Welcome to DU! The truly grassroots left-of-center political community where regular people, not algorithms, drive the discussions and set the standards. Join the community: Create a free account Support DU (and get rid of ads!): Become a Star Member All Forums Issue Forums Culture Forums Alliance Forums Region Forums Support Forums Help & Search

pnwmom

(108,926 posts)
Sat Jul 14, 2018, 01:27 PM Jul 2018

How cryptocurrency like Bitcoin provides "enormous advantages" for money laundering.

The Russians paid in cryptocurrency.

It's used to avoid taxes and other financial regulations, and for money laundering. I strongly disagree with the libertarians. We need to bring cryptocurrency under full financial regulation.

https://www.blockchain-council.org/blockchain/how-bitcoin-money-laundering-works/

Despite the dozens of benefits that Bitcoins and the Blockchain Technology have to offer compared to the traditional banking system, there is a risk that Bitcoins can be used for money laundering. This is because Bitcoins are not linked to a person’s identity and only depend on the private key connected to the Bitcoin account. Since Bitcoin is a decentralized network, there is no central record-keeping mechanism that governments or financial institutions can after.

Moving large sums of money around has traditionally been a complicated process that involved trusting intermediaries to do the transfer like the Swiss Banking System. Switzerland has a tradition of banking secrecy that dates back to the Middle Ages. This system was codified in the Banking Law of 1934. Up until recently, this made Switzerland the prime hub of individuals looking to evade taxes. But in 2008, this all changed thanks to a multi-billion dollar tax evasion case probed by the Federal Bureau of Investigation (FBI) which involved the Swiss bank UBS. The incident led to stricter money laundering laws for the Swiss banking industry along with more authority to regulators.

So tax evaders are now looking at alternative ways of laundering money like cryptocurrencies. For individuals trying to evade taxes or launder money, Bitcoins provide enormous advantages over the Swiss Banking System. With Bitcoins, individuals do not have to rely on other intermediaries to facilitate the transfer. Cryptocurrencies like Bitcoin and Monero which are focused on privacy allow individuals to become their own banks by holding their own private keys. Since cryptocurrencies make it hard to regulate such transfers, they could attract lots of people who want to evade taxes in their respective countries. However, some startups like Chainalysis are actively trying to come up with solutions to track Bitcoin transactions as they are available for everyone to view on its public ledger.

Need for Regulation

Bitcoins and other cryptocurrencies are decentralized so there is no central organization that is aware of all the transactions happening on its ledger. This makes it especially challenging for regulators to control. Essentially to control Bitcoins, an adversarial government would have to shut down the whole public internet. This is so because Bitcoin does not depend on central servers to function, but instead on its decentralized network of miners to process transactions. In its ten years of operation, no government has been able to regulate Bitcoin efficiently even though several attack vectors have been tried. This shows that Bitcoin can handle scale and is also very resilient to attacks on its network making it a haven for tax evaders.

SNIP

2 replies = new reply since forum marked as read
Highlight: NoneDon't highlight anything 5 newestHighlight 5 most recent replies
How cryptocurrency like Bitcoin provides "enormous advantages" for money laundering. (Original Post) pnwmom Jul 2018 OP
Stories about these Cryptocurrencies being Wellstone ruled Jul 2018 #1
Big plus! Crypto currencies are a big part of how Russian support was funneled to Alt Right... Anon-C Jul 2018 #2

Anon-C

(3,430 posts)
2. Big plus! Crypto currencies are a big part of how Russian support was funneled to Alt Right...
Sat Jul 14, 2018, 01:39 PM
Jul 2018

...and white supremacist groups over the last several years.

Latest Discussions»General Discussion»How cryptocurrency like B...