Topic: US DOJ Calls Bitcoin Mixing ‘a Crime’ in Arrest of Software Developer (Read 699 times)

I unquestionably anticipate that the US should take action against blenders, I'm amazed they haven't been putting indirect accesses or making their own to follow programmers once they blend assets after a serious wrongdoing. I anticipate that the US should keep this up and it being one among their enormous endeavors they were talking about prior this month.

The title of the article is really poor, does give an impression that every mixer will get a special uber ride to jail. But the reality is that the guy made a service specifically to move around black markets, it gave me the impression that if you're not actively promoting illegal activities you should be in the clear if you want to use mixing platforms. However, I do see govts kinda don't want people to be completely off the grid anyway, and this could be used as a premise for future trials to eventually crack down on all efforst to fully anonimyze your funds, and that's what I think should be worrisome. But only time will tell.

Interesting fact. For once, I've thought that the Etherdelta exchange was completely decentralized. But now I know more about the situation. This explains why the SEC required the Etherdelta developer to comply with securities. I guess that if software developers decide to make everything decentralized at the protocol level, mainstream governments wouldn't have a reason to prosecute them. As far as I know, there's only one true decentralized exchange called Block DX. It may survive a lifetime as governments will be unable to interrupt its services.

As far as mixers go, we need more decentralized solutions for Bitcoin in order to completely eliminate the need for centralized mixing services. While we still have the Wasabi Wallet, and JoinMarket, the much-awaited decentralized mixer called "TumbleBit" is still in active development and not ready for mainstream use. People will either need to rely on privacy coins completely (Monero, Grin) or trade Bitcoin in a P2P manner to prevent suspicion from the government (or they could use Wasabi Wallet while they're at it). Once TumbleBit is ready for mainstream use, you could expect people to use Bitcoin more thoroughly for privacy-centric transactions (as I believe it's the best solution around for privacy).

The current actions of the US government is just the beginning, as other countries will follow in eliminating centralized mixers from existence. Thankfully, we have decentralized solutions for preserving our privacy no matter what the government's efforts will be. The recent news should have no effect whatsoever in Bitcoin's growth within the mainstream world. Sooner or later, governments worldwide will realize that their efforts in diminishing Bitcoin's growth/usage will be in vain, leaving them with no choice but to join the "monetary evolution". India has already lifted its ban related to Bitcoin and other cryptocurrencies' usage within the country. Which means that countries will become more friendly to crypto and Blockchain tech as time goes by. Just my thoughts

etherdelta = non-custodial, not decentralized. they had centralized servers, order book matching, DNS registration, etc

the SEC noted this distinction in their case against etherdelta:


p2p trades (or mixes) done completely at the protocol level (without reliance on centralized third parties) don't fit that situation. the biggest issue for p2p trading is decentralized order matching, which is still a big challenge.

That's certainly true, mate. FinCEN targets central operators who profit from market trades, money transmitting services, etc. But I find it odd to see the SEC targeting the Etherdelta developer after being a decentralized exchange with no central operator. If they've still enforced securities laws on a decentralized exchange, they could easily make decentralized mixers' developers accountable too. After all, the government would not want people to use crypto in order to obtain financial freedom. Once they see Bitcoin and other cryptocurrencies as a threat to the existence of the current monetary system, you could expect something like this to happen in the future.

We cannot discard the possibility of governments making developers accountable for decentralized exchanges, mixers, and other crypto solutions. The US government has been the most strict one when it comes to crypto/Blockchain regulation. They've taken down the mixer in question and could easily shut down others over time. Once people start using non-custodial Bitcoin mixers like Wasabi Wallet and JoinMarket, you could expect opposition from the US and other worldwide countries. The main excuse from these entities will be that decentralized mixing solutions open a pathway for criminals to launder money and evade taxes at will. While we know that Fiat is used more for this than crypto, governments don't see it that way.

In the end, this will be a never-ending battle between crypto/Blockchain proponents and governments with central banks. Governments will continue to pressure the industry until everything is completely centralized (dependent on centralized exchanges, and other services). After all, it's no secret that today's crypto land is largely dominated by centralized exchanges. It would be surprising to see centralized mixers enforcing KYC/AML sometime in the future due to government's pressure within the mainstream world. If that happens, I believe that people will be more inclined to using non-custodial mixers than anything else. The recent situation of arresting a mixer operator, is only the beginning. Just my thoughts

Nobody, not for unlicensed money transmission anyway. JoinMarket just links together liquidity providers with liquidity takers, who pay fees to each other. The developers of JoinMarket are not generating business income from release of the code, so they aren't considered money transmitters under this law.

Then in a decentralized "market-place" for mixing such as JoinMarket? Who's the target? That's a purely 1's and 0's tumbling scenario.

I think monitoring a bitcoin mixer or software is good to monitor because today there is a lot of projects released by the people and they want to create those to spread into the world of crypto and gained a lot of users. Today there is a lot of software created just use to scam other people and also it is good we the US restricting the use of software also we want to avoid having future problems like not secured data and information. Still, we need to have a lot of verifications before we tell that bitcoin mixing is a crime because we all know it is decentralized we can restrict but we cannot control the market value of these coins and the use and purpose of it.

