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A few weeks ago, $3.6 billion in bitcoin was seized from a Manhattan couple who were arrested and charged with money laundering in connection with a 2016 hack on the Hong Kong cryptocurrency exchange Bitfinex. It was the largest financial seizure in the Justice Department’s history.
Law enforcement went to great lengths to trace the illicit funds, including tracking the stolen bitcoin through a complicated web of transactions spanning multiple countries. It took six years, but authorities eventually caught up.
From the beginning, bitcoin and other cryptocurrencies have been associated with anonymity and privacy. The notion of invisibility with the technology was touted in the original 2008 white paper introducing blockchain technology via bitcoin.
Because cryptocurrency allows for direct peer-to-peer transactions made via the internet, the idea is that only two parties are involved in the activity. No banks, governments or intermediaries are necessary. But considering the $3.6 billion bitcoin bust, as well as other recent examples, how anonymous are crypto transactions really?
Bitcoin has now caught on with mainstream investors, and this principle of private transactions has become much more precarious. If this financial activity can be traced, then cryptocurrency like bitcoin is more pseudonymous than anonymous.
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