The indictment claims that Bitcoin Fog engaged in money laundering because they knowingly processed transactions that:
"knowingly conduct ... financial transactions ... involving property represented to be the proceeds of specified unlawful activity, ..., knowing and intending the the transaction was disguised in whole and in part to conceal and disguise the nature, location, source, ownership, and control of property believed to be the proceeds of specified unlawful activity, and intended to promote the carrying on of the specified unlawful activity."
> I don't see how you could argue the service itself was unless they somehow knew the purpose behind every transaction occurring on their platform.
The indictment states that the US government did an undercover operation in 2019 in which Bitcoin Fog was told that a transaction was from illegal activities and Bitcoin Fog accepted it anyways. If the person sending you Bitcoin says "I did a crime to get this", it is hard to claim you didn't know it was from criminal activity.
Please note that in that case with undercover transactions, there is no evidence that the message sent by an agent was read by the administrator, because the agent didn't receive any reply. It is possible that the mixer was fully automated and performed the exchange before the administrator had a chance to read the message and stop the transaction.
This was the first thing I thought of. Why the heck would the admins read random notes sent by users? Obviously there is the potential for abuse for this kind of service, so from a liability perspective you'd be better of deliberately ignoring all messages.
Or rather, even if the admins were knowingly facilitating crime, from a liability perspective they would be better off reporting/rejecting any users that say they're committing a crime and only do business with criminals smart enough to wink wink nudge nudge.
I can only think of two scenarios where someone would tell a mixer the money is dirty:
1. They are law enforcement
2. They have already been caught by law enforcement and are being used as bait, either knowingly or not
Or, and this is the most likely in my opinion, but it is just a guess. The undercover said they had a lot of illegally sourced coins to mix, asked the Mixer admin to help them mix such a large amount and offered them an additional reward in exchange. That said, we should not jump to any conclusions until evidence is presented. The government could be fronting a strong case in the indictment and then it turns out to be much weaker when presented.
Using a bitcoin mixer is money laundering in the same sense that turning off the public feed on Venmo is money laundering.
Yes, it potentially makes it harder for the authorities to track your activity, but it's also the only way to stop any random person in the entire world from seeing your transaction. Privacy is not inherently money laundering.
I agree that privacy is not inherently money laundering deep in my bones. I spent three years of my life attempting to improve Bitcoin mixers.
The issue is that if you run a mixer and someone says "please launder my drug money" you reject that person's coins unless you like Federal prison. It is like if you run a gun store and someone comes in and asks for a gun "to rob a bank", that person is a Federal agent and if you sell them a gun an indictment is forthcoming.
People are doing life sentences for giving their friend a ride when their "friend" decided to hold up a liquor store.
So hypothetically, if they ask you with a checkbox whether your funds are legitimate, and only process transactions that say they are, would that absolve them of liability?
I can't imagine anybody reads private messages on such a service or could be expected to, with any significant volume.
"knowingly conduct ... financial transactions ... involving property represented to be the proceeds of specified unlawful activity, ..., knowing and intending the the transaction was disguised in whole and in part to conceal and disguise the nature, location, source, ownership, and control of property believed to be the proceeds of specified unlawful activity, and intended to promote the carrying on of the specified unlawful activity."
> I don't see how you could argue the service itself was unless they somehow knew the purpose behind every transaction occurring on their platform.
The indictment states that the US government did an undercover operation in 2019 in which Bitcoin Fog was told that a transaction was from illegal activities and Bitcoin Fog accepted it anyways. If the person sending you Bitcoin says "I did a crime to get this", it is hard to claim you didn't know it was from criminal activity.