People that feel safe using Bitcoin or other cryptocurrencies on the deep web to commit crimes better take warning:
If ‘Big Brother’ hasn’t caught up to you yet, he might not be too far behind.
Recent revelations, such as the confirmation of the existence of a Bitcoin Task Force in the Department of Homeland Security, are quickly dispelling the myth that cryptocurrencies are a way to stay anonymous from the watchful eye of law enforcement. It was only a few years ago that the Wall Street Journal reported how Bitcoin posed a challenge for law enforcement. Since then, the knowledge that law enforcement agencies have on Bitcoin technologies has increased dramatically. Users of the cryptocurrencies are not completely anonymous as once believed.
Much of the technology that law enforcement uses to track criminal is being developed by private blockchain firms such as Elliptic. Elliptic, which was founded in 2013, was recently able to raise $5 million dollars from several private investment groups that believe that the demand for cryptocurrency intelligence will continue to grow. Elliptic has also developed a partnership with the non-profit organization Internet Watch Foundation to find ways to prevent the use of Bitcoin to make transactions related to child pornography.
Child exploitation isn’t the only crime that people have used cryptocurrencies to commit. The US government has successfully tried and prosecuted multiple crimes that have been carried out with the use of Bitcoin. The criminal activity that has been prosecuted ranges from white collar crimes, such as securities fraud and Ponzi schemes, to money laundering and selling narcotics.
The Bitcoin prosecution with the highest profile was the US vs. Ross Ulbricht. Ulbricht, who used the Silk Road black market to sell over $1 billion of narcotics, received a life sentence for his illegal activities. Ulbricht’s arrest and prosecution prove the vulnerability of criminals using cryptocurrencies to commit their crimes.
Even before the existence of the Department of Homeland Security’s Bitcoin Task Force was confirmed, people were becoming aware that their transactions using cryptocurrencies were being monitored. In May 2015, a member of the Reddit subgroup DarkNetMarkets posted online proof that a transaction made using the Bitcoin wallet hosting service Coinbase had been reported to authorities. Coinbase responded to the revelation by confirming that the company was required by law to monitor and report certain activities in compliance with the Bank Secrecy Act.
As the shroud of anonymity for Bitcoin users is being lifted, many users of cryptocurrencies are expressing concerns over the privacy of their transactions. In spite of this concern, the vast majority of people using Bitcoin or other cryptocurrencies in a law-abiding way have nothing to worry about.
Regardless of the advances made in tracking illegal activities conducted through the use of Bitcoin and other cryptocurrencies, the game between law enforcement and criminals is far from over. As John Bohannon of Science Magazine recently pointed out, there are several new cryptocurrency systems being developed to meet the demand for user privacy. The development of these new systems means that the chase between the bad guys using cryptocurrencies for illegal activities and law enforcement will continue to become more sophisticated with time.
