The Lightning Network FAQ - page 21.

Wind_FURY

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Quote from: dkbit98 on December 28, 2021, 12:15:43 PM

Quote from: hv_ on December 26, 2021, 09:18:26 AM

There is FATF Travel Rule compliance anyway. So LN might be classified as illegal coin mixxer by default

That is not going to happen any time soon, but in theory they can classify anything as illegal, walking on street, using paper money, owning gold, owning bitcoin or any other property.... oh wait some of those things were already illegal once upon a time.

One more reason why Lightning Network won't be made illegal is because they prefer to track in and get more tax extortion from people, hence why Chainalysis recently announced they are integrating and tracking Lightning Network for regulation compliance.

It's a well know fact that Chainalysis is working with many exchanges, companies and government agencies.

It’s probably because the government doesn’t have the regulatory-framework to work on to start shutting down Lightning routing nodes. They can’t stop centralized shitcoins, how can they censor Bitcoin and any decentralized offchain layers build on top of it.

Plus Chain Anals’ tracking of Lightning transactions actually helps increase the liquidity in the network and helps it scale, and makes it function better. Cool

dkbit98

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Quote from: hv_ on December 26, 2021, 09:18:26 AM

There is FATF Travel Rule compliance anyway. So LN might be classified as illegal coin mixxer by default

That is not going to happen any time soon, but in theory they can classify anything as illegal, walking on street, using paper money, owning gold, owning bitcoin or any other property.... oh wait some of those things were already illegal once upon a time.
One more reason why Lightning Network won't be made illegal is because they prefer to track in and get more tax extortion from people, hence why Chainalysis recently announced they are integrating and tracking Lightning Network for regulation compliance.
It's a well know fact that Chainalysis is working with many exchanges, companies and government agencies.

HeRetiK

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Quote from: hv_ on December 26, 2021, 09:18:26 AM

There is FATF Travel Rule compliance anyway. So LN might be classified as illegal coin mixxer by default

Unlikely, IMO.

First of all it's questionable whether LN node operators would fall under the definition of a VASP in the first place, as they arguably (1) merely provide ancillary infrastructure, which is explicitely excluded from the definition of a VASP and (2) acting as a VASP also implies running a business, for which the expected "profits" of running a LN node hardly qualify -- at least for 99.9% of nodes. The latter means that worst case you'd see large nodes replaced with many smaller ones. And exchanges that run their own LN nodes already know their customers anyway, if regulations tighten they can stop routing and only use LN for in- and out-going transactions.

Secondly the FATF travel rule would only apply to transactions of larger than USD 1000,- or its equivalent. Even assuming LN node operators would get ruled as VASPs and have FATF guideline-based legislation applied to them they can just adjust the maximum amount that can be sent via their channels to fall within regulation. I believe even now most LN transactions fall well below that limit anyway.

Wind_FURY

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Quote from: hv_ on December 26, 2021, 09:18:26 AM

There is FATF Travel Rule compliance anyway. So LN might be classified as illegal coin mixxer by default

The cat is out of the bag. In fact, Bitcoin is classified as an illegal currency by default, but because of technical break throughs, and the genius of the implementation of HashCash/POW in Bitcoin, it could not be censored. Lightning will be the same. It will only increase in liquidity provided by Chain Anals, Routing Nodes, and Users.

hv_

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Clean Code and Scale

There is FATF Travel Rule compliance anyway. So LN might be classified as illegal coin mixxer by default

n0nce

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Quote from: dkbit98 on December 15, 2021, 09:21:01 AM

Quote from: BlackHatCoiner on December 13, 2021, 08:26:09 AM

Interesting... I guess they'll open lots of channels with lots of nodes? It seems to me that they'll need lot of liquidity.

I don't know exactly how they plan to do this, but it's with using their KYT software I am sure they will connect with all exchanges that accept LN payments.
They are also monitoring many addresses from ofac list, but it's not going to be so easy with lightning network, unless they have some actors inside.

How can they know where the money is going, though? I mean, sure, they will be able to ask exchanges who bought how much BTC and which hop it was next sent to, but it will be difficult to determine where it ends up after the last onion 'peel' is removed.

