Just curious, say someone hides a lot of illicit wealth (money obtained from doing illegal things) in bitcoin. How would any government recapture the wealth?
They usually get some, but not all of it, even if they're really angry at you. Art, jewlery, other stores of wealth that can be stored in a few rented spaces all over the country, paid for in cash a few years in advance. Basically, convert money to hard assets, and keep enough portable that you could still survive even if they got it all. Assume that they're watching even after they "got everything". The next step is to have money in other people's names. For example, you may be able to get the widower to lend you her name if you pay for her apartment, and you keep her name clean. The government is full of people, even if they are passionate about following the law. There are limits to the expenditure their bosses will let them incur to find every last dollar. A good example of the government not doing anything is Madoff. It wasn't the government who got the bulk of the ponzi money back.
The problem with illicit wealth isn't hiding it. It's paradoxically figuring out a way to pay taxes on it. If you have wealth and don't spend it, then what's the point? If you spend it, then your spending is obvious. If you're going to do something illegal the risk adjusted return demands that you go big with it (the punishment doesn't scale with the magnitude of the crime generally and tops out at some point with life in prison). So you're left with a couple problems. First, normal folks don't buy a house or a jet or even a car or vacation using bitcoin, heck you don't even pay rent on an expensive house or take a flight paying with bitcoin (or cash for that matter) without someone thinking its suspicious. So you need to put a large amount of money in a bank. Which triggers suspicious activity reports by the bank. Which leads to tax evasion charges because you've got all this money and you never paid taxes on it. Or you can start a laundromat chain that makes several million a year you pay taxes on, they call that money laundering. Also a few AML measures meant to catch that. Alternately you can be an illicit billionaire living in a studio apartment in Topeka driving a Camry always looking over your shoulder and trying to find someone who will give you something real for your bitcoin without a record. Just doesn't seem worth the effort to me, either way.
I agree. But what if the goal is not to live in the US, but to simply live in a country that has no extradition treaty with the US (admittedly, most of them are sh*t holes) but the United Arab Emirates might be tolerable for someone with a lot of money. So say the US realizes that some hacker stole millions in wealth in a ransomware attack (similar to the Wannacry attack from NK a few years ago) and that person is living in the UAE or Russia. Assume that the US also knows which bitcoins the criminal holds (assuming bitcoins are traceable with the block-chain as you explained earlier...I'm not really sure how that works). How would they get the stolen money back?
Unless you can get some notoriety like Snowden or Assange I'd guess Russia would want you to pay tax on that income as well. And in most countries you pay a VAT (UAE I think has both income tax and VAT) so again if you put the money to any use you'd end up paying tax. As an academic exercise it's interesting in the "could you get away with it" vein, in real life if you're smart enough to pull that off it's not really that difficult to get to the mid 7 figures legitimately as an entrepreneur so it's kind of pointless unless you want to do the burn out on hookers and blow and die in a Ferrari crash thing...but then you said living in Russia or UAE so....
Haha...as appealing as it is to fantasize about hookers, blow, and Ferrari crashes, I was more curious about whether or not bitcoins / altcoins can be retrieved / forcefully taken back. I guess I could have been more direct with my question rather than unnecessarily describe a made-up scenario about why someone might want to do it to protect and/or hide stolen gains.
By the nature of a block chain it's not possible to "forcibly" take them back per se. Of course the person who possesses them can always be coerced or ordered to disgorge them, but if they refuse they can't be unilaterally repossessed, if that is the question. Think of it like a criminal who hides the gold bars he stole somewhere. If you can find them or force him to tell you where they are you can get them back, but no amount of court ordering will make them appear absent that.
Makes sense. That's what I thought too. Recently there was someone who died and decided to take some bitcoins with him: http://www.wlox.com/2019/02/05/mill...hange-suddenly-dies-taking-passkeys-with-him/