Quote from: Tweaked on September 26, 2012, 09:21:32 AM

Hi Guruvan,

Would be nice to see the link for this googlegroup ?

The only way to really find out if it is a scam or not is to use the service, which many of us did, Is it not ok to assume that there are good people that create quality services out there ? Should we always instantly think that something is a scam.... it's not within our nature.

It was a very successful con... shame that

Yes the only way to find out if it's a scam it to use the service (or wait for others to do so)

No, it is not ok to assume that the new, anonymous people you're sending your money to are good people. You should presume that they are trying to con you, and allow them to slowly earn your trust. Slowly, because the long con nets the most of your money.

When attempting to verify such a service, you must presume that any and all coins sent are gone, and be pleasantly surprised if they're returned. The more complete the anonymity of the service, the less likely that service can ever build significant trust. There's no telling how long the con is!!

Community trust is not an acceptable measure of the trustworthiness of a service. It's very common in all social networks (online and off) for a con artist to befriend multiple people in the same network, establishing trust relationships quickly among all the new friends based on the newly gained trust of the other new friends. With this method, one can become very popular, well known, and trusted in a short time in a tight social group.
Obviously this quickly leads to amplified returns on such a scam as this appears to be. (works better with pseudonomous people rather than anonymous people...pirate got a lot more out of the people than torwallet....he's a friendly guy)

When you have no financial incentive for the service to stay honest, and they're anonymous, you have no way other than limiting your exposure to limit your risk. You have no way to inflict a penalty, so there is exactly zero consequence to relieving you of funds. Your funds should, at most, go in, and right out.

But, there's more....Say you do use a somewhat less anonymous, well known anonymous mixing wallet, like Silk Road. Well....they provide a service which is illegal in most jurisdictions that I know. So, if you move coin from your Mtgox account (with your real name on it) into SR, and SR is discovered, you now have exposed yourself to risk of law enforcement contact (at least). Or, maybe, the people who run SR got tipped off they were about to be discovered, and had to close up shop unexpectedly, and for any number of reasons...say...destruction of data in a high speed chase w/ crash ending...your btc is gone. With any anonymous service, it's impossible to truly evaluate the operation's overall security posture - if the operation is illegal in any jurisdiction, that makes your risk analysis much more complex (especially if you're not an experienced criminal!) So, still, you only move the coins you really want mixed, and move them out asap.

Yeaah. Even if they're super nice guys - there's reasons not to trust anonymous services that collect your funds. Even with economic incentive, there may be significant risks. The less obvious the risks are, the less you can evaluate them, the more that risk goes up.

You must not assume that people asking for your money are the good people that they might be. And the second you see red flags in their behavior, you and your BTC must flee!

Finally, you really have to ask yourself: "Am I even achieving what I thought I was by mixing my coins, and did I even need to do that in the first place?"

Most of the time, most people do not have the experience with fiat money systems or bitcoin to successfully obfuscate the source of funds. While the mixing service may work effectively enough, the tracks on either side of the mixing service are usually going to expose you. This means that all that's really been achieved is exposing the mixing service's addresses.