[HN Gopher] U.S. sanctions virtual currency exchange after spike...
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U.S. sanctions virtual currency exchange after spike in ransomware
attacks
Author : MilnerRoute
Score : 90 points
Date : 2021-09-21 17:22 UTC (5 hours ago)
(HTM) web link (www.cbsnews.com)
(TXT) w3m dump (www.cbsnews.com)
| vmception wrote:
| > "We recognize that the vast majority of activity that's
| happening in the virtual currencies is legitimate activity,"
| Deputy Treasury Secretary Adeyemo told reporters during a
| briefing.
|
| Welp, there goes most of HN's arguments against cryptocurrency.
|
| Just a matter of time before the EPA says the environmental
| impact argument is misinformation in favor of remarkably
| sustainable use of the energy.
| KptMarchewa wrote:
| "vast majority" is very weak statement.
|
| Vast majority of cars did not get stolen last year.
| vmception wrote:
| I don't understand the analogy, they are saying the vast
| majority of cryptocurrencies were not stolen or part of
| anything illegal. Thats the point of my post. Did you
| misread, or do I just misunderstand what you are saying.
| BobbyJo wrote:
| I think the point is 'vast majority' isn't relative. If 10%
| of cars get stolen every year that's a LOT, but 'the vast
| majority of cars did not get stolen'.
|
| In this case we'd need to relate it to normal
| asset/currency transactions. Is the rate of illegitimate
| transactions the same? 10X? 1000X? It can have several
| orders of magnitude more illegitimate activity while the
| statement 'the vast majority....' remains true.
| vmception wrote:
| ah okay, so the goal post moves from imagining the vast
| majority was illegitimate use, to imagining "orders of
| magnitude" above other asset classes contains
| illegitimate transactions. now I understand. I don't
| personally care about that.
|
| Its more important that the US Deputy Treasury Secretary
| has intelligently differentiated between sanctionable
| centralized institutions and the network itself. A lot of
| people have talked themselves out of cryptocurrency by
| imagining that the [US] government would attack or outlaw
| the networks themselves, instead of acknowledging their
| legitimacy, and supported that with the imagination that
| the vast majority of use was illegitimate.
| hn_throwaway_99 wrote:
| > ah okay, so the goal post moves from imagining the vast
| majority was illegitimate use, to imagining "orders of
| magnitude" above other asset classes contains
| illegitimate transactions.
|
| The only one who is moving goal posts is you, who have
| somehow setup this strawman that the collective position
| on HN was that the vast majority of crypto was illicit
| use.
| vmception wrote:
| Yeah I did. Anyone that actually harbored that opinion
| should feel silly now.
| [deleted]
| tombert wrote:
| What I don't know about this is a lot, and I will admit to having
| a bias since I have ~25k in cryptocurrency on Gemini, but from a
| high level does this actually make sense?
|
| If someone hires a hitman for $9,000, and then that person goes
| to Bank of America to withdraw money from their account, we don't
| typically hold BOA liable unless we assume that they know that
| the reason you're withdrawing the money is for something illegal.
|
| Similarly, why sanction the crypto exchange?
| Animats wrote:
| 40% of transactions were related to criminal activity.
| PretzelPirate wrote:
| So they were too small to fight back? HSBC has helped far
| worse groups than this exchange did, and their punishment
| wasn't nearly as heavy handed.
|
| I'm all for going after companies that are complicit in
| crime, but we shouldn't give the big players an easier time
| than the small ones.
| [deleted]
| kube-system wrote:
| I'm suspect that if 40% of HCBC's business was illegal, the
| regulatory actions taken may have been different.
| Generally, regulators don't run businesses with a quarter-
| million employees into the ground for the mistakes of a
| few, particularly when there's a path forward to
| compliance. Organizations that demonstrate they exist
| largely to facilitate crime don't get the same treatment.
| This makes practical sense.
| axiosgunnar wrote:
| Are you implying 40% of HSBC clients are blatant criminals?
|
| Because surely something would happen to them if that were
| the case.
| PretzelPirate wrote:
| The percentage doesn't matter. I'm saying that HSBC has
| helped launder money for terrible people/organizations
| and the US government would stop more crime by
| appropriately punishing them vs a small exchange.
|
| Edit: I can't reply to the person who responded, but if
| you read my original comment, I say I think both should
| be punished instead of the government going hard against
| small fish while letting large-scale corruption thrive.
| nobody9999 wrote:
| >The percentage doesn't matter. I'm saying that HSBC has
| helped launder money for terrible people/organizations
| and the US government would stop more crime by
| appropriately punishing them vs a small exchange.
|
| And so they (HSBC) did[0]. And quite blatantly too.
|
| HSBC should have been smacked down _hard_. They were not.
| And that was wrong.
|
| Is your argument that others doing the same should get a
| pass because HSBC only got a slap on the wrist?
