Cyber-Criminals Abandon Bitcoin; Homeland Admits "It's A Lot More Legitimate Than People Think"

Tyler Durden's picture

Regulators in the US, Europe and Asia who’ve sought to crack down on bitcoin – many of these regulators are also proponents of a “cashless society” – have been dealt a stunning setback by an unlikely defender of the pioneering digital currency: The US Department of Homeland Security.

To wit, one anonymous DHS source told CNBC that bitcoin has become “a lot more legitimate” than many believe.

"We're getting a lot better through law enforcement tracking those [criminals] and holding the exchanges more accountable," the Homeland Security official said. "I think [bitcoin]'s a lot more legitimate than people give it credit for."

Another source told CNBC that criminals have backed away from using the digital currency as bitcoin transactions have become much easier for authorities to trace. Earlier this month, the IRS announced that it had developed, with the help of bitcoin security firm Chainalysis, a tool to unmask the owners of bitcoin wallets.

“Although hard numbers on criminal activity in digital currencies are difficult to pin down, Shone Anstey, co-founder and president of Blockchain Intelligence Group, estimates that illegal transactions in bitcoin have fallen from about half of total volume to about 20 percent last year.


"Now it's significantly less than that," he told CNBC earlier this month, noting that overall transaction volume has grown globally.”

Bitcoin is vulnerable to law enforcement because each user must display a public ID, a complex cryptographic combination of numbers and letters, in order to tansact in bitcoin. By tracing the movement of coins between accounts, CNBC explains, intelligence and security agencies can follow the money and arrest the criminals when they try to withdraw their ill-gotten games in US dollars, or another fiat currency.

Last month, US authorities partnering with Interpol and local law enforcement shut down AlphaBay and Hansa, two of the largest dark-web marketplaces for drugs and illegal goods. Before that, they took down BTC-E, a shadowy digital-currency exchange, arrested its Russian-born founder and seized the company’s website.

Another cybersecurity expert who spoke with CNBC noted that, when a user tries to convert bitcoin into cash, the digital-currency’s veneer of anonymity disappears.

"Bitcoin basically introduced a situation where we could bypass the money mules," said Rickey Gevers, cybercrime specialist at RedSocks Security, which detects and fights against malware.


But, Gevers said, "in the beginning [bitcoin] looks very anonymous, and in the end it doesn't look very anonymous."

Paul Triolo, a consultant at Eurasia Group, said bitcoin has “changed quite a bit” since it was first launched in early 2009. It’s now primarily used by legitimate investors, not dark-web criminals.

"The whole use issue of digital currencies has become a big industry. Bitcoin isn't this weird, odd currency that's being used on the dark web," said Paul Triolo, practice head of geotechnology at consulting firm Eurasia Group.


"Since the early days of bitcoin on some [levels], the world has changed quite a bit."

Instead of bitcoin, the DHS told CNBC it’s focusing on other cryptocurrencies like Ethereum and Monero. For those who are unfamiliar with the latter, it’s one of a handful of digital currencies featuring enhanced privacy controls. For example, Monero scrambles a user’s public ID, making it more difficult for authorities to trace transactions.

Even the European Union admitted that bitcoin was never popular with organized crime groups, which overwhelmingly prefer payment in large-denomination bills like the 500-euro note, production of which has been discontinued by the ECB, part of the European elites' war on cash.

Still, global authorities remain skeptical. Earlier this week, Russia signaled an about-face when the country’s deputy finance minister told local media that the ministry of finance and central bank were seeking to “regulate” digital currencies by forcing users to execute trades on the country’s public stock exchange, allowing the government to monitor transactions.

In the US, the SEC decreed last month that digital currencies are financial securities that must be registered with the agency. However, the ultimate significance of the agency's ruling remains unclear.

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MANvsMACHINE's picture

They make it seem too easy for them to trace. Maybe they are hoping that press such as this will dissuade the bad guys from using Bitcoin because they really have zero way to track. If they really could track it all, they'd certainly shut it down.

auricle's picture

Yep, start scaring everyone! Now that we can track you, you better pay your capital gains! 

Arturo's picture

They cannot track Monero.

Xibalba's picture

No....but they can probably short the piss out of it

DWD-MOVIE's picture

I’m making over $7k a month working part time. I kept hearing other people tell me how much money they can make online so I decided to look into it. Well, it was all true and has totally changed my life. This is what I do…

vegan's picture

Only when his comments are up-voted.

