"Conventional financial institutions comply with anti-money laundering regulations that make it difficult for criminal organizations to use their payment infrastructure."
Yes, yes of course. Just like how HSBC physically expanded their teller windows to make it easy for Mexican drug cartels to make cash deposits.
> 50. The Department alleges, and HSBC Bank USA and HSBC Holdings
do not contest, that, beginning in 2008, an investigation
conducted by HSI’s El Dorado Task Force, in conjunction with the
U.S. Attorney’s Office for the Eastern District of New York,
identified multiple HSBC Mexico accounts associated with BMPE
activity. The investigation further revealed that drug
traffickers were depositing hundreds of thousands of dollars in
bulk U.S. currency each day into HSBC Mexico accounts. In order
to efficiently move this volume of cash through the teller
windows at HSBC Mexico branches, drug traffickers designed
specially shaped boxes that fit the precise dimensions of the
teller windows. The drug traffickers would send numerous boxes
filled with cash through the teller windows for deposit into
HSBC Mexico accounts. After the cash was deposited in the
accounts, peso brokers then wire transferred the U.S. dollars to
various exporters located in New York City and other locations
throughout the United States to purchase goods for Colombian
businesses. The U.S. exporters then sent the goods directly to
the businesses in Colombia.
In Canada we have banking regulations related to money laundering and an oversight agency called FINTRAC. However, anyone with any knowledge in the matter will tell you that a bank will happily tell customers exactly how to structure transactions to achieve what they need without having to report to FINTRAC, and FINTRAC itself has no investigative capabilities.
That this system is entirely to keep up appearances is blatantly obvious, but such a large percentage of the population is making a killing on real estate they have less than zero interest.
Pretty much, because what HSBC did was illegal and they got caught. The statement you quoted wasn't intended to be a statement that "conventional institutions never cheat", but that there is a regulatory process in place to prevent that (i.e. the one that HSBC cheated around, thus the enforcement action in your link), where with bitcoin there is none.
The bank didn't adjust the teller windows but people designed boxes to perfectly fit through the teller windows.
From a Rolling Stone article --
The banks' laundering transactions were so brazen that the NSA probably could have spotted them from space. Breuer admitted that drug dealers would sometimes come to HSBC's Mexican branches and "deposit hundreds of thousands of dollars in cash, in a single day, into a single account, using boxes designed to fit the precise dimensions of the teller windows."[0]
>The bank didn't adjust the teller windows but people designed boxes to perfectly fit through the teller windows.
The one thing does not exclude the other.
It is entirely possible that previous windows were too small and, after they were enlarged, in order to optimize the deposit operation some special boxes were put in use.
Possible, but that set of facts do not appear to be alleged anywhere. If this was thought to be true, it would have definitely been alleged in the prosecution agreement.
The Guardian published something [0]:
>In some branches the boxes of cash being deposited were so big the tellers' windows had to be enlarged.
Rolling Stone published something different [1]:
> ... Breuer admitted that drug dealers would sometimes come to HSBC's Mexican branches and "deposit hundreds of thousands of dollars in cash, in a single day, into a single account, using boxes designed to fit the precise dimensions of the teller windows."
Yes, the takedown of AlphaBay and Hansa darkmarkets, the bitmixer.io shutdown, the arrest of this guy and the BTC-e exchange 'down for maintenance' are all related, I would guess.
They should at least say he is the owner of btc-e.com to give it context. The site was used by cyber criminals but it was also a legit operation, much like HSBC.
The difference is always the proportion, obfuscating that is pretty dishonest.
HSBC laundered something like $9 billion for the cartels from 2006 - 2009.[1] As of Dec 2009, they had $2.36 trillion in assets.[2] Money laundering is clearly illegal and $9 billion isn't a small amount of money, but their business wouldn't have changed at all without that 0.3% of dirty cash. You can absolutely make the case that the penalties should be larger (although $2 billion in fines is a pretty good start considering they didn't keep the deposited cash) and that executives should have criminal liability, but there's nuance to both of those things.
