Topic: US DOJ Calls Bitcoin Mixing ‘a Crime’ in Arrest of Software Developer - page 2. (Read 773 times)

Here are my 2 cents about this topic.
Bitcoin mixer services are just a tool.It can be used for illegal purposes or good purposes.The tool itself can't be illegal,but the person who uses it for illegal purposes breaks the law and have to be punished somehow.
If the USA bans bitcoin mixers,the effectiveness of such ban is questionable.The BTC mixer services and their users will just move to other jurisdictions and continue working.I was expecting mixers to be attacked by the authorities,sooner or later.Almost everyone who is using the darknet marketplaces uses mixers as well.

seriously tho, what legit reason do you need a mixer for if its not to "illegally" hide the origin of the bitcoin you are mixing?

whether it was obtained legally or not, the act of hiding it is illegal.

Let me reiterate the definition again with two bolded statement-
Money laundering is the illegal process of concealing the origins of money obtained illegally by passing it through a complex sequence of banking transfers or commercial transactions.

In the above scenario given by you - the money is not obtained illegally! So one of two parameters is invalid here! Hence it is not illegal! Money laundering process is far more complex in nature. People create shell companies, fake subsidiaries, fake invoices to hide the origin of the illegally obtained money. They invest in real estate in the name of the shell companies and then sell it to their own subsidiary company. There are a lot of things they do. Wage money is not illegal and money launderers don't really launder a small amount of money!

You should come to Indian political parties (especially the ruling one) to learn the art of money laundering! They have achieved supremacy in all sorts of illegal wrongdoings!

Bittorrent has caused untold billions of losses to content producers, in their and the government's mind at least, yet the the founder and developers are doing just fine out in public.

I can't see any software developer ever being held liable for what's done with what they create by others.

With the recent crackdown on centralized Bitcoin mixing services, I believe that non-custodial solutions will rise like never before. We already have non-custodial mixers such as Wasabi Wallet, JoinMarket, and NTumbleBit (under development). This could render government efforts on taking down mixing services useless over time. The fact that most people still rely on centralized Bitcoin mixers, gives governments the opportunity to "punish" the central operator. Their main excuse is that mixers are used for money laundering and tax evasion. But the truth is that criminals still use Fiat over Bitcoin for this. After all, Bitcoin's price is volatile while that's not the case with Fiat.

This recent event of the US DOJ tells us that more decentralized solutions are necessary in order to provide censorship-resistance to the crypto space. It was easy for the US government to take down the mixing service in question because it was centralized. After all, fees were collected by the central operator. This is just the beginning of the end as I believe that the US and other countries of the world will crackdown on other Bitcoin mixing services in the crypto space. The only path for true censorship-resistance would be to use decentralized/non-custodial mixers for obfuscating Bitcoin transactions.

Nonetheless, I believe that all centralized Bitcoin mixers will fall within the crypto space. Only decentralized/non-custodial mixers will be able to resist government's intervention in the long run. There's no central operator in charge of the mixer, so everything is handled in an automated and decentralized way. Once governments realize it's near impossible to shut down a non-custodial mixer, they might consider banning crypto in its entirety (I hope not). Maybe governments will prosecute developers working on decentralized solutions for the BTC blockchain? If that happens, then Bitcoin and other cryptocurrencies will be "doomed" as they'll be unable to keep up with their value proposition of eliminating third parties from the system. Just my thoughts

For all the people still wondering what is Bitcoin mixing.

Bitcoin tumbling, also referred to as Bitcoin mixing or Bitcoin laundering, is the process of using a third party service to break the connection between a Bitcoin address sending coins and the address(s) they are sent to. ( Taken from Google)

Now there are certain things that can go wrong with that :-

*People dealing with something illegal can hide their address because now a days most of the addresses are linked with the real identity , PAN card and all , so I'm case of a fraud the government won't be able to track the person .

*Government may be even trying to track the non tax payers who are hiding from the eyes of the law and trying to hide the money they are making using bitcoins.

*Or the government of US actually made bitcoins in this other world senario and they are now just trying to avoid such problems [[ Government might be smart but people are smarter at the end of the day (they always find a way) ]]

I think this was connected to the case of money laundering via mixers. It's not mixing that is illegal but mixing illegal funds is. I know it may look weird but the law is weird in this way.

Hiding someone in your house is legal. Hiding a criminal can be illegal depending on the crime and your knowledge of it. Hiding a fugitive whose face is in the news is illegal and they won't even ask if you knew or not. They'll assume that you knew.
This mixing case is similar.

this case relies on very specific facts to justify the money laundering charge. mixing outputs is not itself a crime. knowingly mixing coins from a DNM is also not a crime since it doesn't prove the mixer knew the underlying financial transaction involved criminal proceeds.


the partnership with alphabay and other DNMs showcases the explicit agreement required for the conspiracy charge. explicit advertisement as a money laundering service fulfills the "willful intent to commit a crime" requirement.

that's how the DOJ made this case.

Agree with gentlemand here somewhat (on the intent, rather than the activity). Even in the recent arrests (is last year even recent now?) and shut down of past mixers at least in the ones where Dutch police were involved, the mixers apparently specifically and deliberately aided in money laundering.

Now I'm not saying any facts other than as reported and we know there's little truth in that at times. Under AML laws for example, ignorance is not innocence. So let's see what comes out of this.

It's a complex subject to discuss, and I think US prefers to ban mixers to prevent crimes

But we have to consider mixers the same thing as any kind of technology: it's just technology, people can use for crimes, so is it right to blame the tech or the person to commit the crime?

