The U.S. Department of Justice has released a report from the Attorney General’s Cyber Digital Task Force titled “Cryptocurrency Enforcement Framework“, which provides some insight into how Team America interprets its jurisdiction regarding digital asset activities.
The report opens with a hopeful introduction noting:
it bears emphasizing that distributed ledger technology, upon which all cryptocurrencies build, raises breathtaking possibilities for human flourishing.
But after noting the valuable research and numerous studies and US Federal agencies exploring blockchain use, the report asserts:
this technology plays a role in many of the most significant criminal and national security threats our nation faces
As one would expect for a document titled “Enforcement Framework” the report focuses on the oft repeated claim that digital assets are some kind of criminal haven. The DOJ also claims:
Criminals use cryptocurrency to facilitate crimes and to avoid detection in ways that would be more difficult with fiat currency or “real money.” They can avoid large cash transactions and mitigate the risk of bank accounts being traced, or of banks notifying governments of suspicious activity
This of course completely ignores the practical reality that cash transactions are more difficult to trace by orders of magnitude than the vast majority of digital asset transactions (aside from privacy coins), with the vast majority of illegitimate market activity on digital assets occurring on entirely traceable blockchain protocols like Bitcoin and Ethereum. While privacy centric coins have been claimed to have infinite uses for criminals, time and time again criminals appear to show a preference for blockchains that enjoy deeper liquidity and more reliable networks.
Frustratingly, the various case studies included in the report setting out the Departments experience of cryptocurrencies in investigations, which includes the cases against ‘Welcome to Video‘, ‘Lazarus Group‘, among others, makes no mention of the significant contribution made by blockchain analysis companies like Chainalysis. The narrow focus on the “dark side” of cryptocurrency completely ignores the reality that cryptocurrency with immutable public ledgers is a terrible system for illegal value transfer and an excellent tool for regulators. Had the perpetrators of these various illegal schemes paid in cash or another means, the critical blockchain analysis which contributed to their resolution would never have been possible.
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