Topic: OFAC-Sanctioned Transactions Being Censored - page 2. (Read 2162 times)

Bad news.  Now Samourai's whirlpool is censored:  https://nitter.cz/SamouraiWallet/status/1732584009442443336.

I always thought this scenario was an "if", and that more people would be disgusted by this behavior and do something about it. Given how little everyone seems to care, I worry this scenario is now a "when".

It is indeed happening. The question is, how will we be able to use our bitcoin if most of the people suddenly decide to use bitcoin in a government-approved manner. I mean we wanted bitcoin to be free for everyone, without any intermediaries. We wanted to get rid of all of this centralised manipulation.

Now, I am worried more than ever. If I want to buy something from an online store, will my bitcoin be rejected, just because I didn't buy it from a CEX?

This is already happening. There have been a whole bunch of centralized exchanges saying they will only allow deposits or withdrawals to other TRUST entities. TRUST stands for the Travel Rule Universal Solution Technology, and is essentially a list of fully centralized fully KYCed services which report everything to the US or other respective government. So not only can you not transact with non-KYCed services, but you can't even withdraw you coins to your own wallet.

Soon you will have government approved KYCed bitcoin which is bought, held, and sold only on centralized exchanges and used only to chase fiat gains, and then you will have all bitcoin which is held in your own wallets and not in the custody of a centralized exchange, which you can use for anything you like but which the government will treat as criminal and malicious. This split has already begun, and very few of us seem to care.

Cash (i.e. physical FIAT) has two essential properties

- Anonymity. In the general case it is not possible to find out who owns a given coin/banknote at the moment. Nobody knows what transactions are performed except for their participants.
- Zero cost and unblockable transactions. It does not cost anything for user A to give any amount of cash to user B and it is very difficult for a third party to block a transaction between A and B.

Both properties are nice to have but one might argue that the second one is more important. When the CBDCs are introduced they will not have anonymity but if they allow (almost) zero-cost transactions between arbitrary users A and B, then it is possible to allow conversion between CBDCs are real crypto (e.g. Monero) at (almost) zero cost and still keep the pure crypto transactions anonymous.

CBDCs are a big problem and the crypto community better start thinking how to work around that problem, otherwise in 10 years we will live in a totalitarian world with CBDCs and non-anonymous, KYCed, government-controlled "crypto".

The next logical step after enforcing KYC for all financial institutions (including CEXes) is to prohibit KYCed wallets from transacting with non-KYCed wallets. This will cause the KYC to spread like an infection over crypto wallets. It is an obvious step and sooner or later the governments will do that. This will effectively split the crypto wallets into two non-communicating groups of KYCed and non-KYCed wallets. That is why I said that we need to find a working solution to exchanging CBDCs/KYCed crypto with non-KYCed crypto. That's the main problem.

Yeah, that is 100% so. Unfortunately, some countries, like EU member states for example are tightening the laws regarding cash. In some countries like Sweden, cash is almost not used at all.

I think that cash is one of the pillars of democracy, privacy and freedom. Any efforts to eliminate cash should be illegal. 

Well that's a relief. If it's only enforcing KYC through centralized exchanges, then you can switch to a P2P or DEX exchange for true privacy. We should stick with open source wallets and decentralized exchanges to avoid failling into the hands of the government. Regulations are getting strict, especially when Bitcoin's popularity is increasing at a fast pace.

I've been doing a little research and found out a private alternative to the Lightning Network called "Ark". There isn't a working product (as far as I know), but the project is very promising. You might be able to "anonymize" your BTC with this off-chain scaling solution in a trustless manner. There are also trusless cross-chain atomic swaps that will eliminate the need for CEXs in the future. With development happening behind the scenes, it seems to me that not all hope is lost.

That too.

Everybody hates FIAT but physical FIAT is a wonderful thing. Only a few realize that. Once paper money is gone, we are fucked.

These KYCed cryptocurrencies will lose the "crypto" functionality (no more anonymity) and will essentially become very similar to the other digital government-controlled currencies. For practical reasons they will be just like the bank electronic money that people access through their debit/credit cards or the future CBDCs. However the CBDCs and the bank money will integrate better with the online/offline shops and the government institutions. So the KYCed crypto will not have any advantage over the government CBDC and I expect it to be used mostly for trading on the exchanges by people trying to make some profit from the volatility of the crypto. But no reason to use KYCed crypto in the everyday life if it is does not provide any benefit over the CBDCs.

So institutionalizing a cryptocurrency by enforcing KYC for its usage essentially means turning it into yet another stock symbol that is useless outside of the exchanges.

If cash remains then most likely there will be people who will keep buying/selling real (anonymous) crypto trying it make profit from the volatility of the real crypto. This market will be much smaller by the current one but it will exist.

The major problem is converting between real crypto and CBDCs (and other government-controlled electronic money) at the same time preserving the anonymity of the real crypto wallets and the anonymity of the crypto transactions. I have been thinking about it and it seems that there are various ways to organize this conversion between real crypto and CBDCs as long as the users are allowed to transfer freely CBDCs (or other government-controlled money) from one government-controlled wallet to another without significant cost, i.e. minimal or no government taxes for such transfers. I think that if this problem is solved, then the remaining problems will be solved too.

I don't understand why they trade bitcoin for pump and dump... there are many stocks which they can use only for this purpose alone. My guess is, It is probably crypto is the first asset they learned to trade and they think it is the only asset which can go moon.

On one hand, we will have bitcoin which will become ultra-institutionalized, fully KYC enabled, censored, high fees (thx to ordinals), good performer against FIAT, available on every exchange

On other hand, we will have XMR. Zero KYC, zero adoption, shit price performance (when this is over, will it even have a price i wonder), zero censorship, low fees. We won't even find a place to convert it to FIAT. No legit business will accept it too.

