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Comment by ABeeSea | Hacker News Reader

Probably because of all the obvious money laundering.

Check out Paxful. Last time I properly looked at it there was a huge amount of African "vendors" who would trade any giftcard imaginable for BTC. Giftcards being basically anonymous cash, I can't imagine how much criminal activity must be going on there.

The owners also keep going on about saving Africa https://paxful.com/assets/images/about/bwb.jpg?v=1675941877

The difference is that here in the giftcard industry, we want to stop that, because it's how scammers convert grandma's $500 in itunes giftcards into actual money, and that costs our companies money in fraudulent transactions and public goodwill. We've had customer support agents actively talk customers out of buying giftcards for scams.

> The difference is that here in the giftcard industry, we want to stop that,

Do you guys really? I mean "you guys" generally, not you personally.

It doesn't seem that way to me. If the gift card industry really wanted to curb this shit, it would be a simple matter to abolish all high-value denominations of gift card and forbid purchasing more than one a day. If Gran wants to buy a birthday gift for her grandhchild, a single $20 gift card should be more than sufficient to show her love. There is no reason to allow her to buy 10x $500 cards in one day. Only tiny fraction of the population could afford to be doing something like that legitimately, virtually all such sales are people being tricked by scammers, yet the high denomination gift cards still exist despite your industry's supposed care.

Were people making significant transactions through localbitcoins?

Are there people trying to launder $100? Are there people using some online-marketplace if they're trying to launder $1000000 and meet random people to make that kind of transaction?

Don't be naive. LocalMonero / LocalBitcoin is prime way to launder cash for organized crime. A thousand dollar here, a thousand dollar there, then you have converted your money to crypto.

A thousand dollars here and there doesn't get you anywhere. And really, you'd have lots of risk -- if money laundering was the primary application, the police would surely join the fun, and if you're not meeting a cop, there's a good chance you're meeting a robber that knows you'll be arriving with lots of cash.

But the amounts really don't make sense. Organized crime is certainly not running around making $1000 deals all day with different people to somehow launder money by converting it into bitcoin and back ("I found this bitcoin on a sidewalk on the internet and I've exchanged it for cash, so now this cash is legal?").

I have drugs. I want cash.

You have cash. You want drugs.

You go on localbitcoins and trade your cash for bitcoin (fully legal) and then buy drugs from me via darkweb (fully anonymous).

I sell you the drugs on darkweb (fully anonymous) and then offload my bitcoin on localbitcoin for cash (fully legal). This removes a lot of risk for both parties

This is the original business model, but the authorities caught on pretty quickly and implemented all of those pesky KYC/AML requirements.

Not very anonymous unless you're really careful about it and never fail once. The localbitcoins person is linked to everyone they interacted with, and the transactions are public and timestamped. Unless you use a new address every time, your identity can be deduced fairly easily from your other activities.

The probable result is that the police nab the localbitcoins person, then pressure them to explain who they were doing business with, and go from there.

If anything it's worse than buying drugs in a dark alley because there's a permanent record of your activity.

Sure, but that's not money laundering, that's just buying drugs.

Localbitcoin has required KYC for the last 5 years or longer, and apparently does share information with tax authorities.

A thousand dollars here and there is not how these guys launder money. That's not noteworthy at all to authorities. It would put like the whole population under the radar. Authorities start to check things out at the $10k range.

I am aware of some people who would trade a few thousand dollars on local bitcoins, and then, once trust was gained, they would then trade a few million dollars with the same person off localbitcoins. That avoids the fees, and leaves fewer records...

Some trading partners would also have a 10x or 100x multiplier - ie. 10% or 1% of a trade would be done on localbitcoins, and then the remaining 90% or 99% would be done offline later at the same exchange rate. The way the feedback/reputation system worked, you could still ding someones reputation if they didn't follow up with the offline part of the trade.

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