Darknetlive

Coinbase Explains Why Criminals Should Avoid Coinbase

Coinbase explained why people should avoid using a centralized exchange in a blog post about banning Russian addresses.

Every reader of this site is aware of the cryptocurrency exchange Coinbase. Dread users know not to send funds from Coinbase directly to a marketplace. But many first-time users of illicit onion services believe that buying Bitcoin on Coinbase and sending it to a darkweb market is standard practice. Depending on how many people send Coinbase-purchased Bitcoin to a marketplace, this practice might be the norm. It obviously should not be.

A picture of Coinbase BTC > Electrum Wallet Windows > Electrum Wallet Tails > Vendor. Laundering 101.

Coinbase BTC > Electrum Wallet Windows > Electrum Wallet Tails > Vendor. Laundering 101.

Banning Russian Addresses

Coinbase recently published a blog post about enforcing sanctions on users in various countries. Unlike Uphold, Coinbase claims to be banning sanctioned individuals instead of an entire nation. Coinbase CEO Brian Armstrong has opposed calls from outraged Twitter users to restrict the accounts of all Russian Coinbase users. People should not expect Coinbase or other legitimate companies operating in the United States to ignore sanctions. Like it or not, that is just the reality of the situation. Such an expectation is akin to expecting an email service to tell law enforcement “no” when the feds show up with a subpoena for a user’s email address. But these companies are under no legal obligation to ban an entire country. Companies taking action against their Russian customers are just signaling and allowing an emotional mob to dictate their decisions.

A picture of His opposition to the banning of Russians is pretty weak. He will not be holding the line.

His opposition to the banning of Russians is pretty weak. He will not be holding the line.

The blog post blurred the lines between accounts held by regular Russian users and those used by sanctioned Russian oligarchs.

Today, Coinbase blocks over 25,000 addresses related to Russian individuals or entities we believe to be engaging in illicit activity, many of which we have identified through our own proactive investigations.

My personal opinion is that not all 25,000 addresses are associated with sanctioned Russians. Coinbase claimed to have “identified” most of these addresses before Russia invaded the Ukraine. “Once we identified these addresses, we shared them with the government to further support sanctions enforcement,” Paul Grewal, Coinbase Chief Legal Officer, wrote. Even Coinbase seems to be admitting that the blocked addresses belong to users who are not sanctioned.

Coinbase: Why Not to Use Coinbase

Coinbase, probably in a proactive defense of its existence, explained why digital assets enhanced the ability to detect sanction evasion. The explanations provided in the blog post apply to the illicit use of Coinbase or cryptocurrency in general. A possible exception is Monero (and perhaps other privacy coins).

  • Public. Public blockchains offer unprecedented visibility into the details of transactions, including information about the date and time of each transaction, the type of virtual asset transacted, the amount, the wallet addresses involved, and the unique transaction identifier. Suspicious transaction activity can be traced without needing to gather information from multiple financial institutions. These advantages for investigation and enforcement simply do not exist with cash transactions or transactions across multiple countries.
  • Traceable. When applied to public blockchain data, analytics tools offer law enforcement additional capabilities. In many cases, law enforcement can trace the transaction history of a wallet from the very first transaction, follow transactions in real time, and group transactions according to risk level based on interactions with other wallets. Other techniques can help authorities to follow transactions between chains or through intermediaries. For example, Coinbase’s proactive on-chain analysis identified more than 16,000 addresses possibly associated with Iranian exchanges, many of which had not yet been identified by others. We used this analysis to strengthen our compliance systems and inform law enforcement in order to enhance industry-wide awareness.
  • Permanent. Once recorded on the blockchain, transactions remain immutable. No one (not crypto companies, not governments, not even bad actors) can destroy, alter, or withhold information to evade detection.

There you have it. Why not to use Coinbase in the company’s words.

I am still skeptical about what the rest of their blog post means, though. Coinbase appears to be claiming that the 25,000 blocked addresses of Russian users are not associated with sanctioned individuals. Grewal throws an “or” in-between “Russian individuals” and “entities […] engaged in illicit activity.” Word games? I do not know.


Nobody should do anything illegal anyway. But they certainly should not use Coinbase to do illegal things. I suppose the issues with Coinbase are not relevent to people who are using it for lawful purposes who do not care about linking their identity to their transactions or having their funds arbitrarily frozen. But nobody should store funds in a wallet outside of their control. I think they are the PayPal of the crypto world.

Also, the Secret Service pays Coinbase for blockchain analysis software.

10 Comments
Do you really want to comment here? not rules
0157fadd
4c42b2b0 Tue, Mar 8, 2022

I am interested if there is any exchanges besides Coinbase need to be avoided. I would be thankful for a list of them.

f1b8405f
bd85aaf0 Tue, Mar 8, 2022

locale monero should be avoided also

8cfcdf18
111e0ba0 Tue, Mar 8, 2022

why? almost everyone advocating monero advises to use localmonero

9c0f66c5
a8218f90 Tue, Mar 8, 2022

I’m hoping that Haveno is completed soon. We need a good DEX. :)

3e64ef61
996fc100 Tue, Mar 8, 2022

Local Monero is fine, there are other places to exchange BTC for Monero on the DN. Bitcoin is in no way untraceable, nor was it designed to be, it’s a decentralized currency, not an anonymous one like Monero. If you send small amounts of funds from Coonbase directly to a market, nothing will likely happen, as larger transactions are often still overlooked. Still, sending directly from Coonbase to a market is a dangerous practice that a simple btc mixer can largely mitigate. Keep in mind Coonbase has cooperated with LE for many years. There are exchanges with significantly less scrutiny, perhaps one that doesn’t have to sign up with all the US money transaction laws… or better yet no extradition treaty with the US.

Putin is a drug addicted neo-nazi and if you’d pardon me, I have to go take a big Russian shit and a few shots of Stoli before those exports have been blocked

bffb934e
60f6a720 Wed, Mar 9, 2022

I mean, there are various services available like elude.in, xchang.me, agoradesk, etc. that Russians can access. Thus far I am still seeing Russian nodes appear on my first three Tor nodes. These are DEX with hidden service access. If the user wants it bad enough they will find it.
What may happen is that the people of Russian finally revolt and murder him and his team. Happens there a lot. Hopefully this time the next one who sits on the throne isn’t some meth addicted psycho.
Save Stoli and any Russian imported Vodka, as it may soon become a rare relic and worth more than a mother case of Johnny Walker Blue.
Cheers~

29c50cb6
ad638d00 Wed, Mar 9, 2022

Russian vodka may become like the Cuban cigar

888d162e
32e19370 Thu, Mar 10, 2022

Vodka is literally just ethanol and water. It is all the same

85c70965
cb2329c0 Mon, Mar 14, 2022

Any exchange that doesn’t have Monero available for purchase is a glownigger op.

E.g. Swyftx (Aus) glows harder than Lucifer

e7ee6c03
3d5f20b0 Sat, Mar 19, 2022

You must be pretty fucking stupid to buy crypto on platforms and sending it straight to a marketplace.

There are 3 ways to do it safe;

1 buy crypto with cash, plenty of local dealers

2 send it through a mixer first, then to a random wallet and then purchase it, yeah it will cost you extra but freedom is more important

3 earn crypto by selling stuff and then use that for purchases.

Naturally all from behind a good OPSEC. For me that would be a burner encrypted laptop with all measurements.

New comments are disabled after one month in an attempt to limit spam.