Looks like the guys behind the Samourai Wallet have gotten themselves in a lot of trouble for running a mixing service (article below). With Bitcoin (BTC), the block chain is public and you can follow transactions, and the government runs large operations to track transactions. But to be successful they need to track at least one address to an individual somewhere, and you can protect yourself by not reusing addresses and not making commercial purchases where you’re identified which is becoming much more difficult as the on-ramps and off-ramps are highly regulated. Consequently, one of the ways to give yourself more privacy is to use a mixing service where many people input their BTC and then it’s split back up and sent back out making it extremely difficult to track without some new identifying transaction address they can link to an individual or organization. Personally, the privacy aspect of this type of service is beneficial for all users who should enjoy the right to financial privacy like you enjoy with cash, but you’ll run afoul of laws in western governments for Know Your Customer and Anti Money Laundering (even though the OCGFC are the true money launderers). So if you were to run such an operation and be publicly known, you’d better be in a country with no extradition agreement and not venture to a country that does have one.
And as an example, I pulled a simple BTC transaction in the mempool waiting to be picked up, and you can see that the transaction has one input at left with two outputs at right. One output would be the payment and the second would most likely be change returned to the wallet via a new address though you could have the full amount on the left address being paid out to others, and any remainder not listed goes to the miners as the transaction fee. And even though public, it’s still quite hard to track and why the government applies so many resources to the endeavor.
Also, western governments are set on introducing their own cryptocurrencies they can track perfectly and control, reversing and limiting transactions, ability to cut off users, so they desperately need to control and track alternatives as best they can. One last thing, a great way to convert your electricity payments into untraceable BTC with some profit is to run your own mining equipment and joining a good mining pool anonymously. And there are plans to increase the privacy of BTC and add built in services to the protocol for user privacy, and you could always convert BTC into other cryptocurrencies and back to BTC outside of KYC and AML tracking, making it extremely difficult to track. And don’t forget your capital gains taxes on profits when cashing out BTC if applicable.
By Sergiu Gatlan
Bitcoin (BTC)
The FBI has warned today that using unlicensed cryptocurrency transfer services can result in financial loss if law enforcement takes down these platforms.
This announcement is aimed at crypto transfer platforms not registered as Money Services Businesses (MSB) and non-compliant with anti-money laundering requirements as mandated by U.S. federal law.
Such cryptocurrency services are frequently targeted by law enforcement operations, particularly if criminals use them to transfer or launder funds acquired through unlawful means.
In a public service announcement published on its Internet Crime Complaint Center on Thursday, the FBI said, “Using a service that does not comply with its legal obligations may put you at risk of losing access to funds after law enforcement operations target those businesses.”
“Using a service that does not comply with its legal obligations may put you at risk of losing access to funds after law enforcement operations target those businesses.”
Those who want to use such transfer services to send cryptocurrency should protect themselves against financial risks posed by unlicensed platforms by:
- Checking here if they’re registered as an MSB with the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN).
- Being wary of financial services that do not ask for KYC information, including name, date of birth, address, and ID, before allowing you to send or receive money or cryptocurrency.
- Understanding that just because an app can be found in an app store does not necessarily mean it is a legal service and is complying with federal requirements.
- Avoiding using services that advertise themselves for illegal purposes.
- Being cautious when using cryptocurrency services known to be used by criminals to launder their funds.
Follow-up to Samourai crypto mixer takedown
The FBI’s warning follows the recently announced takedown of Samourai, an illicit cryptocurrency transfer platform that also provided a crypto mixer service that allowed the laundering of funds sourced from criminal activity.
Icelandic law enforcement seized Samourai’s domains (samourai[.]io and samouraiwallet[.]com) and web servers. The Google Play Store also removed the Samourai Wallet Android mobile app (downloaded over 100,000 times) after it was served with a seizure warrant.
The U.S. Department of Justice also charged Keonne Rodriguez and William Lonergan Hill, the platform’s founders and operators, for laundering over $100 million from various criminal enterprises through Samourai’s crypto mixing services and collecting around $4.5 million in fees.
According to the superseding indictment, “Since the start of the Whirlpool service in or about 2019 and of the Ricochet service in or about 2017, over 80,000 BTC (worth over $2 billion applying the BTC-USD conversion rates at the time of each transaction) has passed through these two services operated by Samourai.”
“While offering Samourai as a ‘privacy’ service, the defendants knew that it was a haven for criminals to engage in large-scale money laundering and sanctions evasion,” the DOJ said.