Quote from: dkbit98 on December 15, 2021, 09:21:01 AM

Quote from: n0nce on December 13, 2021, 12:33:57 PM

I'm very interested to see what / how they want to try spying into LN.

I a sure they won't tell anyone how they are doing that spying part but I am sure they have huge funding from governments and other big tech corporations.
LN tracking for them is just one small puzzle part in much bigger picture of tracking everyone and everything.

Sure, it's just that conceptually I don't get which possibilities there could be asides from usual onion routing attacks like controlling a vast amount of nodes. One issue for them might be that compared to attacks on the Tor network, is that channels 'cost' real money. It's not just setting up AWS instances, but also funding and maintaining tons of well-connected nodes.
If they were to instead create one huge node that will connect most people through 1 hop (alternative to maintaining lots and lots of nodes), it would quickly get noticed on LN observer maps and stand out as very suspicious to node operators.

BlackHatCoiner

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Farewell, Leo

Quote from: Rath_ on December 15, 2021, 09:10:02 AM

Maybe you also need to run Electrum through Tor proxy? I am not sure because I used Electrum only with clearnnet nodes, but it would make sense.

Went through Tor. Results:

No outgoing transactions in history. In my node's log:

Code:

2021-12-15T14:31:34.512Z INFO 0348800b9c5e68fe052d6b240350ae5412bbfc7fee7456ec4d725f7c7beff333f2-chan#3: Parsing funding_created

dkbit98

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Quote from: BlackHatCoiner on December 13, 2021, 08:26:09 AM

Interesting... I guess they'll open lots of channels with lots of nodes? It seems to me that they'll need lot of liquidity.

I don't know exactly how they plan to do this, but it's with using their KYT software I am sure they will connect with all exchanges that accept LN payments.
They are also monitoring many addresses from ofac list, but it's not going to be so easy with lightning network, unless they have some actors inside.

Quote from: n0nce on December 13, 2021, 12:33:57 PM

I'm very interested to see what / how they want to try spying into LN.

I a sure they won't tell anyone how they are doing that spying part but I am sure they have huge funding from governments and other big tech corporations.
LN tracking for them is just one small puzzle part in much bigger picture of tracking everyone and everything.

Rath_

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Quote from: BlackHatCoiner on December 15, 2021, 09:04:08 AM

Did it connect with my node, but run a command that isn't recognized?

Maybe you also need to run Electrum through Tor proxy? I am not sure because I used Electrum only with clearnnet nodes, but it would make sense.

BlackHatCoiner

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Farewell, Leo

Quote from: Rath_ on December 15, 2021, 09:00:59 AM

Electrum failed to find an IP address of your c-lightning node in its local map of the network. You need to specify it manually.

039a7e0982d3b0f967dfc18b8b69c9e8cafd035985eff1832258daf08de119b10e@pn4dvsmjxpkemwsuhocrytdpfgrqjzbd6zagasyrg4msce63sldxtlqd.onion

Electrum now returns me:

Code:

Could not open channel: ConnStringFormatError('Hostname does not resolve (getaddrinfo failed)')

Did it connect with my node, but run a command that isn't recognized?

Rath_

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Quote from: BlackHatCoiner on December 15, 2021, 08:46:31 AM

So... what's going on?

Electrum failed to find an IP address of your c-lightning node in its local map of the network. You need to specify it manually.

039a7e0982d3b0f967dfc18b8b69c9e8cafd035985eff1832258daf08de119b10e@pn4dvsmjxpkemwsuhocrytdpfgrqjzbd6zagasyrg4msce63sldxtlqd.onion

BlackHatCoiner

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Farewell, Leo

Alright, so I installed c-lightning on my RPi and it's, indeed, better for a newbie like me. It seems more simple than LND, but I need your help with something. I opened a channel with - 026c0f266268c1edc4e1f7e17ba6aa18979fee47f059e46a40cafbbcc56ab3df57. (d1d5720a39fe5786e972d1fc7ca1badd4dfb8c31dea62d45978f77b3dd9fc5e6)