|
| [0] https://www.investopedia.com/stock-
| analysis/2013/investing-n...
|
| Edit: Added link to details of HSBC's bad behavior.
| true_religion wrote:
| Actually there is legitimate value in saying that all
| parties should receive the same punishment.
|
| If there is precedent for a lesser punishment, then the
| guilty should all receive it, not just the guilty of with
| the right connections, wealth or... skin color.
|
| There's another similar argument to be made for mandatory
| minimum sentences.
| nobody9999 wrote:
| >Edit: I can't reply to the person who responded, but if
| you read my original comment, I say I think both should
| be punished instead of the government going hard against
| small fish while letting large-scale corruption thrive.
|
| Fair enough. And I don't disagree. At all.
|
| IMNSHO, HSBC should no longer be allowed to operate as a
| bank and those who allowed this to happen should _still_
| be in 8x10 boxes somewhere.
|
| But it's an imperfect world.
|
| Edit: Fixed typo (IMNHSO vs. IMNSHO).
| finiteseries wrote:
| The US government is having to address ransomware crime,
| a topical issue, in the middle of a gigantic rise in
| ransomware crime.
|
| HSBC laundered money for cartels and helped eg Iranians
| avoid sanctions. Those are issues, but they aren't
| directly related to ransomware crime like a crypto
| exchange facilitating payments for ransomware crime is.
| It's somewhat off topic.
| mdoms wrote:
| Didn't your parents ever tell you that two wrongs don't
| make a right?
| kadoban wrote:
| That's a good argument for punishing HSBC more than was
| done. In general in the USA we're really bad at holding the
| rich and powerful accountable. It's a serious issue.
| KptMarchewa wrote:
| If your business deals with double digit percentage of criminal
| activity, it's called fencing and it's a crime.
| superkuh wrote:
| At least until you do it at a scale large enough to make
| significant campaign contributions like, say, Bank of America
| or Wells Fargo. And those companies not only processed large
| relative amounts of criminal proceeds as companies they
| literally committed fraud themselves against their own
| customers.
| [deleted]
| KptMarchewa wrote:
| In absolute amounts, yes. In relative to their total
| operations? No.
| tombert wrote:
| Fair enough! As I said, I don't know a ton about this stuff,
| so always good to have knowledge shed for me.
|
| Out of curiosity, what do regular banks (e.g. BOA in my
| example) do to avoid this problem? Just basic background
| checks and reporting suspicious behavior to the FBI or SEC or
| something?
| geofft wrote:
| Yup, there's a thing called a "suspicious activity report":
|
| https://www.occ.treas.gov/topics/supervision-and-
| examination...
|
| https://en.wikipedia.org/wiki/Suspicious_activity_report
|
| https://www.fincen.gov/reports/sar-stats
|
| Millions of these are filed per year. Obviously not all of
| these - probably not even most of these - are about actual
| crimes or end up in actual prosecutions, but the banks
| still have to file them.
| tombert wrote:
| Ah, I learned something today! Well then I think that
| cryptocurrency exchanges should probably have to do the
| same thing (and it's possible that some of the more
| reputable ones like Gemini and Coinbase already do).
| dmoy wrote:
| There is are reams of various regulations on this,
| including the various "Know Your Customer" stuff. Some of
| that came in with the USAPATRIOT Act.
|
| > Just basic background checks and reporting suspicious
| behavior to the FBI or SEC or something?
|
| yes that's part of it (FinCEN though I think, not
| necessarily direct to the fbi/sec)
| complianceguy wrote:
| BoA would have a legal requirement to verify the identity of
| their customers and in some cases the source of their funds,
| and if they failed to meet those obligations they would indeed
| be held liable.
|
| This action also has the side effect of making it illegal for a
| victim organization to pay a ransom that would run through this
| exchange, which may be desirable outcome from the government's
| POV.
| [deleted]
| mark_l_watson wrote:
| From the article, a government spokesperson: "We recognize that
| the vast majority of activity that's happening in the virtual
| currencies is legitimate activity,"
|
| It seems like collective punishment? I am not sure about this.
| kube-system wrote:
| > An analysis of known SUEX activity has shown that over 40% of
| transactions were associated with illicit actors
|
| That's really really high compared to cryptocurrencies as a
| whole, of which, less than 1% are associated with illegal
| activity.
| foepys wrote:
| > That's really really high compared to cryptocurrencies as a
| whole, of which, less than 1% are associated with illegal
| activity.
|
| Where did you get this number from?
| kube-system wrote:
| Here's three sources:
|
| Chainalysis:
| https://blog.chainalysis.com/reports/2021-crypto-crime-
| repor...
|
| Ciphertrace: https://ciphertrace.com/2020-year-end-
| cryptocurrency-crime-a...
|
| Elliptic: https://www.elliptic.co/blog/cryptocurrency-
| money-laundering...