Honey-Badger's picture

Considering that all data is stored by the NSA they know probably most peoples IP to bitcoin address links (unless you are using a VPN).


Let's see them try that with cash at the LCS.

in4mayshun's picture

Even a VPN won't hide IP addresses from public routers. VPN's encrypt data. People who think any internet transaction can be 100% anonymous don't understand how the internet works. An argument can be made that the details of an internet packet can be kept secret, but there is simply no way to guarantee that an exchange with a particular website can be kept confidential. Think of it like sending a sealed envelop thru the mail. The envelop will have a source address and destination address. These have to be accessible for the post office to deliver it. If I'm the post man and I keep delivering you packages from Gun, I may not know exactly what you're buying but I'm pretty sure you're acquiring weapons.

any_mouse's picture

Good post, except for thinking Gun could or would deliver a firearm directly to the consumer in violation of Federal law.

My latest shipment of ammo was not marked "OMD", there were no external markings on the box other than the shipping info.

So Brown knows I received a package from a source. Could have been a pair of heavy binoculars.

kochevnik's picture

You do not understand what you purport to know. Silkroad only indited by death threat, not by business model

Think for yourself's picture

GGP said: monero is untraceable.

We can trust crypto the day we can trust our computing platform. And if you trust your computing platform it's likely only because you don't know shit about signal intelligence and 3-letter agencies embedded in cpu design and fabrication.

doctor10's picture

this is more of a statement about the worth of USD capital and cash in a surveillance society. "Anything" worth investing in -that you discuss by phone or email-is immediately glommed onto by the Deep State and their NY cronies. Has been so for the last 15 years.

At the end of the day its why interest rates -at least in 100% traceable accountable taxable regulatable and ultimately takable dollars are basically 0% give or take a few fractions of a percent.

"value" is anonymity and privacy in conduct, thought and action-one of the consequences of which is enhanced ability to keep the fruits of your own labor. Electronic currencies actually fulfilling those needs will be the most valuable-there is yet to emerge one that clearly does so.

Ask East Germany and the Soviet Union exactly how well a surveillance society worked out during the 20th century. The 21st is no different in that regard

tdag's picture

it's funny to see downvotes on statements like this. it simply means that if you want your transactions to be untraceable, you'll have to be smart about it--crypto-currency or not.

berryfarmer's picture

You should probably look up Libreboot

Think for yourself's picture

Thank you. This is a very good answer for what I was trying to communicate. I couldn't review the code if I wanted to (talking about my competence) and I don't know if it would be fully effective at re-establishing sovereign control over the hardware, but this is the kind of thing that I was hoping to point to (without even knowing a specific solution). Installing Linux or running some kind of rooted android is not enough when external agents can remotely activate the network chip and take over the CPU's master control. We need much more focus on this, awareness of the loopholes/backdoors implemented at the hardware level, solutions that work and communities trustworthy enough to review them.

thanks again.

kochevnik's picture

I read some Americans tried to start trouble in Chinese ocean while using Chinese microchips, then supertanker eats them

kochevnik's picture

Best deal is to trade Jew fiat and pump proceeds into hard asset like crypto. Slowly bleed Bolsheviks dry

kochevnik's picture

Best deal is to trade Jew fiat and pump proceeds into hard asset like crypto. Jew value always oscillate as they are worthless debt junk. Slowly bleed Bolsheviks dry

quadraspleen's picture

BTC is as easy to hide as cash if you know what you're doing.

Of course nothing is "safe" from the Man if he really wants it, but then, was it ever?

Winston Churchill's picture

You can infer a lot by whom is takling to whom,you dont need to decrypt the message(crypto).

Without privacy,and thats long gone,cryptos will never be anything but a tool

of TPTB.

For short term greed you will get permanent enslavement.

Rhetorical's picture

 mainstreamers is starting to get mainstreamers is starting to get involved with Bitcoin and the more high-profile alt currencies while it definitely will correct sometime in well whenever.  the proof-of-concept has been established and is limited only by the ability of those specific coins creators. 95% of all alt coins are pump and dump scams that is true but the 5% that are correct are going to give you 10 20 or 30 x your return if you choose it right and buy the correct ones .  read the white papers and study the creators history and past projects and you will be pretty much set.

 if you're if you're unsure just throw 5K into coinbase and a private wallet and forget about it also montereau will go up 10 times by this time next year if it's features are not broken you can lose your shirt but for that risk-return it's nothing's beating it

Justin Case's picture

IRS announced that it had developed, with the help of bitcoin security firm Chainalysis, a tool to unmask the owners of bitcoin wallets.

