[ad_1]
By Ezra Galston
June 16, 2021 12:27 p.m. ET Photo: edgar su / Reuters
How did the Justice Department recover $ 2.3 million from the ransom paid by Colonial Pipeline to a group of hackers known as DarkSide? Bitcoin, the cryptocurrency in which the payment was made, isn’t it supposed to be nowhere to be found? Actually no. Bitcoin is anonymous, but it is far from private, an important but often overlooked distinction. The Justice Department recovered over $ 1 billion in bitcoin in various investigations in 2020 alone.
The historical blockchainbitcoins record of all transactions is publicly visible at all times by anyone, so that there cannot be any cash transactions under the table. Software companies such as Chainalysis and Elliptic have backed federal investigators with a suite of analysis tools meant to help track down criminals and tax evaders, including those trying to obscure the bitcoin trail through dozens of successive transactions.
What complicates the recovery is the anonymity of the bitcoins. Senders and recipients are referred to by wallet addresses, a string of numbers and letters rather than names or Social Security numbers. Other cryptocurrencies such as Monero, zCash, and Haven are working on technologies that would provide both anonymity and privacy. But even then, users would be faced with the exit dilemma.
This happens when criminals have to spend their bitcoin or convert it to conventional currency. The final transaction de-anonymizes the participant and usually triggers the jurisdiction of one or more government agencies. So, once criminals move their coins to an exchange wallet, even one that does not adhere to the requirements of Know Your Client / Anti-Money Laundering exchanges, investigators have what they need to freeze and ultimately claim those assets. This is probably what happened in the case of Colonial Pipeline.
Traditional currency itself poses problems for investigators. Banknotes are nowhere to be found unless authorities write down the serial numbers in advance. Global banks have amassed some $ 15 billion in fines in 2020 for tacitly allowing money laundering and other financial crimes. Bitcoin transparency can do more to mitigate fraud and theft than traditional banks and currencies ever could.
Mr. Galston is a Managing Partner of Starting Line, a early stage venture capital firm and investor in bitcoin among other cryptocurrencies.
Journal Editorial Report: Best and Worst of the Week by Kim Strassel, Mary O’Grady, Joe Sternberg and Dan Henninger. Image: Invision / Biogen / AP Composite: Mark Kelly
Copyright 2020 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8
[ad_2]
picture credit