:/


Their motivation is simple. They are following the law. Either they censor the tx, or they will go to jail.

Is there a business which pay taxes to the gov can say no to "KYC"?

Miners pay taxes too. How are they gonna ignore the gov?

R.I.P.

---

We can only solve this problem if we bring home mining back and it ain't coming back.

Yeah, I agree. There will be some privacy penalty for huge fiat gains. It's inevitable. But I guess it's a reasonable trade-off and we're lucky they're not planning to ban Bitcoin. After so many years, staying poor but free doesn't seem enticing to me. 

If you're still unsure, just try creating a new account or order a debit card from some exchange (say Coinbase). It's mission impossible if you can't provide proof of employment and source of funds. Where are the good old days? 

I'm afraid you're right.

Most Bitcoiners are huge hypocrites, they give zero fucks about freedom, they only care about fiat gains...

Hell, I don't even pay attention to BTC/USD these days anymore (I no longer participate in price discussions). I know the price is rising, but what's the point?

They don't have to acquire anything, though. Just force pool operators to obey their blacklists, and count on enough individual miners not caring enough to switch to a different pool. F2Pool started censoring transactions based on the US government OFAC blacklist, despite there being exactly zero laws requiring them to do so and despite them not even being based in the US.

This forum is full of people who welcome ETFs, welcome institutions, and welcome more regulations, all because it will make the price go up. And if the bitcoin forum founded by Satoshi is largely happy to sacrifice everything bitcoin was designed for in order to chase some short term fiat gains, then you can be damn sure the average Joe isn't going care.

Just learned about this. Big if true and it looks like it is. If they can censor any tx they want, since there is no business which don't demand KYC, then bitcoin and the legacy banking are pretty much the same thing  now. That's what I was afraid of.

They are getting bitcoin ready for the ETF approval.

Bitcoin is getting "institutionalized".

They are kiling mixers, punishing CZ/Ronaldo, censoring transactions, letting no no-KYC business survive...

Not looking good.

Everybody who cheered for the Blackrock ETF should rethink their actions imo.

Sheeple are sleeping, they just won't wake up and try to understand who wants to abolish privacy by 2030:

https://medium.com/world-economic-forum/welcome-to-2030-i-own-nothing-have-no-privacy-and-life-has-never-been-better-ee2eed62f710

Another "conspiracy theory" according to some "educated" folks...

Do you know how many people have been shouting since 2020 about the Great Reset agenda? And how many people dismissed it as a silly, tinfoil hat conspiracy theory?

Sheeple/useless eaters will get what they deserve, I have zero pity/sympathy for them.

It's arguably still resistant, just not immune.  But yes, there's definitely a considerable amount of work to be done to prevent further erosion of privacy and freedom.  



If users sleepwalk into subservience, then it's certainly possible.  Hopefully enough of them are alert and aware of how dangerous AOPP can potentially be.  For those that aren't, maybe we need to shout louder?  It seems like it should be blindingly obvious, but then I sometimes forget that not everyone places value in having full control of their funds.  

How likely is that to happen? Either from the US government or BlackRock.

It's a huge ASIC investment to acquire 51% of the hashpower. Billions of dollars are required, maybe trillions in the future.

Not to mention there's tons of competition:

https://cointelegraph.com/news/russian-government-subsidies-crypto-mining-facility-in-siberia

Nothing, of course, except they might decide that doing so is illegal. The AOPP protocol wasn't designed to make every wallet undergo KYC at source though, but rather require that centralized exchanges attach your KYC to your withdrawal addresses by having you sign a message from it prior to withdrawal.

True, but as we've seen in this thread, bitcoin is not actually censorship resistant. If the government get 51% of mining power to comply with their blacklists, then they can simply censor any transaction paying to or from a non-KYCed address.

So this means non-custodial wallets will now be KYC-compliant via the use of the AOPP protocol? It doesn't make any sense. Especially if the wallet is open source. What's stopping someone from making a fork without the protocol? This will only work on closed-source wallets.

There's no way governments will be able to enforce regulations on truly-decentralized blockchain networks. It's technically impossible. The only thing they can do is regulate centralized exchanges, services, and wallet providers (custodial). They can also pressure developers to write code that's regulatory-compliant. But the community ultimately decides which changes to approve or reject on a Blockchain network. Lets hope decentralization wins in the long run. :/

The governments will probably force most centralized web-based wallets and most hardware wallets to perform KYC. But it is difficult to enforce something like that for purely software wallets running on users' computers (i.e. self-hosted wallets). They will probably try to outlaw and/or block the self-hosted wallets, but I don't think they will succeed. At best they can succeed in splitting crypto into a government-controlled, fake crypto and uncontrolled, real crypto. There might be a another problem with the real crypto if its development becomes outlawed, e.g. it may become illegal to develop something like Monero.

For cash it is easy to convert it to/from real crypto, so the question is converting between real crypto and the totalitarian CBDC. Of course I am not suggesting anything illegal, but I can imagine how trade may happen in the future between no too law abiding people.

I can imagine that there is user A who has real crypto and user B who has some CBDC. Then I can imagine that user A creates some random image, that user B likes and buys it from user A, paying user A some CBDC. At the same time some crypto is moved from a crypto wallet owned by A to a crypto wallet owned by B. The random image may contain the actual crypto transaction data but it is not mandatory if both parties trust each other to perform the two transactions (CBDC and crypto) independently.

Obviously this approach has the disadvantage that the government will try to tax the purchase of the random image and charge user A a sales/VAT tax , but there may be other types of transactions that are not taxed by the government, e.g. donations or something else. The tax code varies from country to country.

I can also think of other more complex ways to use real crypto in parallel with CBDC, but the above is probably the simplest to implement.