Quote from: 88mph on Today at 03:26:54 PM

Hi all,

Sorry for the confusing title. I'll try to explain:

What if I buy some KYC Bitcoin through an exchange and then move it to a wallet. And then, let's say I either give some of that Bitcoin to someone else (maybe a charity or a friend), or use it to buy something (maybe a used car off Craigslist). At this point, from my perspective, I no longer own that Bitcoin (i.e. it is "beyond my ownership"). But now what if the person who now "owns" that Bitcoin uses it for some illegal purpose? I would have no knowledge of that transaction, but my KYC has "propagated" to the new owner. If that transaction were to be traced, assuming it hadn't been linked with KYC transactions with the new owner's identity, I would still be the last owner of the transaction from a chain analysis perspective, right? This is not something I've heard discussed before (but admittedly I'm new hear). Seems like a risk.

Thoughts?

Thanks.

Chain analysis is obviously not an exact science. They are using their best guesses to track bitcoins. If you don't do anything illegal you don't have to worry. Chain analysis can never prove you did something once you have bitcoin from a wallet it knows you own to a wallet it doesn't know you own. So if you send bitcoin to someone else chain analysis at best cannot prove you still have it, or otherwise if it can connect that other wallet to someone else then it can prove you don't have that bitcoin anymore. So the only way chain analysis can prove you spent bitcoin on something illegal is if in fact you did spend bitcoin on something illegal like doing that illegal spending from a wallet that they know you own through KYC.

Your worry is a bit like worrying that you'll be in legal trouble if you own a store and a criminal who stole money comes into your store and buys something and you are worried about facilitating the use of illegal money. You did nothing wrong, you are not the criminal, so you're fine.

Also realize that the number of people who do illegal things with bitcoin is very small, so not only can chain analysis not prove you did something illegal that you didn't do, its also extremely unliikely you're gonna be sending money to someone who then goes and does something illegal with that money.

No need to worry yourself over needless things. If you don't worry about this sort of thing with fiat you shouldn't worry about this sort of thing with bitcoin.