Ask SN: Lightning Network to anonymize KYC Bitcoin.
386 sats \ 15 comments \ @x 26 Aug 2022 bitcoin
What are your thoughts on anonymizing bitcoins that one has purchased KYC exchanges.
Would it be possible/reasonable to go that way:
Bitcoin on KYC exchange - put it on Lightning network - Lightning network transaction - Lightning back to main chain - send to hardware wallet.
Would love to hear your thoughts.
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291 sats \ 3 replies \ @deleted231216 26 Aug 2022
Exchanges save permanent purchase records with the amount, date and customer's full name, photo, home address and ID scan, and they disclose these records to the state and corporations, without the customer's knowledge or permission. If you have KYC Bitcoin, the best option is to sell the same amount back to the same exchange to generate a sale record (so that the exchange and the state may assume that you don't own Bitcoin anymore).
Then buy KYC-free Bitcoin with a peer-to-peer exchange, Bitcoin ATM or Azteco voucher: https://anarkiocrypto.medium.com/how-to-buy-earn-and-spend-kyc-free-bitcoin-and-monero-without-id-or-a-bank-account-496ff20986ff
For forward privacy, you can mix Bitcoin via Whirlpool (Samourai Wallet, Sparrow Wallet) or swap Bitcoin -> Monero -> Bitcoin (use 2 different accountless exchanges and make multiple withdrawal transactions in order to avoid correlation).
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180 sats \ 2 replies \ @purpurato 26 Aug 2022
There might be a proof that you bought them, but there is no way to prove that you still own them, there's always the proverbial boat accident.
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130 sats \ 1 reply \ @super_testnet 26 Aug 2022
I doubt the boating accident defense would hold up in court. If they prove you bought bitcoin, you'd need to convince them you lost it, the burden would be on you at that point.
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0 sats \ 0 replies \ @glix 27 Aug 2022
Or you can tell them that you spent it on a trip to El Salvador. What? having some fun is illegal now?
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165 sats \ 1 reply \ @dolu 26 Aug 2022
You should use a submarine swap service like https://boltz.exchange to exchange your KYC on chain bitcoin to LN bitcoin. Then you can do whatever you want with your LN btc. There is also https://fixedfloat.com/ which is centralized, but it's a good alternative
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120 sats \ 0 replies \ @kilianbuhn 26 Aug 2022
boltz.exchange is really cool.
It's essentially like setting up a node, getting an inbound channel and closing the channel again. In fast.
Hopefully one day this will be a niche method because there is no reason to leave onchain ever ever. 😁
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110 sats \ 0 replies \ @BeardedSaintRef 26 Aug 2022
What are you trying to accomplish? Complete anonymity? Are you attempting to wash your name from a kyc buy on an exchange? Either way, as was spoken in another reply, the exchange had the purchase transaction and they will report your purchase which your still responsible for tax wise etc…am I off here?
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117 sats \ 1 reply \ @cryptocoin 26 Aug 2022
Depends on what you are trying to accomplish, but simply obscuring the history may not be enough.
See the suggestions from this thread.
From BlockFi to no KYC -2M sat bounty #12106
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25 sats \ 0 replies \ @x OP 26 Aug 2022
Okay, will check it out.
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20 sats \ 1 reply \ @NetWt1oz 26 Aug 2022
Yep. https://www.suresats.com/post/enhance-privacy-to-kyc-d-bitcoin-with-mobile-wallet-submarine-swaps
In my experience, the cheapest option for this is currently Muun.
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1 sat \ 0 replies \ @x OP 26 Aug 2022
Thanks!
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0 sats \ 0 replies \ @Krv 7 Dec 2023
Lots of great ideas on this here: #307880
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0 sats \ 0 replies \ @tech5 26 Aug 2022
To go an extra step, you could cycle through 2-3 different lightning addresses/wallets before going back on-chain
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0 sats \ 1 reply \ @Krv 7 Dec 2023 freebie
One strategy I've thought about:
  • Run a Virtual Machine with some version of Linux.
  • Install tor and/or tor browser on it.
  • Set up and run a vpn on it.
  • Install a couple of wallets that support Liquid and tor. Run them over tor.
  • Use Boltz exchange or SideSwap (peg-in / peg-out tool), to get Liquid-BTC into one of the Liquid wallets.
  • Use Boltz or SideSwap to get funds into a Lightning wallet. - Send to another Lightning.
  • Use Boltz to get the lightning funds back into BTC.
  • Send to your Hodl wallet / cold storage.
For the lightning part, perhaps have a pair of Lightning nodes and send the funds between them. Both running over tor and/or vpn. Mobile lightning probably works, too, but I don't totally trust smartphones.
There are several variations possible, and maybe over-kill, but I like peace of mind.