Code:

bitcoin@raspibolt:~/lightning/cli $ ./lightning-cli --network=testnet getinfo
{
"id": "039a7e0982d3b0f967dfc18b8b69c9e8cafd035985eff1832258daf08de119b10e",
"alias": "VIOLENTCHASER",
"color": "039a7e",
"num_peers": 1,
"num_pending_channels": 0,
"num_active_channels": 1,
"num_inactive_channels": 0,
"address": [
{
"type": "torv3",
"address": "pn4dvsmjxpkemwsuhocrytdpfgrqjzbd6zagasyrg4msce63sldxtlqd.onion",
"port": 9735
}
],
"binding": [
{
"type": "ipv4",
"address": "127.0.0.1",
"port": 9735
}
],
"version": "v0.10.2-145-g5bbe3fe",
"blockheight": 2131247,
"network": "testnet",
"msatoshi_fees_collected": 0,
"fees_collected_msat": "0msat",
"lightning-dir": "/home/bitcoin/.lightning/testnet"
}

Code:

bitcoin@raspibolt:~/lightning/cli $ ./lightning-cli --network=testnet listfunds
{
"outputs": [
{
"txid": "d1d5720a39fe5786e972d1fc7ca1badd4dfb8c31dea62d45978f77b3dd9fc5e6",
"output": 0,
"value": 999846,
"amount_msat": "999846000msat",
"scriptpubkey": "0014bcddf25998e909d839b327d0f1bdabe7e0e68bd4",
"address": "tb1qhnwlykvcayyaswdnylg0r0dtulswdz75m44y2l",
"status": "confirmed",
"blockheight": 2131240,
"reserved": false
}
],
"channels": [
{
"peer_id": "026c0f266268c1edc4e1f7e17ba6aa18979fee47f059e46a40cafbbcc56ab3df57",
"connected": true,
"state": "CHANNELD_NORMAL",
"short_channel_id": "2131240x43x1",
"channel_sat": 1000000,
"our_amount_msat": "1000000000msat",
"channel_total_sat": 1000000,
"amount_msat": "1000000000msat",
"funding_txid": "d1d5720a39fe5786e972d1fc7ca1badd4dfb8c31dea62d45978f77b3dd9fc5e6",
"funding_output": 1
}
]
}

I'd, now, like to try to open a channel from my Electrum with my node.

So... what's going on?

HeRetiK

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Quote from: ?? on ??

Quote from: n0nce on December 13, 2021, 12:33:57 PM

But it doesn't change that they can't look into the 'onion' packets and e.g. track who sends money to whom and stuff like that.

With timing attack, it's theoretically possible to reveal some information.

I could imagine tracking larger payments by probing channel liquidity before and after the payment of interest has been made. If successful, you'd see a path of misbalanced (or rebalanced) channels along the route the payment took. Probably not reliable enough though due to the fuzziness of the data; also rather conspicuous since you'd have to send probing payments / payment attempts.

n0nce

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Quote from: dkbit98 on December 13, 2021, 08:07:48 AM

I don't know if you heard the news but Chainalysis launches support for Lightning Network after they noticed how LN second layer protocol recently gained more popularity.
Funny thing is how they created censored twitter post not allowing anyone to comment anything on that tweet unless they approved it.
They plan to release Chainalysis KYT software for monitoring Lighting Network transactions, it will show ''risky'' activity and other insights.
https://blog.chainalysis.com/reports/lightning-network-support/

I'm very interested to see what / how they want to try spying into LN. Sure, they can create channels to lots of nodes and find out a few bits of information. But it doesn't change that they can't look into the 'onion' packets and e.g. track who sends money to whom and stuff like that.
Not sure how they will find out any activity, be it 'risky' or not, since in LN even if they put themselves between all senders and receivers, it will be hard to even trace where the money is going after the next hop. At least that's my understanding of the Onion routing protocol.

Also, we could just all configure our nodes to avoid Chainalysis nodes on the route (source routing).

BlackHatCoiner

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Farewell, Leo

Quote from: dkbit98 on December 13, 2021, 08:07:48 AM

[...]

Interesting... I guess they'll open lots of channels with lots of nodes? It seems to me that they'll need lot of liquidity.

Quote from: dkbit98 on December 13, 2021, 08:07:48 AM

Funny thing is how they created censored twitter post not allowing anyone to comment anything on that tweet

The funniest part of their twitter account is the biography:

Quote

Building trust in blockchains among people, businesses and governments. Our crypto compliance and investigation software powers hundreds of top institutions.