There's just no comparison to BTC-E (or any of the darknet markets that people insist are 'just like' eBay) who solely exist to launder money and facilitate illegal goods.
I have a feeling that the informed, consenting adults who have funds in that exchange will soon discover exactly why dealing with an unregulated, secretive foreign financial company (Whose owners keep their identities secret, so that they won't be arrested) is a bad idea.
HSBC has none of these properties (Which are more important to their legitimate users.)
If you're keeping coins on any exchange -- even Coinbase -- they are no longer your coins. You've just loaned them. And you may eventually discover why that is a very bad idea.
No one thinks "It could happen to me" until it's too late. Stop keeping coins on exchanges. Stop using third party wallets and other software. If you want to invest in coins because they might go up, that might make sense, but at least treat it like a serious investment.
If you're keeping coins on any exchange -- even Coinbase -- they are no longer your coins. You've just loaned them. And you may eventually discover why that is a very bad idea.
Since you have to use an exchange to obtain or sell crypto currency, this 'advice' is just pointing out the terrible flaws in bitcoin/ethereum/whatever. There will be plenty of users who were in the middle of cashing in/cashing out and have now lost all their money, and you're just saying "it's your own fault"
You don't have to use an exchange to obtain cryptocurrency. You have to use an exchange to convert conventional fiat money into cryptocurrency. If you buy or sell natively in bitcoin, you don't need an exchange.
Currency exchangers have been around for a very long time and there's nothing inherently bad about depending on one. All the other currencies do.
...But my 'serious' investments are handled by accounts through third parties that mediate my purchases on the exchanges. They're probably even lending out 'my' shares.
It's just a sign that cryptocurrencies are new (and insecure) that I can't do the same with them.
Seems like people want to treat currencies the same way people have been used to thinking about what traditional banking has become today.
For those among us that want to ignore the long history of banking and coinage in general, some depositors in greece may have recently seen similar analogues to why banking in a particular locale turned out to be a very bad idea.
Though you'll have people debate the relatively philosophical differences all day compared to the parties who have ended up on the wrong sides of the above.
What I'm more interested in is: how does all of this change the landscape of incentives of actors of all sizes, and what capabilities does it give to such that weren't accessible to such (or any) degree compared to before?
People who were only storing money in the exchange for the short term (To conduct trades) got robbed too.
When I open a trading account on a stock exchange, it's not longer my money. I've loaned it.
I do have more confidence that its owners won't be arrested for money laundering, followed by all my funds dissapearing to a Bahaman slush fund, though.
In another thread (About the SEC regulating ICOs), there were a number of people encouraging investment into and downplaying the risk of unregulated, opaque financial securities ran by persons not based in the US. Rail against the SEC all you want, but events like this are why it exists. Fraud erodes trust in the market.
The brokerage only owns the stocks in your account if you enable margin on the account (you dont even need to use margin, if you enable margin they own what's in the account and if they go bankrupt your account is gone too).
If you keep margin disabled, you'll eventually get it all back even if the brokerage goes bankrupt.
During the financial crisis, I asked a broker to disable margin on my account (never used it anyway). It took weeks before that happened. Some "technical holdup" that they assured me had nothing to do with loaning or pledging the contents of my account.
Do you know for sure that this is related to btc-e ? It's the most likely suspect (it is currently 'down for maintenance' and it was started in 2011, the same year mentioned in the AP story), but I can't find any concrete evidence of who the owners of btc-e actually were.
>A Russian national arrested in Greece on Wednesday on suspicion of laundering criminal funds by switching them into bitcoins is a key person behind the BTC-e crypto-currency exchange, two sources close to the exchange told Reuters.
