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In-depth explanation and consequences of the OFAC compliant Bitcoin block mined on Thursday

In-depth explanation and consequences of the OFAC compliant Bitcoin block mined on Thursday



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  1. I watched the first 15 minutes of the video (going to bed soon) to give some constructive feedback.

    First, it takes you a while to get to what OFAC means (~5 min mark) but until then you’re using it quite a few times. And it’s not until ~12 min that you explain what it is *with regards to Bitcoin*, i.e. addresses versus entities (as you initially say). I’d storyboard the topic to make sure to stay on track and hit points in order.

    Second, you mention at 11:20 giving a private key to someone, implying an address I guess isn’t any one person’s necessarily. In practice this is quite unlikely, and in law I would not be surprised if that does you no good in court, making you an accomplice at minimum. It’s a weak argument, and those are best left unused because they provide strawman vectors to opponents.

    You’re suggesting in 11:40 that the methodology used for determining bad addresses is simply because someone sent “tainted” money to it. That method was explored a decade ago and chainalysis has moved on well beyond that point. It is a great deal more complicated these days. You later mention CO heuristics but still lump all chainalysis tech as using the same very old binary taint methods and treating anything that was coinjoined as tainted.

    Also at 11:40 you mention just that Mara’s coinbase address is tainted. Two things. One, the block had 2 effects, and making Mara’s coinbase address “clean” was just one. The other was to essentially prune all txns that were included from any complex graph of taint, making them clean. A launder. Second, it is quite easy for Mara to live with that tainted coinbase address. Simply burn – send to an unspendable or agreed-upon address with the counterparty, in this case the government – the amount that is being added by 3rd parties to that address. They don’t even *have* to do that, if they are running a tab with the US gov they can just sell them the 6.3 BTC and if the government ever sees the rest leave the address, they revoke any privileges to Mara.

    Professional chainalysis today (private sector) is developing into big data, web scraping, and massive ML, and has the promise to build a very nice network of avatars, some of whom may be the same person sure. With government, that is where KYC exchange data, IRL criminal confiscations, and more meet to deanonymize some of those avatars. That’s critical – government use of chainalysis is a combination of on-chain and off-chain techniques, and they both feed each other.

    The scary part is so many people still think chainalysis is binary taint or clustering, so dismiss it, and have completely forgotten how 10 years ago Walmart was already **accidentally** figuring out your daughter was pregnant 🙂

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