixers are safe to use

Think about it from a point of view of investigator. You found an address used by a criminal, let's say drug dealer. Then among their transaction you find a transaction that leads to an address (your address) which received funds directly from exchange. Keep in mind that exchange wallets are very publicly known. Now the investigator can contact the exchange, and the exchange would likely provide them your identity, and you will get questioned by authorities over your connection with the alleged criminals.

But each of these steps can fail. Maybe investigators won't be interested in those addresses, because it would be clear to them that those belong to bystanders. Or the exchange will refuse to cooperate with law enforcement. Or the investigation is ongoing in a far away country that doesn't cooperate with your law enforcement. 

From a chain analysis perspective, yes. You are the last (only) known owner of those coins. But the investigation carried out by the police or other law enforcement agencies is not limited to chain analysis. In the case of some kind of crime related to "your" coins, you will probably be invited to an interview where you will simply provide evidence that the coins have changed hands and that you no longer have anything to do with them. On the other hand, with the information you provide, you may even help police detectives identify the real criminal.

What i believe is that the bitcoin is no longer is your custody and whatever they finds out may not be subjected to you rather tracked down to the new holder. However, there will be a trace to your wallet if the wallet pass kyc in a centralized exchange though the trace could be termed to the amount of bitcoin that is used for the crime or for illegal activity. Just as they have suggested p2p at this point would be more preferable if your not confident of using centralized exchange to buy bitcoin. I think here is when you would like to make used of mixers if you are that comfortable with it.

Good question but this should not appear strange to you and this are situation that can happen to anyone even those outside of crypto-currency. Imagine you gave your care to your friend to run a close by errand and he just quickly uses it to commit a crime and unfortunately the plate number was spotted but not your friend. Logically after the plate number must have gone through some checks you would first be called in for questioning then you would have to prove your innocence, it's unfair but it sure does happen so in this case you have to maintain innocence and then investigations are Carried out

Or better still don't give our you sensitive information to any exchange there are Decentralized exchanges you can choose from.

You can get more information about decentralized exchange on this link
https://www.google.com/amp/s/cointelegraph.com/learn/what-are-decentralized-exchanges-and-how-do-dexs-work/amp

No, it is a valid concern. So I don't think you are not unnecessarily paranoid.

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Bitcoin is pseudonymous by nature and it has a public blockchain. The concept of fungibility and taint is also preserved to be discussed here. Some entities flag and consider some bitcoins as bad/dirty or good/clean. Some governments maintain a blacklisted address. Some mining pool was trying to filter a specific utxo. Also, A mixer coinjoin operator collaborates with the blockchain analysis company to scan the bitcoin before they are able to be mixed.

In regard to your case, I think you have found an understanding of the matter. For further options to acquire bitcoin in a more privacy-preserving way, consider the non-KYC solution. Also, I suggest this resource for related information about Bitcoin privacy: https://www.lopp.net/bitcoin-information/privacy.html. 

I think this kind of scenario speaks on the importance of mixers in the cryptocurrency space. The fact that they can at least hide your transactions make it more safer for you to send your BTCs to someone.

But think of it this way- if you have given paper money to someone and that someone uses it for illegal means, does this mean that you have propagated or enabled the person to commit the wrong done? I think not- it still boils down to the person in which he/she used the BTCs for, whether legally or illegally. If this were the case, I am confident that nothing would happen to you and no one would be able to question your intentions.

If you are really skeptical about it, then you may also exercise the option of purchasing BTCs in exchanges that do not require any KYC documents to be submitted.

First of all, I will like to correct the motion that there is nothing called "KYC Bitcoin" but rather we have Bitcoin that could be bought on an exchange that uses KYC (i.e Know Your Customer), whereby you are required to submit some documents to allow you buy, sell or trade Bitcoin. Secondly, the moment you gift your coin or it leaves your wallet you loses ownership of it to the next person.
However, I have seen situations whereby people get arrested simply because someone bought a coin from them through p2p with a stolen fund and when traced they happen to be the suspected victim, whereby in such case if only you could prove that you are innocent, you are likely to get allow free, which is why it's good to always use a reputable exchange.

I understand where you're coming from, but it's quite unlikely that anything unfortunate would happen to you, even if the Bitcoin you sold or moved was involved in illegal activities. You can simply show the transaction ID that it is no longer in your possession, but generally, it's doubtful that you'd get in trouble. I also had a similar question regarding KYCed Bitcoin, which is tied to your identity if purchased through a centralized exchange, but it was mostly regarding the taxation of cryptocurrencies.

Unfortunately, if you have transactions on centralized exchanges, it'll always be shown that you have purchased crypto in the past. This is why P2P exchanges come into place—to avoid being screened, even though it's quite unlikely, unless we're talking about thousands of dollars worth of crypto.

Chain analysis is obviously not an exact science. They are using their best guesses to track bitcoins. If you don't do anything illegal you don't have to worry. Chain analysis can never prove you did something once you have bitcoin from a wallet it knows you own to a wallet it doesn't know you own. So if you send bitcoin to someone else chain analysis at best cannot prove you still have it, or otherwise if it can connect that other wallet to someone else then it can prove you don't have that bitcoin anymore. So the only way chain analysis can prove you spent bitcoin on something illegal is if in fact you did spend bitcoin on something illegal like doing that illegal spending from a wallet that they know you own through KYC.

Your worry is a bit like worrying that you'll be in legal trouble if you own a store and a criminal who stole money comes into your store and buys something and you are worried about facilitating the use of illegal money. You did nothing wrong, you are not the criminal, so you're fine.

Also realize that the number of people who do illegal things with bitcoin is very small, so not only can chain analysis not prove you did something illegal that you didn't do, its also extremely unliikely you're gonna be sending money to someone who then goes and does something illegal with that money.


No need to worry yourself over needless things. If you don't worry about this sort of thing with fiat you shouldn't worry about this sort of thing with bitcoin.

Thanks for the various replies!

It seems that, in the case of KYC Bitcoin, keeping good records of the UTXOs sent to others or received from others would be important. Say I buy a used car off Craigslist. If I keep a careful record of the UTXOs involved in the purchase, and possibly also "KYC" on the person I bought it from, then I could always provide that as "proof" if the Bitcoin were ever to be used for something illegal and traced back to me. Hopefully it's an unlikely scenario, but at least keeping records would make it easier to put up a defense if there were to be an issue down the road.

I think it's starting to make more sense to me now. I appreciate the insights.