| DSMan195276 wrote:
| It's perhaps worth pointing out that they have 2020 at 1%
| right now, but they also mentioned how they raised 2019
| from 1.1% to 2.1% due to new discoveries (your first
| source mentions this). I question how effectively we can
| really quantify this if the number can double a year
| after being reported, at the very least it's hard to say
| how accurate the initial numbers are. It's probably more
| accurate to say 1% is a lower bound for 2020, but a lower
| bound is obviously not that useful.
|
| Perhaps it would be better to try and gather the amount
| of crypto use that is definitely legitimate, since that
| would at least give a theoretical upper-bound. Give the
| assumption that it's such a larger group that may just be
| too much to work through.
| CircleSpokes wrote:
| I think the part about how 40% of transactions SUEX is involved
| in are "associated with illicit actors" makes this not
| collective punishment.
| judge2020 wrote:
| North Korea's trade wouldn't be entirely comprised of weapons
| either.
| Factorium wrote:
| Western societies should just ban the purchase of cryptocoins by
| deactivating the fiat onroads - it will provide a necessary boost
| post-pandemic from reduction in the ransomware attacks, savings
| in electricity and chip waste from mining, reallocating tech
| talents to productive areas of the economy, and making money
| laundering (including sanction evading) more difficult.
|
| Sure, the coins will keep trading in Belarus or El Salvador or
| somewhere, but at a fraction of the value, and the overall
| objective will be achieved.
| bitxbitxbitcoin wrote:
| The coins will keep trading in Western societies, too.
| hcurtiss wrote:
| I am strongly of the opinion paying cyber ransoms should be a
| felony punishable by jail time. It's the only cure. Absent that,
| the question is only how the ransomer gets paid, not whether they
| hold assets for ransom.
| cma wrote:
| Unless it is a worldwide law, it won't matter except for
| reducing targeted attacks. For broad, automated attacks it
| isn't worth it to disable just for the US, that actually takes
| more work. They will just still have it encrypt the drive and
| then not bother trying to collect manually if it is in the US.
| Larrikin wrote:
| They already hard code prevention for attacking Russia and
| other countries in the Russian sphere of influence so the
| code is already there.
| hcurtiss wrote:
| This is what treaties are for. To the degree the developed
| world took this position, it would radically reduce the
| incentive.
| bluGill wrote:
| The US is big enough and rich enough that that alone would
| make a major dent. "I Rob Banks Because That's Where the
| Money Is" (https://quoteinvestigator.com/2013/02/10/where-
| money-is/ for investigation) When there is no money in it
| they won't do it.
|
| Even if that doesn't work, the US alone will ensure that a
| lot more effort is put into prevention. If you can't pay a
| ransom anymore, then after a few high profile major losses
| companies will take security and backups more seriously which
| will make it even harder to attack anything - this will then
| be rolled out to the rest of the world because once you make
| good tools you may as well.
| drummer wrote:
| Privacy coins, dex and p2p atomic swaps are going to become very
| popular.
| unemphysbro wrote:
| dexs, or the ideas therein, are shaping the future of finance.
| qeternity wrote:
| And which ideas are those?
| vmception wrote:
| permissionless innovation, use, coordination, capital
| formation
|
| which provides permission to rapidly iterate, permission to
| fail
|
| which provides more egalitarian access and growth
| opportunities as well as failures
| mcguire wrote:
| Ease of laundering, mainly.
| MathCodeLove wrote:
| I've heard "crypto currency x is shaping the future of x" so
| many times now that I just can't believe these claims any
| longer.
| reedjosh wrote:
| Dexs is short for distributed exchanges.
|
| Not a particular currency.
| ttmb wrote:
| You would think that any reputable news editor would know not to
| use an autoantonym in a headline.
| sbierwagen wrote:
| >"We recognize that the vast majority of activity that's
| happening in the virtual currencies is legitimate activity,"
| Adeyemo told reporters during a briefing.
|
| That is a bold assertion. Not sure how true it is.
| hanniabu wrote:
| "This doesn't confirm my bias about crypto, they must be wrong"
| wearywanderer wrote:
| Interesting how you managed to turn _" Not sure how true it
| is"_ into _" they must be wrong "_. From an expression of
| incredulity to an expression of certainty. Impressive.
| Impressively moronic.
| DSingularity wrote:
| If you didn't conclude with personal attacks your point
| would have stood better.
| 0x000000001 wrote:
| Well the FBI has released reports about it
| [deleted]
| da_chicken wrote:
| I'd imagine what they actually meant was, "We recognize that
| the vast majority of activity that's happening in the virtual
| currencies can't be proven to be illegitimate or illegal."
| kube-system wrote:
| There are plenty of companies and researchers that analyze
| cryptocurrency ledgers and publish reports about these kinds
| of stats. I'm sure the Treasury Department has read a few of
| them.
| labster wrote:
| Rampant market speculation in cryptocurrency is legitimate.
| Keep buying tulips, people!
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