Bitcoin's big secret: How cryptocurrency became law enforcement's secret weapon
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thoughtful
Sentiment
mixed
Category
tech
Key topics
cryptocurrency
law enforcement
blockchain analysis
The article explores how law enforcement agencies have leveraged cryptocurrency and blockchain analysis to track and disrupt illicit activities.
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11/13/2025, 3:39:56 AM
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Monero also complicates any type of investigation much more than Bitcoin. It is very hard for investigators. They also don't want to burn techniques unless the case is absolutely massive.
Also make sure to never use an exchange that forces KYC.
Fees may be higher is a note.
Or to put it another way, it's good for "money laundering", but not "tax evasion".
IRS or CRA is getting their cut, so it's the regulator or the FBI's problem
Seriously though, the days of easy tax avoidance are long gone at this point. Welcome to The Matrix of America.. and China.
With an imagination and taking proper anonymity safeguards, the possibilities are endless.
Make no mistake, this is not coincidence. It's hard because non auditable financial transactions would undermine the fiat issuers authority.
So while it's completely traceable in theory, in practice it's vaguely akin to trying to track money by the serial numbers in that you can probably figure out a few points in a dollar's lifetime, but tracing it point by point to a specific entity is generally not realistic. Of course most criminals are stupid and doing something like using CoinBase hosted crypto to try to do something illicit is as good as leaving your license and phone number at the scene of a crime.
and using these makes no sense, since it's readily noticeable that you've used one, and using them is basically always illegal. The crypto currency ecosystem keeps reminding me of https://xkcd.com/1494/ .
Any sort of economic dealings with a person you should reasonably have known to be engaging in criminal activity, is a legal risk.
I don't think you find very many registered companies whose stated purpose is running a tumbler or otherwise "providing economic anonymity" - at least not in the west.
I STILL encounter people that get this confused.
It took them until 2014 to read the satoshi white paper?
I haven't kept up with developments though. What are best privacy coins these days. ZCash seems to be the institutional favourite while Monero hasn't moved much.
All you have to do is make a single transaction using all of them. You will receive a freshly minted UTXO. Each bitcoin block involves burning a set of UTXO and then minting a new set of clean UTXO.
In this scenario, is the first output UTXO of the transaction tainted? The second? The miner's reward UTXO? Someone else's output UTXO?
Institutional pumps and dumps are exactly the thing to steer clear of, and Monero is fortunate to not have become a huge victim of them. Monero has seen more organic growth.
I'm with you, but it also seems like they have a better roadmap than Monero. If Silicon Valley can get monopoly status by selling things cheap and then jacking up the price after they have their network effect, why not get the coin embedded into the financial system first and then hard fork into private transactions only? Maybe it's not the right play, but at least we have people trying different things.
I am not opposed to the existence of more privacy coins and features. Anything that loosens the grip of surveillance is good.
Besides default privacy, one other thing that Monero has is constant emissions, making it sustainable for transactions in the long term beyond the next century. To my understanding, both Bitcoin and Zcash will in contrast shift toward pretty high transaction fees, keeping them relevant as a store of value, but irrelevant for small transactions. Bitcoin will survive via an efficient layer 2, e.g. Lightning, but will Zcash? Switching to PoS and other such gimmicks won't fix the core issue.
> Monero is hard to obtain and spend if one doesn't know how.
What matters is not how difficult something is once you know how, what matters is how difficult something is when you don't know how.
> If one has an app like Cake Wallet, it's easy. Monero has a strong culture of self-custody, competitive DEX swappers, and P2P swappers, although a few service providers occasionally are scammy.
- Download an app they have little to no familiarity with
- Buy a different currency like LiteCoin
- Perform a swap to Monero
- Reverse the process to spend their XMR since essentially no service allows direct purchase by XMR
> Monero has is constant emissions, making it sustainable for transactions in the long term beyond the next century.
While XMR has a larger block size they're still longer times than ZEC. That still presents an issue as well[1,2]
[^]Again, I want to repeat myself because I want to make this part abundantly clear
>> Maybe it's not the right play, but at least we have people trying different things.
[0] https://bitinfocharts.com/comparison/transactionfees-zec-xmr...
They will try, but as per my understanding, due to the cap, there is no mathematically conceivable solution that doesn't require escalating the transaction fees dramatically once the supply diminishes.
Even if zcash is technologicially superior, why not just fork it exactly and start over from genesis? Zcash is not the next bitcoin, but the next bytecoin.
Cryptocurrency needs to be a community-led project like bitcoin or monero.
This seems awkwardly unnecessary for a technology that has only prioritized deflationary economics and economic sovereignty through private key encryption.
outside of a few san fran tech bros, how many people you know ever bought a house with BTC?
you gonna gift your mom monero for x-mas?
In fact, Bitcoin are fungible from a regulatory perspective: As every one USD is worth as another USD, every Bitcoin has same value as another Bitcoin and they are fully intechangeable without any change of value on both sides of the transaction.
Thats the reason why there are NFT - these are not fungible in that sense, as they are not interchangeable one by one, since one 1 NFT may have another value than the next NFT.
