Comment by olalonde 3 days ago
It's extremely simple until it's not. Let's say you bought 100$ worth of BTC back in 2012 with cash at a meetup. Now it’s worth $1M, but you can't prove its origin. You now have a perfectly law-abiding person that risks being accused of "money laundering" just to keep what's rightfully theirs.
Bitcoin literally has an immutable transaction record baked into it's model.
You would be able to point to the timestamp when you took possession of the wallet which would prove providence unambiguously.
There's no KYC to take possession of a wallet, how would you prove the wallet wasn't just traded to you (maybe even yesterday) instead of moving the bitcoins?
AML statutes don't invert the burden of proof! If the government wants to prosecute you for taking money, they still have to prove you took the money beyond a reasonable doubt.
I'm always amused by the paranoia in the xxxcoin communities. If the government had and exercised the power you believe it does, why on earth do you think putting your money in bitcoin or whatever would provide any protection at all?
Edit: case in point:
> KYC and AML invert the burden of proof and are essentially an exception to the 4th amendment
Oooph.
> If the government wants to prosecute you
Their point is that the government does not prosecute you, they threaten the banks with "regulatory incidents" if they don't comply. The result is that some people find it difficult to ever open a bank account with no means to "clear their name" as it were.
KYC and AML invert the burden of proof and are essentially an exception to the 4th amendment, that's why they're so controversial.
I tried to open a bank account when I was moving states before I had a local state ID or any utility bill or proof of address, no one would do it because they stated the standard the feds hold them to for KYC would essentially presume I am guilty of lying and require me to provide documentation to prove I'm not.
That works until it does not. What if you transferred the BTC to other wallets or exchanges in the meanwhile? Even if you still had access to the original wallet, what proves that it was really yours? etc.
What if you tried your best to do everything that a money launderer does without actually doing any money laundering?
If you and your friends are just innocently idling in a your car wearing a ski mask in the middle of summer with a shotgun and a large duffel bag, in front of a bank that was robbed in this manner four times last month, you're highly unlikely to, at minimum, beat the ride.
What I described is actually extremely mundane. Maybe you started with Bitcoin Core and later switched to a lighter SPV wallet like Electrum when the blockchain got too big. Maybe you bought a hardware wallet and moved your BTC offline. Maybe you sent some to Binance to invest in Ethereum at some point. There are countless reasons to shuffle BTC around - and countless reasons why you couldn't prove your full transaction history dating back to 2012 - none of which involve any crimes.
Sounds like that criteria would match about 50% of people with child support or alimony orders.
Unless you’re using mixers then it is relatively trivial to follow your BTC around the blockchain. That is the very point of it.
The issue of provenance is an issue regardless of the type of funds.
In most jurisdictions the burden of proof is civil, so more likely than not.
Sure, you can trace the full transaction history of any BTC through the blockchain... but that doesn't prove anything. At minimum, you need all the private keys involved (e.g. not possible if you used an exchange or deposited/withdrew from some online service or lost/deleted an old wallet). Even if you had the full list of private keys involved, going back to 2012, what proves that they were really yours and, like another commenter pointed out, that you didn't just acquire them yesterday?
Suppose you deposited btc into an exchange, traded it back and forth for a while, and then withdrew. The withdrawn coins come from a communal exchange wallet, so the chain of evidence on the blockchain is lost.
Monero? Zano? (if you could actually see that monero actually hasn't been hacked as people say and it was all just a marketing gimick though I'd still be cautious and maybe keep my money in monero short term??)
Your other replies rely on "assume the government has powers it does not and/or the judiciary is willing to suspend the burden of proof in criminal cases". I mean... yeah. It's true. If you assume we live in a totalitarian dystopia then sure, the government can do terrible things.
But needless to say such a government doesn't need to pass boring AML laws to do that. It can just throw you in jail because it wants to. The actual rule of law under which we live doesn't have that property.
I've had this exact problem before, though not with such high amounts. To make it worse, it was Monero rather than Bitcoin, which made tracing impossible. In the end, I just had to produce emails/documents proving I was paid in crypto a couple years back & the associated increase in value since then. I got the crypto into my bank via a sketchy non-kyc exchange and somehow they didn't care about that at all.