chainanalytic – Can stolen or tainted coins be laundered with mining fees?

Can stolen or contaminated coins be laundered through mining fees?

They can, and they certainly will.

Does the chain analysis technology consider the fee portion of the block reward to be tainted funds?

In general, you should not do so because miner pools are protected by the good faith doctrine unless proven otherwise.

To prove a bona fide violation, you must prove that only the miner pool administrator was aware of the transaction.

If the bad faith of miner pool managers is proven, it will be the first big win and regulations will be enacted, and if they do so again, government enforcement will be stronger.

For example, if funds known to be stolen are moved to a specific block, the fees paid by the sender will eventually “pollute” the block reward. When it comes to chain analysis, I’d like to know how much of this pollution actually counts.

None unless malice is proven.

Will the largest exchanges accept this coin as deposit?

yes.

If so, thieves could collude with miners to launder the funds. For example, you make the transfer yourself paying a 10% fee. Don’t broadcast the tx, just pass it on to colluding miners who mine it and later return part of the fee to the thief in the block reward.

No, a higher fee is the surest suspicion of malice. Eventually, blockchain police will build enough evidence to prove malice.

Otherwise, a thief can pollute the rewards of every block by paying enough fees for the next block and only sending a minimal amount himself. Then, no block rewards can be deposited on highly regulated exchanges. If the thief’s UTXO is well known, it seems like miners can censor that tx, but it’s still likely an attack vector.

No, there is no need to censor it. When the tainted fees are low, the taintedness of the rewards is also very low because most fees are legal.

What I don’t see now is a future where countries are hacking into each other’s reserves and using their own mining equipment to launder coins stolen by their enemies, long after anti-mining laundering regulations are enacted in internal countries. Multipolar world state consensus. Until the straw breaks the camel’s back. I think you have discovered the false cause of World War III.