The average Bitcoin user may get their funds seized, or accounts blocked, should they ever receive tainted Bitcoin.
Here's a thread 🧵 on what tainted Bitcoin is so that you can be more aware in case you ever get caught in the mix. BTC BTC
Bitcoin being censorship-resistant and permissionless has always worried governments. To prevent it from having more users, exaggerated narratives about illegal activity done using BTC are always pushed and how tainted Bitcoin is being flagged by authorities around the globe
could result in criminal charges to those that own any of those tainted Bitcoin.
As you're probably aware, Bitcoin is fungible i.e each unit of BTC is interchangeable with one another meaning that it is indistinguishable. Tainted Bitcoin is the network's metadata overlay, overseen by governments or blockchain forensics firms like @elliptic and @chainalysis
Tainted Bitcoin is basically branding certain fungible coins out of the 21 million with the 'illicit' or 'dirty' tag indefinitely in spite of it theoretically still being able to move it to different wallets and changing hands on the blockchain.
The problem with enforcing these blacklisted coins is that the average person (who is most likely innocent) who isn't aware about this may be subject to criminal charges or get their funds frozen or accounts locked
Here are some significant metrics that can signal a UTXO taint
🔺Stolen funds or any hacks 🔺Technology that increases anonymity like mixing services or coinjoins
🔺 Sender or receiver profiles: Unusual behaviour might be a sign of illegal activities.
🔺Transactions from countries with weak regulations for cryptocurrencies since hackers can easily exploit 🔺Irregular transaction patterns 🔺Transaction size if the quantity and frequency dont make any sense from a commercial perspective 🔺Income associated with illegal activity
If you own any tainted bitcoin on-chain, you can still transact freely due to Bitcoin's characteristics however you need to be aware of the metadata attached to the coins, the possible trail you're leaving and priotize using the best privacy methods
Businesses and service providers that are regulated are required to abide by anti-money laundering laws and regulations. They make sincere attempts to minimize money laundering. They must put in a sincere effort, otherwise, these institutions risk legal action.
Remember that any BTC on-chain is never discriminated due to its history. Only governments that commission tracking and tagging programs and the blockchain forensics companies they work with see taint.
If you liked this tweet please like, retweet and follow us @JetkingLtd
If you'd like to get in on the discussion you can join our Crypto focused Telegram group:
IndiaWantsCryptothis twitter thread.