[nybble41]

"Forcing an innocent to hand over bitcoins they had no clue they were tainted" shouldn't wreck trust in cryptocurrencies, but rather in the organization unjustly harming those innocents—i.e. the government. If anything the fact that they had to track down each individual recipient and force them to transfer the funds, rather than simply pressuring some bank or other intermediary, ought to increase trust in cryptocurrencies.

[lolc]

The "but I didn't know" excuse of innocence is not universal. In some cases one is required to do due diligence or risk catching some of the guilt in one's trades. Whether Bitcoin traders should be held responsible for the provenance of their coins is an interesting question. It really comes down to whether we want to protect Bitcoin as a payment system. And few people even care so it's not looking good.

[nybble41]

Due diligence is not sufficient in the interesting cases. If exchanges instituted a blacklist of known ransom payments, for example, ransomware authors would just wait until the coins have been changed into some other untraceable form before releasing their hostages. Blacklisting the transaction in time to do any good would be the same as not paying the ransom. Reporting the address after the fact can only harm innocents several stages removed from the ransomers who could not possibly have known that the transaction was tainted.

The only reasonable solution is to track down the actual ransomers and make them pay for the damage they caused. Dragging other parties into this can only make things worse.

[lolc]

Making the receiving parties intent in covering losses can help a lot during discovery. Dragging "innocents" into it might just get us to a system that makes it hard for extortionists. And that system might not look like the Bitcoin we know.

You can argue that we should suffer the extortionists for other benefits we get out of Bitcoin. I'm not convinced at this point.

[nybble41]

> Dragging "innocents" into it might just get us to a system that makes it hard for extortionists.

If you're willing to harm innocents for the sake of your cause—even if the goal is to make things harder for extortionists—then you're no better than those you're fighting.

[lolc]

I see this as an example where the ends can justify the means. The maximum loss those people could incur would be the sums exchanged. If those are restored to the damaged party I don't see how there's a good reason to protect the people who traded. They can still demand restoration from their partners after all. If they traded with crooks, they might get nothing back. Such is life.

To say this is the moral equivalence of extortion is a long shot.