The Law Office of John W. Noonan
925-400-6635 Call For A Free Initial Consultation Se Habla EspaƱol Available 24/7

If bitcoins are traceable, what's the next step in cybercrime?

After the federal takedown of the so-called “Silk Road” online drug marketplace, the pubic quickly became aware that criminals were among the many enthusiasts using the online currency called bitcoins. The virtual currency was first introduced in 2009 as an open-source, peer-to-peer electronic payment network. Since then, organizations ranging from online merchandisers to Subway restaurants and even Virgin Galactic accept them -- they’re especially popular for their low transaction fees. They are even traded in official currency exchanges.

That may explain why a Nov. 18 meeting of the Senate Committee on Homeland Security and Governmental Affairs didn’t focus on shutting down the electronic currency in light of its potential for use in cybercrime. To the contrary, both the Securities and Exchange Commission and the U.S. Department of Justice sent letters to the committee emphasizing that bitcoins are a legitimate financial instrument, albeit with both benefits and risks.

Silk Road users preferred bitcoins for a variety of reasons, but largely because they were extremely hard to trace and provided anonymity. While it seems the feds did find a way in, the process was still easier and safer than cash.

Since the 1960s, when drug sales became big business, the federal government has working to follow the money. Starting with the Bank Secrecy Act in 1970, Congress has passed law after law to make money laundering through U.S. banks more trouble than it was worth. As money launderers found new ways around the rules, Congress passed more.

In the 80s and 90s, drug traffickers began physically shipping cash out of the country -- but cash is heavy. In 1997, the Justice Department estimated that a pound of cocaine generated six pounds of cash, a pound of heroin resulted in 10 pounds having to be shipped. A Costa Rican payment processor called Liberty Reserve began converting currencies into its own money called Liberty Reserve dollars and then back again, stymieing regulators until just this year. Meanwhile, bitcoins were even easier -- private, liquid and totally legal to own.

Shutting down bitcoins is no longer feasible, but regulating them isn’t. Congress has already imposed money laundering controls similar to those involving legal U.S. currency. If bitcoins are no longer advantageous in cybercrime, Internet gurus will use something else. What that may be, however, isn’t yet known to the uninitiated.

Source: San Diego Daily Transcript, "Are Bitcoins the Criminal's Best Friend?" Stephen Mihm contributor, Bloomberg News’s The Ticker, Nov. 27, 2013

No Comments

Leave a comment
Comment Information

Recent Case Results

  • Juvenile Charges

    A juvenile was arrested for 2nd Degree Robbery. After 6 months the case was dismissed.

    A juvenile was arrested for Sexual Battery. After 6 months and 80 hours of Community service, the case was dismissed.

    Read More
  • Drunk Driving Offenses

    A client with a 1st DUI arrest. Fearing she would go to jail; lose her license for a year and lose her job. Got a wet reckless and minimal fines.

    Read More
  • Drug Charges

    A client with 4 Felony charges on a Transportation Charge, a Attempt to Sell, Possession of Marijuana, (50 pounds), Conspiracy Charge all where reduced to 1 Misdemeanor. No Jail.

    Client was charged with 6 Felony drug possessions. Facing jail time. The results: Client got a deferred entry of judgment and then dismissed.

    Client charged with several felony counts of possession of Marijuana with intent to sell. Client was involved in a medical marijuana grow. Case was reduced and later dismissed.

    Read More
  • Sex Crimes

    A client with alleged 2 Felony Sex charges and he faced jail and sex registration. The case was entirely dismissed.

    Client charged with prostitution; facing jail time and sex offender registration. Result: NO JAIL TIME AND NO SEX OFFENDER REGISTRATION Deferred Entry of Judgment.

    Read More
  • Domestic Violence

    Client charged with domestic violence, with great bodily injury. Case reduced to a misdemeanor with time served.

    Read More
Email Us For A Response

Learn How We Can Help

Bold labels are required.

Contact Information
disclaimer.

The use of the Internet or this form for communication with the firm or any individual member of the firm does not establish an attorney-client relationship. Confidential or time-sensitive information should not be sent through this form.

close

Privacy Policy

Areas We Serve

Pleasanton Office
5674 Stoneridge Drive, Suite 204
Pleasanton, CA 94588

Toll Free: 800-785-9556
Phone: 925-400-6635
Fax: 925-463-3661
Pleasanton Law Office Map

Manteca Office
210 East Center Street
Suite 10
Manteca, CA 95336

Toll Free: 800-785-9556
Phone: 925-400-6635
Fax: 925-463-3661
Manteca Law Office Map

Back To Top