Hopefully everyone is up to date withe their records of capital losses and gains. Everytime you sell a coin to buy sumptin you most likely had a loss or a gain. I'd rather fight a pit bull with aids than the IRS.

MANvsMACHINE's picture

While I don't really think they could trace the Bitcoin activity, I agree with you. If you're in the US, pay your fucking taxes. Tax evaders are treated worse than murderers.

Even if they can't trace now, they may develop the tools some day down the road and with some forensic analysis, you may find yourself in their crosshairs.

Common_Law's picture

You can only evade taxes you're required to pay. Or in the case of most US federal citizens, taxes you are under contract to pay. Ever wonder why you need to sign you SS card? The terms and conditions aren't legally required to be presented to you, like agreeing to this site's terms and conditions simply by visiting the page (clickwrap contact).

How do the feds have jurisdiction to do this? It's not the commerce clause like most things. And the 16th only applies in federal jusistiction (internal in IRS). It's you right to freely contract. And you can forfeit you rights just like you sign an NDA and waive your freedom of speech.

Justin Case's picture

Because you are not a sovereign person. You are an asset of USA Inc. Delivered at birth as per maritime law. This is why every single document that Gov't issues to you is in uppercase letters. You have a statement of birth, not a birth certificate. You are owned by the corporation, know as USA Incorporated.

besnook's picture

there is a legal means to void the contract. i know a coupla people who have successfully emancipated themselves legally.

Justin Case's picture

I know it's possible to become a sovereign person. YouTube has plenty of videos of those that have.

Most people are oblivious to that fact that they are assets of the corporation. That's why you need a licence for everything. Yoar not a free man in USA Inc. Gov't borrows money on yoar future labor. When people tout that the black slaves were freed, it was an illusion. The registerd assets (the Negros) were on the farmers books as assets and enabled him to borrow money against their future labor. What the US gov't did was transfer those farmers assest from the farmers leger to the Gov't ledger. So are they free? As free as you are. Yoar all assets of the corporation.

Justin Case's picture

You can only evade taxes you're required to pay.

Then there is nothing to evade is there? LOL brilliant. If I were you, take yoar tax file to an accountant. You doing it would set off the IRS to audit you.

ET's picture

Anytime bitcoin is mentioned they always need to show a picture of a Gold Coin although bitcoin is not a coin and not made of Gold.

It is essentially false advertising.

When these cryptos are traced, to be sure, you do not want your name anywhere on it. You never know what illegal transactions were made in the ledger before you received it. Otherwise, a subpoena and wiretaps may be in the future.

Lore's picture

Issuance of a "GOLD" CREDIT CARD seems like a glib inside joke. 


...Call it the "C.I.A. STANDARD."  (Ahem.)

Greenspazm's picture

"Bitcoin" is not a coin. It is a succession of digits in a computer with zero value, a digital nothing.

Representing these digital nothings pictorially as golden discs is part of the confidence trick.

The "wallets" do not contain the nonexistent coins. They contain digital nothing keys to the digital nothings.

"Satoshi Nakaomoto", the purported inventor, is a ghost and most likely a committee. The "bitcoin" "white paper" published by "Nakamoto" appeared on Halloween 2008 - an ironic joke. It was evidently written by more than one person, one of whom either did not have English as a native language or wanted to convey that impression.It is stuffed full of meaningless jargon like "implement the proof-of-work by incrementing a nonce in the block",
"obtain the Merkle branch linking the transaction to the block it's timestamped in"

The website makes the following patently untrue claims:

"an innovative payment network and a new kind of money"
"Fast peer-to-peer transactions/ Worldwide payments/ Low processing fees"

" it is even possible to send a payment without revealing your identity, almost like with physical money"

Anyone who doesn't smell this government op a mile away and swaps legal tender fiat for these digital nothings must be gullible beyond redemption.



Norwegianfish's picture

When are u guys gonna buy and get on the train to the moon? $5000 ? $6000?  $10000?

The Cooler King's picture

".It is stuffed full of meaningless jargon like "implement the proof-of-work by incrementing a nonce in the block",
"obtain the Merkle branch linking the transaction to the block it's timestamped in""


mosley always tells me he can't understand my chicken squawk like when I ask him if I can buy a FORD Veliciraptor with bitcoin.


