DOJ Calls Bitcoin Money (Samourai Wallet)

DOJ Calls Bitcoin Money (Samourai Wallet)

this is Matthew crder from Bitcoin
University today I want to talk about
how the US Department of Justice the doj
has just called Bitcoin money this is a
little bit of a tongue-and-cheek
headline here’s the real headline
Founders and CEO of cryptocurrency
mixing service arrested and charged with
money laundering there’s that word money
and unlicensed money transmited offenses
if you’ve spent any time in the Bitcoin
space you probably have heard about
Samurai wallet these are the two guys
who just got arrested killed Rodriguez
and William lonin Hill the defendants
develop marketed and operated
cryptocurrency mixing service known as
samurai samurai according to the
complaint un unlawfully combined
multiple unique features to execute
Anonymous Financial transactions valued
at over two billion in cryptocurrency
and here’s the problem while offering
Samurai as a quote unquote privacy
service the defendants knew that it was
a Haven for criminals to engage in
largescale moneya laundering and
sanctions evasion a substantial portion
of the funds at Samurai processed were
criminal proceeds passed through Samurai
for purposes of concealment indeed
during the relevant period Samurai
laundered over 100 million dollars of
crime proceeds originating from among
other criminal sources illegal dark web
markets such as silkroad and hydr Market
various wire fraud and Computer Fraud
schemes including a web server intrusion
so here’s I think an interesting
statistic and we flip it on its head we
can say that
95% of activity on Samurai was legal
while only 5 % was essentially money
laundering using Bitcoin as we as we’ve
always said Bitcoin is primarily used by
law- abiding people but I was actually
surprised by these numbers that only 100
million was bad money quote unquote bad
money and the other 95% was being used
for presumably legal purposes now here’s
the samurai wallet website we can see
here that’s been taken down by the US
government it’s important to distinguish
between mixers and coin joins a mixer is
something like this the Fiat cash
version would be you give all your $20
bills to a guy you don’t know and then
he gives you each back a different $20
bill this process is custodial in other
words you temporarily give up ownership
of your money by contrast coin join is a
collaborative Bitcoin transaction you
enter into it with other people you have
multiple inputs to the transaction and
multiple outputs and what coin joins
seek to do the same thing as mixing they
seek to give you better forward privacy
because just like in the mixer you don’t
get the same $20 Bill back now the
danger of this of course in the Fiat
system is you get the wrong kind of Bill
but for coin join these are fresh
outputs from the Bitcoin transaction and
unlike mixing or mixers you don’t give
up custody of your Bitcoin in a coin
join coin joins are very visible on
chain you can see inputs like this very
equal inputs and equal outputs the
reason that the inputs are slightly
higher is to pay either the coordinator
who does the coin join or in this case
it’s more likely to pay the minor trans
transaction fee if you’re enjoying this
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a friend or family member now here’s
another way of thinking about coin join
and the Privacy that it gives you for
example when I go to an ATM and I take a
take out US dollars cash the bank knows
how much money I have withdrawn but what
the bank does not know is where I end up
spending and when I end up spending this
cash so us cash has good forward privacy
and there’s nothing illegal about this
in itself this is in fact one reason why
the US government is obviously trying to
phase out cash but using coin join with
Bitcoin can give you similar good
forward privacy when sending or spending
Bitcoin I believe it should be legal for
people to use coin joins to give
themselves forward privacy with their
own legally obtained Bitcoin but doing a
coin join with il legally obtained
Bitcoin maybe you’ve stolen it maybe
it’s proceeds from some illegal activity
illegal drug or terrorist activity Etc
in order to hide its origin doing a coin
join with illegally obtained Bitcoin in
order to hide its origin that’s clearly
money laundering under current
definition so I think it’s important to
distinguish between these two things at
the outset here’s a really unfair thing
though there is a double standard at
work where certain groups are allowed to
do money laundering and their websites
don’t get taken down Pentagon failing
its audit for the sixth uh year in a row
Etc so there is a bit of a double
standard at work here what was Samurai
wallet’s biggest mistake I think it was
probably their thumbing their noses at
powerful actors on Twitter for example
this is from June 30th 2022 welcome new
Russian oligarch Samurai wallet users
this is clearly something that it’s not
smart to put on Twitter and this
particular tweet did end up in the
department of Justice’s uh uh complaint
uh they have a snapshot a screenshot of
that uh tweet
if you use this is for users of Samurai
wallet if you use Samurai’s Whirlpool
through Sparrow wallet or using your own
dojo and other words you did not use it
through their app then your xubs were
not on the servers that were confiscated
in Iceland you may still want to assume
that your mixes have been or will be
demixed or your coin joins be uncoin
joined for example if the FBI knows four
participants in a 5 person round of coin
join then they can Deon de anonymize
your transaction if you’re using Samurai
on your phone through the app for
example you can use your recovery seat
in a new wallet and then use that wallet
to send funds to a wallet controlled by
different new recovery seed this is of
course not advised to criminals at all
I’m only speaking to people who are coin
joining their own legally obtained
Bitcoin for obvious reasons this is not
something as you probably noticing this
is not something that I talk about much
on YouTube for fear of similar
misunderstandings if you want to be part
of this discussion you have to go to my
website which is a safer place to
discuss these things I want to end by
emphasizing that I believe that privacy
is a fundamental human right and this is
one problem with many of our modern laws
Desiring privacy should never be taken
to mean that you have something to hide
it’s very stupid to say well I don’t
care about privacy because I have
nothing to hide that’s a little bit like
saying as people have said I don’t care
about Free Speech because I have nothing
to say I think it’s similar here’s an
easy example of privacy things that go
on in the bathroom or in the bedroom for
example are almost never illegal but
they do deserve full privacy as Eric
Hughes puts forward in The Cypher Punk’s
Manifesto privacy is necessary for an
open Society in the electronic age
privacy is not secrecy A Private Matter
is something one doesn’t want the whole
world to know but a secret matter is
something one doesn’t want anybody to
know privacy and I think this is
important privacy is the power to
selectively reveal R oneself to the
world you should have a choice how much
is revealed to the world about yourself
now Bitcoin itself is pseudonymous at
the base layer it’s not Anonymous this
is a common misunderstanding but Bitcoin
can still be used in a really Anonymous
way you just have to learn how the tools
work Bitcoin can also be used in this
stupidly public way that leaks enormous
amounts of privacy so I’d say it’s very
important to learn how to use the tools
that exist I’ve taught how to use
Sparrow wallet on this channel and that
was uh not surprisingly one way of
accessing Samurai whirpool we’re going
to have to come up with a different
method now but learn to use the tools
that exist learn utxo management learn
how Bitcoin works at a deep level so you
can use it in a private Manner and
protect your family now a lot of people
on Twitter saying does this mean uh you
should store your wealth in Bitcoin and
then use Monero for spending for
spending privacy I’d say definitely not
because swapping back and forth between
Monero and Bitcoin can leak privacy in
itself as Monero Advocates themselves
admit if you’re swapping Bitcoin for
Monero frequently it could leak some
information Monero is unfortunately not
the solution to this Monero suffers from
not having a circular economy and Monero
also suffers from the fact that no one
wants to huddle it we can see Monero
still down even after news like this
this is the chart of Monero versus
Bitcoin so this is one problem this is
why people want to huddle Bitcoin
instead of Monero because Monero is
proven itself to be a very poor store of
value for the past few years so Bitcoin
is what we have Bitcoin is the future
and hopefully this will drive uh the
development of more privacy tools going
forward and more awareness of these
issues as well as perhaps some more
humility on Twitter and YouTube as well
if you enjoyed this video be sure to hit
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below thanks all for watching and I’ll
see you in the next video