I don't think so. To qualify as a money transmitter in the second scenario, one would need to both develop the mixing platform and also profit from the associated money transmission.

It's arguable that a market-maker does neither. They are profiting from the bid-offer spread, not the mixing activity:


You would see the same distinction with an exchange. A market-maker on an exchange doesn't pocket trading commissions whenever trades are made -- the exchange operators do. That's who FinCEN is targeting, the ones who build the platform and are profiting from it.

Read bolded. JoinMarket "market-makers" are actually "liquidity-providers", that ask for a fee in exchange for providing liquidity. Is that considered a money-transmitter?

That's certainly true, mate. But we cannot discard the possibility of governments prosecuting cryptocurrency developers in the future, once they believe crypto and Blockchain tech to be a threat against the current monetary system. Expect to see a massive crackdown into Bitcoin if people begin using decentralized solutions on top of centralized ones.

Considering that people are still acquainted with centralized exchanges and mixing services, I doubt governments will become interested in making software developers liable anytime soon. We'll have to see how everything unfolds in the future as governments continue to shut down centralized mixers. After all, their excuse is that mixers are used for money laundering and tax evasion. Even if a mixing service hasn't done anything wrong, the central operator could be held liable for any illegal activities done on it. The only way the mixer operator can be relieved is if he enforces KYC/AML laws on people using its service. But this will greatly defeat the purpose of a mixer which is to provide privacy over one's crypto transactions.

Nonetheless, with the advent of non-custodial mixers, anyone can confidently obfuscate their Bitcoin transactions without governments being able to disrupt the service. Centralized Bitcoin mixers will eventually die because of the massive crackdown from worldwide governments. This recent event from the US DOJ shutting down a centralized mixer is just the beginning. First it was bestmixer, and now this one. The trend will continue until all centralized exchanges are shut down for good. Luckily, people will still be able to mix their Bitcoin using non-custodial solutions or even exchanging BTC to a privacy-oriented coin (like Monero) of their choice. At least, there's nothing to worry about. Just my thoughts

The mere act of mixing your outputs (decentralized or not) isn't money laundering because there is no proof of unlawful intent. This is true of cash, bitcoins or anything else. The issue isn't that output mixing is illegal. On its own, it is not.

Regarding money transmission law, US regulators have drawn a clear distinction between decentralized mixing protocols like CoinJoin and centralized mixing services. That issue is about who is a money transmitter and therefore is supposed to comply with MSB regulations, and who is not:

vs.

Good that you cleared it out because if bitcoin mixers were to be considered as illegal then I guess they should have termed TOR as illegal too.

Yes, the most forms of privacy in regards to the financial matters will be outlawed. This is why cash is slowly being removed in many countries (see Sweden), in business transactions in Europe you have limits for paying in cash (above some threshold you can legally pay only by a bank transfer).
As well FATF with its recommendations which are basically obligatory aims for outlawing privacy solutions like private coins, mixers and make each owner of wallet fully identifiable (just as bank account owners).

I feel like we still live in an approximately okay present, but the future looks horrific. Any attempt of having more privacy will most likely be seen as a crime..

You know, it's funny how I am literally able to hand a complete stranger a paper with the private key to some illicit-sourced Bitcoins and get them in big trouble because of it.

We live in a God damn shit world. Transparency apparently comes with its big cost too. It was somehow forseeable they'll count this as a crime though, all fun BTC-related stuff doesn't last very long anyway.

What about Wasabi Wallet, JoinMarket, or some other, not yet invented, peer to peer/decentralized mixing? How would that be "illegal"? Why/how can the obfuscation of OUR UTXOs be illegal?

Imagine if the conventional banking world introduced a system that ran along the same lines as Bitcoin. Every time you bought a barbed wire dildo the place you bought it from would be able to see how much money you had, where else you spent it and what you spend in future.

It would take about ten minutes for the nearest banker to be dangling from a lamp post.

Wanting to keep your business to yourself is a perfectly sensible and necessary desire.

the guy had no mercy:


he already knew that the authorities were hunting the mixers. it seems to me that it will not end well for mixer owners. Unfortunately governments will not accept mixers due to their nature


when it comes to laws, things get complicated, why do you think there is kyc? and how would mixers obtain a license and comply with KYC? I like a mixer, I like it a lot, I've used it a few times and to be honest whenever necessary, I'll use the mixers, but I don't see how the mixers won't be illegal

Doing bad stuff / code shit for bad purpose

is

a


crime

I thought this topic was about Wasabi Wallet, Samourai Wallet, and the JoinMarket, and that nopara73, and the other developers got arrested! Hahaha.

Mixing 1s,and 0s is not a crime. I believe, FIRST, the DOJ should declare, and fight in court, that Bitcoin is a form of "money".