BTC-E was run out of Bulgaria in the beginning, surprised this guy didn't learn from the dozens of arrests of Russian credit card processors who violated US gambling laws and went on vacation/lured to meetings into extradition areas like Greece or Turkey. This arrest was apparently over laundering Ransomware coins http://www.newsbtc.com/2017/07/26/btc-e-responsible-launderi...
BTC-E was famous for it's one word replies to technical support tickets like "works" and "try" when he wanted you to try something again, and of course the troll box on the front page that was a never ending source of problems like naive users being fished for information on their account details or tricked into pumping up the value of some altcoin.
Another interesting coincidence - yesterday Forbes published article namedropping BTC-e in a really bad way:
>As for where the criminals are cashing out, 95 per cent of ransom funds were cashed out at the Russian exchange BTC-E. That chimes with the indication that the biggest ransomware types are the produce of the biggest organized criminal gangs working out of Russia.
The only other possible bitcoin enterprise fitting their description may be bitmixer but I don't think it started in 2011 and I am certain it has not handled $4bn in transactions, btce probably has.
The fact is fine, the comment is bad. Starting comments with 'LOL!' doesn't fit with the usual style of hacker news (why is he even laughing???). Stating "another" and then immediately stating why it isn't "another" (an arrest is no conviction) sounds really manipulative. And the fact (that HSBC was involved in money laundering) was already heavily implied by the parent comment, making it less interesting as the only value of the comment.
Heavily implied? I thought OP had merely chosen an unfortunate example which coincidentally turned out to be one of the biggest money-launderers and then was minded to state that the individual had not yet been convicted of that offense unlike HSBC. I'm not sure how it is manipulative - to what end? But I take it that I rather ruined the joke.
Money "laundering" is used to hide transactions from view so that the parties involved in the transaction can avoid scrutiny or legal consequences for their actions.
The DoD accounting scandal is an example of the US Government effectively laundering massive sums of money to evade accountability:
Governments care about private sector money laundering mainly because it can be used to conceal tax evasion. If drug lords and human traffickers simply paid their fair share of taxes chances are money laundering would not be on governments' radar.
>If drug lords and human traffickers simply paid their fair share of taxes chances are money laundering would not be on governments' radar.
This is a bit ridiculous. It's sometimes just more convenient to prosecute the side effects of crime than the crime itself. The financial system and regulations are set up in a way that makes it possible to catch and imprison criminals solely for their use of legitimate banking for their illicit activity. It adds a net to improve capture.
What? Laundering often ends up with them paying taxes - for instance by putting tons of cash through a laundromat. Taxes then paid, the criminals are free to spend it as they wish. In fact, that's like, sort of the entire point of it.
Money laundering (as an offence) is just a crude tool to make prosecutor's lives far, far, easier.
I suspect this is what's happening in Canada - billions of dollars of "under the radar" money is coming into Canada to buy real estate, but the construction & trades jobs it creates and resulting boost it provides to GDP makes the government happy to turn a blind eye to the source of this money or that they make no direct taxation revenue (and refuse to audit certain people who are obviously breaking the law).
I've personally looked at BTC-e's trade histories and am not inclined to believe this. BTC-e's weak security track record also doesn't exactly support this theory either.
>To be clear, this investigation turned up evidence to identify Vinnik not as a hacker/thief but as a money launderer; his arrest news also suggests this is what he is being suspected for. He may have merely bought cheap coins from thieves and offered a laundering service. He is, however, a crucial piece of the puzzle, as he will have likely known who he was dealing with and laundering for, and so represents a major breakthrough in the case. We assume that law enforcement will now be taking the appropriate next steps to pursue all the remaining angles and hopefully identify the other individuals involved as well.
This is the inherent problem with Bitcoin. It's just not anonymous! Imagine a dollar that has a history of every transaction written on it. Monero is the coin you want.
I don't think anonymity counts for much in this case. Anyone running this big of an operation has a huge exposure on more fronts than the cryptocurrency end of things.