But he sure seems to be an expert on 'incrementing nonces in the blocks obtained in the Merkle branch'


mosley must be, really, really smart

crazytechnician's picture

You cannot buy a Ford Velociratopr with bitcoin because you don't have any bitcoin.

For everybody who does want to buy a Ford Velociraptor with bitcoin , there is bitpay

The Cooler King's picture

So, "bitpay" is gonna somehow do what?


Force a FORD dealership that doesn't accept bitcoins to accept bitcoins and he's just gonna hand you over the keys to the truck?

dark pools of soros's picture

ok ace... just buy some gold bars with bitcoin and hand them to the dealership??? happy now?

The Cooler King's picture

"ok ace... just buy some gold bars with bitcoin and hand them to the dealership??? happy now?"


No ~ Instead, that's the most ridiculous thing I've ever heard. Why all the histrionics when all I have to do is pay cash? What's the point in involving bitcoin at all?

Justin Case's picture

And gold is money. That’s not to say it’s legal tender. You can’t use it to buy goods and services directly. But inhabitants of Norway can’t use Japanese Yen to buy things either. Does that mean Yen isn’t money? In effect, gold is everyone’s foreign exchange. It’s the original “hard currency.” So to say that gold has “no use” is like saying money has “no use.” Which isn’t correct. One might as well say language has “no use.” Both are fundamental to how societies organize and communicate. What people mean, we think, is that gold has no industrial use. But without money there would be no industry. Therefore, without money there would be no demand for oil, copper, zinc or the other raw materials many prefer on the grounds of “having use.” The monetary goes before the industrial, and so money has an “intrinsic value” to society which few other things do. Yet money is so ubiquitous that it is taken for granted. It is underappreciated and undervalued. Money is also the primary toy of today’s naïve interventionists. And being what they are, they will inevitably play with it until they break it.

Historically, people have understood money’s intrinsic value when they have been forced to, when alternative monies have been rendered unfit for purpose by persistent debasement. Negative real returns to cash, the inflation in various equity and credit markets, and investors’ “reaching for yield” suggest money’s transition from usable to unusable is already underway, if in a subtle and small way (for now). And if debasement to date has not dented debt ratios even slightly, the debasement of tomorrow will. Today, we see the intrinsic value of gold. And although we can’t know when, we think others will soon be forced to too.

crazytechnician's picture

bitpay handle the transaction , you pay in bitcoin and the client receives either fiat currency or bitcoin , their choice.

Even peter schiff now accepts bitcoin for payment of gold bullion , so does JM bullion , along with around 20 other very large bullion dealers. You can now buy anything with bitcoin.

The Cooler King's picture

OK, so if the FORD dealership accepts only cash, but you only have bitcoin, then essentially, you've just converted your bitcoin TO CASH, correct?


Analagous to selling a stock, or any other security, right?


Moreover ~ you've essentially - REINTRODUCED money back in to the fiat banking system.

crazytechnician's picture

Who fucking cares man ???


It means you can buy a Ford Velociraptor from a Ford dealership - with bitcoin.

The Cooler King's picture

I care (& maybe some other people around here do as well).


Otherwise, these bitcoin threads only become echo chambers of all you bitcoin touts trying to get new suckers to buy into it.


The METHOD, as I described is important: (I'll synthesize)


- You say you can buy a FORD Velociraptor with bitcoin

- I asked you to 'prove it' because FORD does not accept bitcoin

- You explained that you go through BIT PAY

- Whereby bitpay converts your bitcoin TO CASH and hands over CASH to the FORD dealer

- I remind you & everyone that 2 things have occurred


1. You've essentially exchanged your bitcoins for CASH (which is analagous to selling a security like a stock, whereby is a DIRECT way to link you to booking a CAPITAL GAIN, & whereby you'd have to report that to the IRS). Depending on your CAPITAL GAINS tax rate, you've essentially paid, say a 28% 'premium' on the Velociraptor. Or, you could just IGNORE reporting those capital gains, which, would basically make you a criminal (which is what this article is trying to tell you is happening less frequently).


2. You've RE-INTRODUCED money backing to the fiat banking system (which is 180 degrees OPPOSITE of what, in other times, bitcoin owners are bragging about being FREE from ~ which is hypocritical at best).

crazytechnician's picture

It's ignorants like you that keep the price surpressed. Please continue to do so all us fools can continue to fill our boots with Ponzi money. We thank you.

