Topic: Liberty Reserve shutdown is a boost for Bitcoin? - page 2. (Read 12722 times)

So, my "tin-foil hat" definition is correct!

AML laws get you then, too! 

So, if I'm concealing the source of legally gotten money everything should be okay?!

No, that's some tin-foil hat definition.

"Money laundering is the process of concealing illicit sources of money." -Wikipedia
"money laundering (concealing the source of illegally gotten money)" -Princeton WordNet

Mixing here is not simply "to combine" as you are using it. It is the act of specifically mixing dirty money with clean money to conceal the original source of the dirty money. See the Bitcoin wiki for "Mixing service." I don't know on what scale this was actually happening with LR -- we are not privy to that information.

Hacked credit card money, for example, and "real money" are fungible; you simply wouldn't want that trail leading back to you. Is it not simple to see why AML laws would be used to prevent mixing of these types of funds?

No. Laundering is every financial transaction if Big Brother has no information about how much money, from whom, and for what are transferred. If they don't know EVERYTHING about your money then you're dubbed money launderer.

Well, cash is mixed in every cash register in every shop. Does it mean that every cash register in every shop is a money laundering machine? Fungibility is one of the key functions of real money. If you can't mix them then you're not using real money but some substitute.

Laundering, IMO, is based on concealment. It's about whether or not you conceal the source of (ill-gotten) money.

So, for instance, if you were able to move funds from hacked bank accounts to anonymous re-loadable credit cards, without the ill-gotten money being tied to you, that would be laundering. That is exactly the type of service that LR was able to provide. It's simply mixing, and it is definitely laundering.

More important than the loss of the money by users of LR is the demonstration of power by the empire state court.  A few folks proved they can take money from any bank accounts around the world (20 accounts in Cyprus, 10 in costa rica, accounts in China, Hong Kong, Latvia, Russia) based solely on unproven accusations.  They showed they can take domains based solely on accusations.  They showed they can shut down amazon web services based on accusations they make.  That is big news I think and will affect the market. 

Speaking of accusations, does anybody understand why "money laundering" is claimed?  I was under the impression that laundering had the implication of cleaning.  This means showing a clean exit for money, for example as restaurant earnings (though not many people went to that mafia restaurant), construction company earnings (hey wait what did they build), etc. etc.  Why do these warrants bother claiming that LR was a "launderer" of money when in no case do they ever provide clean taxable income for anyone? 

13.83% is plenty to support my point, which is that the 6 Billion is grossly overexaggerated. There is no need for 51%.  I think at lower than 3% the impact on the market would be too small. Thanks for the source, BTW.

What I am wondering is, how did the feds come by their numbers? Blunt lie? Or does money laundering require multiple transactions and they simply summed it up? Or....?

Sooner or later they will be forced to realize that they have only three choices:

1) Use a centralized payment system and get shut down
2) Completely stop their operations and don't send payment to anybody
3) Use bitcoin and live with the volatility. Obviously the most profitable option. 

Sure, another option is to start a legitimate business and launder that way, but many criminals either don't have the resources or that is practically impossible due to their particular business. In fact,  laundering money using a cryptocurrency is probably less risky than laundering money using a "front business."

The author does know what he is talking about when it comes to cybercrime, even if he does get a few facts wrong. The majority of cybercriminals do not want to use Bitcoin because of volatility reasons. Feel free to try to prove me wrong.

I suggest you read the article you link to yourself. The poll at the bottom says 13.83% think Bitcoin works best for them. If that translates into 13.83% of the 6 Billion of alleged criminal volume (around 1 Billion / year), that means we should see an additional $300K volume per day. Which would be perfectly visible. Apparently it doesn't translate. Which means that 6 Billion is grossly overexaggerated.

Other than that, I have my issues with the article and the apparent lack of knowledge of the author. Saying that LR was "insanely redundant and secure" as opposed to Bitcoin is not very accurate, as you undoubtedly will agree.

This should give you a better opinion of what cybercriminals think about LR. http://krebsonsecurity.com/2013/05/underweb-payments-post-liberty-reserve/

I doubt anyone ignored alex_fun for this.

But 6 Billion is serious money, compared to the size of the Bitcoin economy, anyway. Some criminals who's funds have been taken by the feds might wonder if another centralized service that can be taken out the same way is such a good solution. If only 10% of that money went to Bitcoin, we should see a serious boost. But we don't. In fact we don't see evidence that any money at all is flowing into Bitcoin atm.

And why should we? Moving money around with LR, Webmoney, WU or Bitcoin is not helping making it appear legitimate, just as carrying a bag of banknotes from one country to another is not helping a criminal in the least. To launder money, you need to have legitimate business and you add to the revenue they actually have.

I think LR's turnover of illegitimate money was orders of magnitude smaller than the official numbers. Govt had other reasons for taking them down and they simply lie to us.

The only man in this thread with the correct answer goes ignored...

The average American adult commits 3 felonies per day.
http://online.wsj.com/article/SB10001424052748704471504574438900830760842.html

Celebrity has many costs.  It is also a currency, but one that depreciates rapidly.

Governments also use anonymity.  Much of what governments do is kept secret.

I don't know that crime is so rampant as you suggest.  Most people don't commit crimes with any regularity, maybe 3%?  Those that do get a lot of attention so it seems more rampant than it is, and many of those are the non-violent type without victims.

right, and im sure the wealthy celebrities and athletes in the world also remain anonymous with their wealth

that is a completely irrelevant side of anonymity

unfortunately crime is so rampant that its impossible to say being anonymous is really a "good" thing from a government and LE position. from our position yes im sure all of us would like to remain anonymous regardless of what we do with it

I remain in the not good / not bad grey areas with respect to anonymity.  It is a tool, it has purposes and uses.  Just like a hammer, you can build a house or hit someone in the head, just don't blame the hammer.

Arguably there are ways to not need things like social security numbers and forms of ID even in an insecure world.
Anonymity is not necessarily meaning you have something to hide, it may also mean you have something to protect

Consider the plight of the wealthy bitcoin hoarder.  They do not want to be a target for evil hacking, so they choose to do most transactions anonymously and use multiple wallets, tor to hide IP addresses, and other means to obscure their wealth.

anonymity is bad when most financial systems are exploitable

if the world was a very secure place then we wouldnt need things like social security numbers and forms of ID

I don't know where you get these ideas, but they aren't from me.  You even chose to ignore the first half of the sentence in order to get this free education.  So here it is:

Anonymity is neither good nor bad.
Anonymity is not necessarily done because you have something to hide, it may also be done because you have something to protect.
A person can do something anonymously or publicly.  However, when someone is committing a crime, and they chose to do so anonymously, and take steps to do so.  This can be used to show intent in court, which is an element of most financial crimes, and all of the serious ones.
To find someone guilty of one of these crimes in a court of law, two things need to be proven.
1) The bad act
2) The guilty mind
The guilty mind is typically the harder one to show unless there are statements on record to show it, or actions that indicate it.
The prosecuting attorney will certainly bring up the fact that there was an attempt to act anonymously as evidence indicating the guilty mind.
A defendant facing a jury of random people who can show that either everything they do is anonymous and that everything they do is legal may have a good defense against this, however proving you do all those legitimate things anonymously is also going to be difficult without revealing a lot of things that you might rather keep private.

This is the challenge the LR folks are facing currently.