Let me rephrase it, to make them look honest:

Quote

We help governments and businesses to censor transactions and make your crypto less fungible. Beware. We're watching you.

dkbit98

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I don't know if you heard the news but Chainalysis launches support for Lightning Network after they noticed how LN second layer protocol recently gained more popularity.
Funny thing is how they created censored twitter post not allowing anyone to comment anything on that tweet unless they approved it.
They plan to release Chainalysis KYT software for monitoring Lighting Network transactions, it will show ''risky'' activity and other insights.
https://blog.chainalysis.com/reports/lightning-network-support/

Carlton Banks

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Quote from: HeRetiK on December 07, 2021, 07:04:30 PM

Quote from: Carlton Banks on December 07, 2021, 03:24:03 PM

I would add that tor on it's own may not be enough to anonymize yourself from persistent attackers. There are various known attack methods that can obtain or infer information about tor nodes/onion domains, but mitigations exist also. Seeing as LN nodes value constant uptime, I'd guess that being a persistent attacker will eventually pay off.

Could you share info on attacks as applicable to LN nodes? This one seems fairly relevant, but I didn't find much else:
https://blog.torproject.org/announcing-vanguards-add-onion-services/

(except for various DDoS research and the classical OPSEC failures when using TOR to browse the internet)

yes, this.

there's add-on software that mitigates, called literally 'vanguard'. But it looks like tor devs are integrating that plugin to tor itself anyway (as per the article you linked)

n0nce

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Quote from: HeRetiK on December 07, 2021, 07:04:30 PM

Quote from: Carlton Banks on December 07, 2021, 03:24:03 PM

I would add that tor on it's own may not be enough to anonymize yourself from persistent attackers. There are various known attack methods that can obtain or infer information about tor nodes/onion domains, but mitigations exist also. Seeing as LN nodes value constant uptime, I'd guess that being a persistent attacker will eventually pay off.

Could you share info on attacks as applicable to LN nodes? This one seems fairly relevant, but I didn't find much else:
https://blog.torproject.org/announcing-vanguards-add-onion-services/

I think a scheme could be constructed as follows:
1) control lots of Tor exit / entry nodes
2) find real IP of node operator (deanonymise them)
3) got a mapping between LN node ID and BT username

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Quote from: Carlton Banks on December 07, 2021, 03:24:03 PM

I would add that tor on it's own may not be enough to anonymize yourself from persistent attackers. There are various known attack methods that can obtain or infer information about tor nodes/onion domains, but mitigations exist also. Seeing as LN nodes value constant uptime, I'd guess that being a persistent attacker will eventually pay off.

Could you share info on attacks as applicable to LN nodes? This one seems fairly relevant, but I didn't find much else:
https://blog.torproject.org/announcing-vanguards-add-onion-services/

(except for various DDoS research and the classical OPSEC failures when using TOR to browse the internet)

Quote from: Carlton Banks on December 07, 2021, 03:24:03 PM

probably a good idea to look into for lightning node operators, although I realize people do connect their LN node over tor only to take advantage of simple port forwarding (and don't care about anonymity)

Probably true, but I also think that these days people are fairly aware of the fact that sharing their IP address publicly on the interwebz may not be such a good idea. Not needing to set up port forwarding or a dynamic DNS is definitely a neat side effect though.

Carlton Banks

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Quote from: Rath_ on November 24, 2021, 01:08:10 PM

Quote from: HeRetiK on November 24, 2021, 10:44:46 AM

I'd rather not post my node id publicly from my Bitcointalk account for now as I'm not yet entirely sure what this would mean for my privacy.

If you are running behind Tor then you should be concerned only about the origin of coins which you used to open your channels.

I would add that tor on it's own may not be enough to anonymize yourself from persistent attackers. There are various known attack methods that can obtain or infer information about tor nodes/onion domains, but mitigations exist also. Seeing as LN nodes value constant uptime, I'd guess that being a persistent attacker will eventually pay off.

probably a good idea to look into for lightning node operators, although I realize people do connect their LN node over tor only to take advantage of simple port forwarding (and don't care about anonymity)

Topic: The Lightning Network FAQ - page 21. (Read 33287 times)