The Cooler King's picture

It's ignorants like me that make 2 truthful and valid points concerning:


1. capital gains taxes

2. the fiat money system, (which you crypto people seem to hate, but can't wait to convert back to for greed)


You cannot address EITHER of those, so, instead you substitute, via redirection, with some ad hominem assault.


I don't give a hoot what you fill your boots with. Frankly ~ I don't like "the system" any more than you do, but I'm not going to risk going to jail over something like this.


Most of what comes across from crypto owners in this and other threads amounts to an echo chamber of ginning up the price. When challenged, they do their best to toss in some logic (like bitpay), which, may be true, but only leads to a new set of doors & obstacles which ALWAYS end at the capital gains, and converting 'profits' to FIAT issues which NEVER get addressed.


So there is nothing noteworthy about this endeavor except that it is full of greed & hypocrisy.

Schizofrantic Squonk's picture

"Depending on your CAPITAL GAINS tax rate, you've essentially paid, say a 28% 'premium' on the Velociraptor."


You've overlooked something: if you made capital gains on your Bitcoin, there's a net gain. Let's say (for easy math) you bought Bitcoin at $500, cashed out at $1,000, paid $50,000 for the car.

Saved your cash and bought the car: net cash cost $50,000.

Bought Bitcoin: 50 bitcoins paid for the car.

                       Cost of Bitcoins: 50 x $500 = $25,000

                       Capital gains: $50,000 - $25,000 = $25,000

                       Capital gains tax paid: (say) 28% x $25,000 = $7,000

                       Net cost of car with Bitcoins: $25,000 + $7,000 = $32,000

The only way that capital gains tax kills the deal is if it's at a rate of 100%.

The only way you lose is if your Bitcoins are worth less when spent than what you paid.

Left out of this analysis: As you save in Bitcoin, its value generally increases. (Not always, of course.)

As you save in cash, what happens?

Greenspazm's picture

Good luck with your IRS compliant bookkeeping on that one.

The Cooler King's picture



I'm not going to argue your math.


It wasn't my point to say the truck was 'cheaper', or more expensive 'net-net'.


My point was that BY USING THIS BITPAY PATHWAY, (as the other dude gave example for). You've folded in 2 UNDENIABLE things:


1. You've PROBABLY booked a capital gain (I say probably, because unless you just bought bitcoin yesterday or the day before, anything is probably a gain). Certainly if the price drops again, and you sell at a loss, then you've booked a loss. But I don't see too many people around here talking about their losses.


2. You've re-introduced money back into the HATED fiat system


Naturally, there are instances where, say if you bought 15 bitcoins for $4 and sold them at $4,000... Well ~ you're on the hook for capital gains taxes on $59,940. Pay 28% to Uncle Sam in the amount of $16,783 and you got your truck for $60 bucks plus whatever the difference.


There are a million variables.


CASH is legal tender, so, if I pay for something in cash, I'm not required to book a profit or loss on any ledgers. Instead ~ paying for ANYTHING with bitcoin is analogous to, say, having a brokerage account that you can write checks off of, and, if you don't have the sufficient cash balance, then securities have to be sold to achieve that cash balance. And where the transaction is reportable.


Trust me, I was DAY TRADING stocks about a decade or more ago and wasn't really going through all the hassle of logging every transaction. A year or two later, I get this $8 million dollar bill from the IRS. (Which was pretty bogus because all it reflected were my SALES of securities & not my cost of entry points). Notwithstanding ~ I was 'scared as shit'. I tried to send a few letters to explain the situation and even some perfunctory evidence.


NOTHING DOING ~ They were gonna take me to court for the $8 million.


Note: One thing that's important to remember in a situation like this is that if you don't report something, they assume that when you SELL it, you got it for free... So they 'book' you for the whole amount. It's not 'their' job to try and figure out what you paid for it, the onus is on YOU


Anyway ~ I knew a guy who worked for the IRS and asked him what I should do. He says that they had a free advocate service, which, I utilized, but I really had to dig deep and go through thousands upon thousands of single transactions to come up with PROOF.


Gladly, I succeeded and the case was dismissed, but the horror of those initial days & weeks after I got the first letter were the only time in my life I've ever contemplated suicide.

crazytechnician's picture

You were stupid not keeping records and paying them. They are the last people on earth you wanna argue with. It's this simple: keep records and pay what you owe. If it makes it easier to swallow see it as protection money.