Unfortunately Monero is the only one doing it right: all transactions are enforced private by default. Dash and zcash offer confidential transactions as an opt-in feature, but so few people use them that it draws additional scrutiny when they do.
At this point in time it's "Solo Monero" for privacy.
Private by default, but the default of 2 foreign tx seems to be largely what people use. It'd be fun to trace it and start to show the probability that a given tx traces to a given public key. I imagine that the older tx have closer and closer to a uniform probability across older addresses. Might make for a good data vis project.
Possibly Ethereum after it gets pre-compiled contracts for elliptic curve point addition and scalar multiplication in the Metropolis upgrade, which will enable zk-SNARKs. Among the many applications enabled by succinct zero-knowledge proofs of arbitrary computations are private transactions.
He's not wrong, Monero is the only crypto (currently) enforcing fully private transactions by default. In a reddit thread about the AB bust someone pointed out that they weren't able to determine the amount of Monero he had, vs. listing exact amounts of his Eth, zcash, etc.
edit for clarification: I wasn't saying he wouldn't have been caught, only that Monero offers additional benefits beyond some of the other coins and help conceal transaction history.
Is that even in the case where the server is seized, or when "Dread Pirate Roberts" leaves his laptop with passwords & encryption keys open when being arrested? Or just by default if the attacker is looking at network activity but doesn't have access to the machine?
The Monero daemon does not know what addresses the deposits came from. So even if the server was seized there would not be any information to glean about this.
Withdrawals in the db may have addresses and amounts, although RingCT upgrades make this more and more useless, but even without RingCT the addresses do not correspond to any information in the blockchain. The best case law enforcement would have had, before RingCT is to have seized the database of several exchanges, where users transferred Monero directly between both exchanges and they could see addresses in both databases. In this respect, Monero is much more akin to accounts at financial institutions, where subpoenas are needed to glean any information at all. But further enhanced by retaining the individual control of private wallets that cryptocurrency allows, where financial institutions are an embellishment to temporary user experience problems.
Monero doesn't help if the FBI manages to get a copy of your DB with trade histories etc. With BTC-e being hosted on unencrypted servers in Germany, it's hard to believe they wouldn't have been able to get it.
What scenario are you describing exactly? What exact problem are you trying to thwart?
A server containing a user's trade histories would show amounts deposited with Monero. But it would not contain the addresses those deposits came from, the Monero daemon doesn't know this.
Similarly, the user's withdrawals wouldn't be to an actual address that they could cross reference. RingCT gives people one time use addresses. But even if you were somehow not using RingCT addresses the Monero user experience had a best practice. Since you cannot follow transactions to that address over the blockchain, you cannot guarantee that it was the real destination at all. Any user should just have two wallets and transfer to one, which would have the address in the exchange's database, and then in wallet B, transfer to wallet C. I believe RingCT removes that marginal inconvenience, as the addresses themselves are one-time (but feel free to correct me here).
The crux of the BTC-E event seems to be from blockchain analysis, given the information we have. In which case Monero would have stopped this investigation.
In general though, the currency has nothing to do with the exchange's problems? I'm not really sure what you are imagining. Decentralized solutions like EtherDelta and upcoming cross chain solutions are going to be accelerated by this culling.
>The crux of the BTC-E event seems to be from blockchain analysis, given the information we have. In which case Monero would have stopped this investigation.
You're wrong.
shuf btc-e.sql|head -n 100|sprunge
Using input from a pipe or STDIN redirection...
http://sprunge.us/JNIP
>In general though, the currency has nothing to do with the exchange's problems?
Weird that https://www.xbtce.com is still running. Seems there are very few trades (3 in the last hour) being made but the "order book" is flashing away like nothing is wrong. Chat is also dead...
Not necessarilly. It could be that some of BTC-E's activities/his non BTC-E activities may have been money laundering.
For example, if you run a USD-BTC exchange, and I mail you a suitcase full of money, then withdraw it as BTC, you would almost certainly be aiding money laundering.
