Welcome to the Dark Side
We are getting some feedback on our (Dark Side) post of the other day. Most of it’s great, however, there are some who insist on getting caught up in semantics. We were clear that to provide all the details of what we were certain we had discovered over the past two months would have taken 100 pages, not including all the technical specifications.
It still amazes me how many people cannot, or will not grasp the magnitude of uncomfortable truths and simply choose to hide behind specious arguments. Yes, bad actors can move money in paper wallets. Yes, the bad guys don’t need to embed coins. Yes, Yes, Yes. We understand all of that. The point was, crypto is being used by some very bad people, both within and without our own governments. Prices are being manipulated by some of the larger miners/nodes. Famous people are involved. Infamous people are involved. They are not all working together. We suspect that several US agencies are neck deep in crypto and it is possible that none are aware of the other’s activities. Some may not even be up to no good, yet others are.
Tying it to the Real World
If you’ve been paying attention to the goings-on in Washington DC for the past year, and to people like Ed Snowden for the past 5, you should be aware of just how insecure your communications are. You should also know by now that our government listens to every phone conversation on this planet. Every one. Really. Many of you think you are safe using one of today’s encryption programs on your phone. You are not. Our government listens to everyone in efforts to keep us safe. I won’t go into the other plots and things the conspiracy nuts think are happening. They probably are. Who cares? What’s important is that you think about all the times you’ve heard of how an intercepted call has lead to a drone strike that killed a terrorist leader or averted a major attack.
The point we were trying to make is until now we have been kept safe, to a very large extent, by our government’s secret intercept programs. With embedding of both currency and data (plots and plans) in tokens/crypto, terrorists now have absolutely secure methods of transmitting information, organizing terrorist attacks, moving money and communicating safety in real time. And, if the crypto is not secure enough, the data being embedded is also encrypted with destruction codes in some cases. No? So what should we do now, call in a drone strike on every person in the Muslim world sending crypto from a phone? This is why our own government is now involved in verifying transactions. They are building huge computer farms to capture crypto to keep us safe. Unfortunately, Geo-Fencing and private blockchains may well render all or current intercept capabilities moot. OK, so maybe some of our government’s uses are more nefarious. Maybe. Again, who cares? I promise all of you with accounts on Asian exchanges, or within China, that whatever info you have there, including the access to your funds is being shared with the Peking Regime to your detriment.
Who is, and Who isn't
And no we were not suggesting any Geo-Fencing ICO is involved. The point was if a really smart entrepreneur in India figured out geo fencing tech in 2017, what’s the likelihood that terrorists, N. Korea or some other super brain trust group out of silicon valley didn’t figure it out 5 years ago? Pretty damned high.
As to the point about my account being altered by the exchange, I suppose I could have spelled it out. You all recall the histrionics in late December as the prospect of real tax liability and the imminent arrival of the IRS targeting crypto was the main subject of most Crypto news. If you look at the current news you are seeing class action suits being brought by exchange clients whose accounts were frozen just like mine in late December. Let’s connect the dots. The exchanges are scrubbing and arbitraging small percentages of most transactions. We found some rules we think they follow to identify candidate tokens. They’ve been doing it for years. They are therefore holding, or have held huge amounts of crypto worth billions of dollars that they have been selling and moving around the world for who knows how long. Do you think they have been paying taxes on any of this ill-earned booty? NO!
Most likely they owe the US government tens, if not hundreds of billions in taxes on undeclared gains. And it is very likely that when they did move that money it was linked to your accounts. Yep. Perhaps the reason so many accounts were mysteriously locked at the end of the year was to allow them time to balance the ledgers. In just about every exchange there are two ledgers, one that you see (your account dashboard) and one (the general ledger) the exchange and authorities might see. Imagine that Exchange “A” really has 300,000 BTC it has conspired to steal or create, in addition to the millions legitimately owned by account holders. It has no cost basis for any of it its siphoned crypto. Therefore at best it’s all taxable as a gain at 20%, but most likely, as its part of an ongoing business that buys and sells crypto, it represents income, taxable at 40%. And if the Exchanges are C corps then the corp tax was also 40% until 2018. This means tens of billions in tax is owed to just the US government.
All those coins can be perfectly hidden in their general ledger customer accounts. They could not easily hide a single account on their ledger with 10-billion dollars in it. In case you don’t grasp the concept of a red flag, 10-billion would qualify. Clearly, not all the people working at an exchange would be aware of this activity. Logic dictates there would not be red flags anywhere for anyone to see. The exchanges most likely have billions in elicit ETH, BTC, LTC, and dozens of other cryptos, all invisibly held - where? Within your accounts, that’s where. What we discovered was that exchanges could park those tokens in a client account without you seeing them. It’s simple code. Just like you can hide a column of data on an Excel spreadsheet. Anyone looking at the ledger from the exchange side would see that every coin was spoken for and belonged to a client. From your side, you only see what you expect to be there, your coin. The problem was they have to leave the back door open for the report programming.
If anyone ran a global transaction report from the exchange side, it would show all the coins belonged to customers. It would show fictitious account value balances in every account, while the balances you see on your dashboard would be correct. The only way they could be caught is if someone actually looked into every one of millions of accounts and compared the Exchange general ledger report to what the clients are seeing on their dashboard. Never going to happen. You can not see it, but that balance (debit/credit) part of the accounting programming does and adds it to your account. You never know it’s there and you never know when it’s moved out. What tipped us was while they were trying to rid themselves of all of this evidence and balance their books for year end, I ran and exported a tax report to a tax company that told me I owed the Federal Government $580,000 in cap gains I knew I did not owe.
Some of these (never say never or always) exchanges are running vast quasi-criminal laundering and tax evasion scams. They are burying billions of questionable assets in their clients’ accounts so the money does not show up homeless in audits or on any reports. We just happened to catch them at a time when they were fixing their mess. Remember getting the messages about no access to your accounts due to heavy traffic in late December on most exchanges? What traffic? There was nothing extraordinary happening at that time. There was chaos, but that was from people trying to access their accounts to sell off. The exchanges were taking the opportunity or creating the opportunity to cook the books. What they did to me was to shut down my account as it was receiving 49.89BTC and by the time I regained access, there was no coin visible. Who knows how much crypto they’d actually hidden in my account? They mixed my coin with their obfuscation program (mixer). This made the coin invisible to me while also visible to my account back end. They thought they had 49.89 illicit coins invisibly parked there and the rest is, as they say - hysterical....or is that “history”?
In case you're wondering - I’m still trying to get my money. If anyone knows an attorney who actually understands this stuff, please have them contact us. Not a single lawyer we spoke to would take on the case. This is a huge, multi-billion dollar problem - some lawyer is going to make a LOT of money.
Posted from my blog with SteemPress : https://www.cryptocriterion.com/dark-side-follow-up-open-your-eyes/