11

Because all transactions in both Litecoin and Bitcoin are stored in the block chain, you run into the same issue you do here if you were just to try and withdraw USD for bitcoins, i.e., does your intermediary store logs of the off chain transactions? When you buy LTC using BTC on Kraken, if Kraken decides to log this transaction then there is now a link ...


9

The term "Tainted Coins" is often misinterpreted as a measure of provenance. That's understandable considering the traditional definition of the word "tainted" coupled with the reality that many Bitcoins actually have been used for what would be considered nefarious purposes by standard societal norms. In fact, it is a common occurrence to be holding or ...


8

A tumbler is used to hide/disguise/make it difficult to prove where bitcoins came from. It might help to first understand that every bitcoin transaction, right back to the genesis (very first) block is available for public inspection in the block chain. Note that the actual bitcoins are not trackable, only the amounts, addresses and the transactions - ...


4

While I’m not an attorney, the website you describe would be considered a “money transmitter business” (MTB) which, in the US, falls under the jurisdiction of The Dept. Of Treasury FinCEN (Finacial Crimes Enforcement Network) which has regulations to prevent money laundering with strict anti-money laundering (AML) policies. You would need to register with ...


3

Fraud and money laundering are two different things. Fraud, or accepting or spending money under false pretenses, would be very difficult to detect on the blockchain because it requires outside knowledge. The way banks detect fraud is by using the context of what was purchased, and where. The blockchain doesn't contain that information, so supplemental ...


3

Most Bitcoin ATM vendors require you to identify yourself and track your buys and sells. This is done due to Know Your Customers and Anti Money Laundering regulation. You need to present the source of of your money in some point when you exceed some threshold of volume. If any Bitcoin ATM vendor chooses not do this it would be helping committing money ...


3

I recently came across an article that clearly articulates what a tumbler intends to accomplish. The analogy they gave was a collection plate at a church: You may have seen collection bags that go around churches, where you put a bill in your closed fist and stick your hand in the bag, so no one knows how much you put in or took out. Imagine that we come ...


2

There's nothing about Bitcoin that makes it especially appealing for money laundering. In fact, given the nature of the block chain, I would think it would be a fairly unappealing prospect for money laundering, because every transaction is publicly posted. Of course, the real issue with money laundering is defining it. I don't even think the authorities have ...


2

A thought experiment, let's nickname it "Poisonous Gift": Doesn't matter what cryptocurrency exactly, just assume the transaction ledger works like Bitcoin's. Alice (wallet A) gets ransomwared by Rufus (wallet R), pays the rather large ransom (95 coins) but reports address R to the authorities, thus tainting wallet R. Malcolm's money laundering ...


2

Yes I would say that this is quite possible but because litecoin is traceable like Bitcoin the entire laundering process you described reposes on the exchanges platform confidentiality. There is actually a coin called Zerocoin that is in preparation and that is designed to be completely untraceable. I hadn't a deep look into their White paper so I can not ...


1

You could spend it on miners, actually mine some bitcoins and then sell the mined bitcoins for fiat again. And then the IRS will tax the mined bitcoins because they consider it 'profit'. Using bitcoins to launder money doesn't really make that much sense. Besides, everything is kept 'eternally', or at least until the year 2100 something, because what goes on ...


1

Mining pools as well as miners using them are recognized as playing the role of banks (processing transactions) in the traditional system and therefore are not only required to not mine transactions from specific addresses but also to reject blocks directly containing or referring past blocks containing such transactions. With the existing laws, in many ...


1

In the US, nobody is likely to care if you assume a zero basis and pay capital gains tax on the full value of the bitcoins. If anyone asks, just explain that you acquired them back when they were nearly worthless. There are a lot of people in that same situation.


1

I want to expand on @raghav’s answer a bit (which is great! I agree with what he’s written), as I’ve thought about this before as well. I see two options for getting these transactions mined: pay a miner to provide this service, or mine them yourself (solo mining, or become a pool operator). Additionally, there are then two approaches you could use to ...


1

While nothing stops you from paying a high fee to a miner and claiming it out of band, trying to launder any significant amounts through this would likely be discovered and linked fairly quickly. A pattern of disproportionately high fee transactions appearing in blocks that are mined by a subset of miners would be noticeable, as would linking the money - If ...


1

https://www.fincen.gov/sites/default/files/shared/FIN-2014-R002.pdf This ruling deals with your exact question.


1

There is already one alternative crypto-currency that is trying to solve the problem of staying anonymous while performing transactions: http://stablecoin.net


1

The way bitcoin transactions work causes them to be chained together in a permanent public record. They are traceable along the blockchain from one bitcoin address to another. A bitcoin laundry breaks this chain by having two independent wallets, receiving bitcoins to one wallet and sending them from another wallet. Instead of the transaction being a ...


1

It surely has some potential to help money launderers to conceal their identity from Anti Money Laundering regulation. Because a new wallet address could be generated at any time, without the prolonged process of Knowing-Your-Client (KYC), you can hypothetically conceal the owner of each account/address. For example, you have hacked a bitcoin exchange and ...


1

It is actually much easier to launder Bitcoins. Just transfer your Bitcoins to an exchange site like cryptsy or btc-e, then exchange your Bitcoins into another currency like Litecoin for example. Now transfer these coins to another exchange site and exchange the coins back into Bitcoin. I think no one can find out the inital source now :)


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