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In this video, I discuss the arrest of the Samourai Wallet founders, and what it means for privacy and Bitcoin.

Not investment advice! Consult a financial advisor.

Founders And CEO Of Cryptocurrency Mixing Service Arrested:
https://www.justice.gov/usao-sdny/pr/founders-and-ceo-cryptocurrency-mixing-service-arrested-and-charged-money-laundering

JPMorgan and Deutsche Bank Named in Money Laundering Report:
https://www.thestreet.com/investing/jpmorgan-jpm-deutsche-bank-db-money-laundering-report

Pentagon fails audit for sixth year in a row:
https://www.reuters.com/world/us/pentagon-fails-audit-sixth-year-row-2023-11-16/

Samourai Wallet poking the bear on Twitter:

Welcome new Russian oligarch Samourai Wallet users https://t.co/WBhB6J89SR

— Samourai Wallet (@SamouraiWallet) June 30, 2022

A Cypherpunk’s Manifesto:
https://www.activism.net/cypherpunk/manifesto.html

Swapping Bitcoin for Monero hurts privacy:
https://decrypt.co/214367/did-law-enforcement-crack-privacy-coin-monero-its-complicated

Why Monero is a hot potato:

I am not being paid or otherwise compensated by any company or cryptocurrency project that I mention in my videos. My opinion is not for sale. Please do not contact me with any affiliate or advertising deals.

#Bitcoin
#crypto

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