People use computers, smartphones, money, cars etc to commit crimes, why not bans all of these?

To me it's clear this declaration is about this one particular case.

I'm sure centralised mixers will eventually have more pressure put on them, but this guy created his system only for the purpose of hiding illegal earnings and nothing else. It would be the same if he had founded a bank to do that one job.

It might mean in future they will regard any mixer that handles problematic funds to be enabling crime and so they'll be fully liable. They probably do already. This guy made it easy to stop.

I'm not that fluent in English as you can see, that's why I was posted this here, I not sure if DoJ are considering illegal all type of coin mixers in general, or this is only for this particular case, where it is clear that those mixed coins were involved in money laundering?
How you guys getting this?

I wonder what information putting a backdoor in server-side mixing software would give them. Mixers only take your wallet address and the amount of bitcoin you want to mix. So theoretically that's the only information they would be able to siphon. At worst they only know the source address that tried to launder the funds, all while acknowledging that bitcoin mixing was intended to be used only as a privacy aid.

If you're making a mixer specifically to clean illegal money (not saying the guy in that article actually did this, I have no idea), don't be surprised if your premises are raided and your servers are seized. Which brings me to the question, why attempt to backdoor mixers anyway when they can just seize their computer hardware?

@The Pharmacist, your last sentence was interesting to read, but I don't think a central forum like bitcointalk would be the first place the FBI would look for people laundering money obtained from illegal things. These kind of people group around tor .onion sites.

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The worst part about all this is that the arrested dev's wife is getting threats from random jerks. And their place of residence was also disclosed in the publicly available indictment which means stalkers might come and harass his family who did nothing wrong. And their homes were trashed by police according to his brother. Which makes it all the more dangerous to be a mixer developer today.


 ^ Finish investigations before making conclusions for they could be highly inaccurate.

They took all the dev's hardware wallets, the article even says there's no bitcoin left with the family.

There are many illegal aspects to finance, job markets and economies that are not currently enforced.

Paying workers in cash, off the books, is technically illegal. And yet exceedingly common due to laws against the practice not being enforced. Not necessarily on a lack of will but rather due to them lacking the resources and manpower to crackdown on it. Not to mention the negative backlash, loss of jobs and confidence in the system should they make a legitimate effort.

The DoJ can label mixers or anything else illegal, without it representing an actual intent to enforce those laws.

Technically streaming and warez websites are illegal. The Department of Justice will tell you so. Tell me how much success the DoJ has had ending warez, streaming, spam emails and other explicitly illegal practices.

The sad thing is, their crackdowns don't improve quality of life or standard of living. Instead, they tend to be oppressive and destroy opportunities for everyone.

Their policies often wind up representing the opposite of "justice".

In the eyes of bankers, BTC mixing sounds too many alarms.
It's using an unlicensed (in their view) form of digital cash, with pseudonymous and decentralized transactions, and even then the coins are tumbled in a way that the original recipient is lost on the way. For the coins to be sent to an unregistered and likely pseudonyms address again, for unknown transactions.

The intentions might be pure, or maybe not. But I get why this entire ordeal would drive systemic regulators and bankers crazy. Bitcoin mixers are taking away businesses from bankers that used to turn a blind eye to money laundering, arguably a sizeable share of their cash transactions.

Same here, although nothing is a crime unless there's a law on the books and I don't think there is one regarding mixers....yet. 

Makes me wonder where the pressure is coming from to crack down on crypto like this.  The DOJ is but one branch of the US government, albeit a big one.  I'm wondering whether any such pressure is being exerted by the prez. 

They've probably got all the Chipmixer sig campaign participants on the FBI's watch list.  Never underestimate the power or stupidity of government agencies.

moving funds is not a crime
moving funds with innocent lack of knowedge of the source of funds or the details of who is not a crime

knowing your handling and profiting from illicitly gained funds is
advertising a service to facilitate it is..

designing a service that has the capability to launder but not doing it is not
(EG fiat can be used for money laundering but banks dont get punished for it. unless they have had knowledge and direct involvement in letting it occur)
(EG scammers use apple and google giftcards for scamming/laundering. but google does not get told to shut down its wallets)

although i detest the guy for many reasons. people like gmax wont get arrested for his 'confidential' code stuff he wrote for the many networks he is part of

however if he was to handle funds and pass them on knowing he is doing so as a service for illicit activity he would get in trouble..

so this article is not about mixing.. its about offering a mixing on the darknet specifically highlighting its service to the dark net nafarius/illicit part of the internet

The noble cause of mixers are well documented in this forum and the idea of a country banning BTCitcoin and the citizens using mixers to protect themselves to avoid legal trouble is the noble cause but the problem is that if you are attaining a tainted coin through the mixer then you might get into trouble in the future, so there is a fine line and majority of the hacked coins are mixed through mixers and if you get those coins then you might get into trouble at a later time and that is the biggest issue i see with mixers.

Mixers conceal the origins, that's true, but I don't think that 'obtained illegally' is something that always applies to Bitcoin. In countries where Bitcoin is banned mixers can be considered as money laundering, I suppose, but if a person obtained Bitcoin without going against any regulations by, say, buying it with an official salary, I don't see how mixing it afterward would make it money laundering.
So I think it's early to say whether this situation means that all of Bitcoin mixers become illegal but the regulations might get tougher.

No it's not, go back to metanet.