Some exchanges and banks to trace lets say the last 20 hops, and if these are OK, then they accept the coin. I know also about institutions which trace ALL hops, meaning: At their desk you cant ever sell a coin that has been in the dark only one day since its existance.
Most have a relaxed approach, like "if the coin wasnt in dirty hands for the last 5 or 6, its OK for us"
As long as this information balance exists, they are worth equal value
This brings to my mind: Chainalysis or the exchanges Co should offer such service like "bitcoin cleanyness lookup" or similar :-) (maybe some do already and Im not aware of...)
But the thing is: These service work wallet-based.
They're not worth the same from a market perspective. When bitcoins are dirty they trade at lower price.
1. Spending dollars on US soil from an US bank account won't incur extra fees (at least visible to the person - I know about interchange fees, but they are borne by the merchant), while using card issued by a foreign bank can incur fees for cross-border transactions (at the level of 2-3% usually).
2. Sanctions and KYC concerns also make different dollars have different value. Money in US bank account of an US company employee can be used at face value - money in some less-favored country bank, not so much.
Anyone know if there's a monitoring program for serial numbers of interest?
The FBI gets out of bed for more inane things than maybe figuring out what happened to DB Cooper (he probably died during the jump or after landing) after all this time.
In practice, if you spend less than $10,000 a time, you'd probably be fine?
I just don't understand in practice how this is an issue.
Say you spend $100 on groceries with marked cash, how are you de-anonymised? The cash mixes in with all the rest of the cash from other registers and then gets picked up by Securicor and so on.
Never made sense to me!
US dollars are certainly worth less if they have a shady transaction history. That's why money laundering exists - I will pay you $100,000 in dirty money if you give me $95,000 in clean money.
Also, US dollars are non-fungible in a collectibles sense because certain id numbers on bills are valuable, older years are valuable (and condition matters). With coins there's a lot more, too - misprints and the like.
So I reject your idea. Either they are both fungible, or neither are.
(Incidentally, banknotes all have unique serial numbers and can be traced to criminal transactions by either the serial or by more mundane taints/markings)
I get that specialized communities use specialized jargon, but it seems like it would be less confusing to use the word "tracable" here.
You will have to spend more than 1 “dirty” bitcoin to get 1 “clean” bitcoin. Almost nobody will accept the dirty bitcoin, whereas basically everyone will accept a bank note no matter the history of said bank note (cops might show up at your door later, yeah).
But sure, eliminating traceability inherently solves this issue too.
Legal and or financial liability by association?
If something works very well, I'd rather it doesn't move much.
Crazy how that works!
https://bitcoinblog.de/2025/05/05/eu-to-ban-trading-of-priva...
Then they will have to resort to the only other alternative: require a government ID and static IP allocation to access to the internet, for complete surveillance and traceability. You know it's coming.
There's 0 real world cases for them except some extremely far fetched ones.
There’s a chance there’s enough political influence by libertarian/crypto folks in the US to push back though.
On the other hand, the transparency of bitcoin could be a boon in ways as well. Currently only governments, large banks, some multinationals can track large transfers of money. Bitcoin levels the playing field and enables internet sleuths to uncover government or corporate corruption.
Or so I’ve heard.
If you know about anyone using Monero for that purpose, you can't use Monero, since obfuscating the origin of transactions is something you do as a condition of participating in Monero (either as a miner or through paying transaction fees).
And if you have to go to north korea to cash out, then the convenience is much lower.
Having said that, if you are a crypto proponent, you would argue that cashing out to fiat will become less and less necessary as time goes on and simply swapping to USDT/USDC and spending that will become easier. The jury is still out on that one
You can (and people often do especially with banknotes) do crime and tax evasion with them, but you can't transport them across borders in large quantities easily.
Something like monero has the potential to be almost as fast and convenient as a fiat bank transfer but able to be done in any size and be untraceable - that's a combination that doesn't win you many friends in western governments
Everyone should just assume that if they're trying to hide themselves via some service, that said business will provide your information/data to the authorities, if asked to.
First they had to learn how to read…
There is a constant flux of papers and prototypes that are not mentioned anywhere (least of all this website) unless you delve deep into technical forums (such as delvingbitcoin) - which I never find the time to stay abreast of.
It is amazing to see that there is no overlap of communities between such a large tech forum, and open-source tech work being done on cryptocurrencies, so strong is the anti-crypto bias in here. I wonder what other tech blind spots does HN have.
or
2) there isn't a way or its not worthwhile; just use Monero instead, dawg.
"why hasn't anyone made, like, a secure Telnet?" because they created SSH and VPNs, same idea.
https://miro.medium.com/v2/resize:fit:1100/format:webp/0*_My...
https://www.reddit.com/media?url=https%3A%2F%2Fpreview.redd....
The NSA was using this sort of tricks long before all this when people tried to use PGP encrypted email.
Either way, if governments allowed payment cards that don't do KYC, it would be more convenient for everyone involved. I don't know how governments suddenly took it upon themselves that in addition to controlling commerce, they get to monitor lawful commerce between law abiding citizens with no suspicious of criminal conspiracy.
Privacy wasn't taken from us, they asked nicely and we shrugged.
Some entity does not want this type of info out there.
The next day he released an update that erased the application and all data.
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