FBI Explores The Implications Of Bitcoin

from the why-that's-so-2011 dept

Tue, May 15th 2012 11:56am — Mike Masnick

Remember Bitcoin? The online cryptographic currency that got a lot of attention last year, but quickly faded? There was some political grandstanding against it, like when Senator Chuck Schumer declared that Bitcoin was a form of money laundering. And, now, the FBI is trying to understand Bitcoin, sending around a document warning that criminals might (*gasp*) use Bitcoin.

The report is pretty even-handed, actually. It notes that there's a reasonable likelihood that "malicious actors will exploit Bitcoin to launder money." However, it at least admits, noting that this is no different than cash, that users of Bitcoin "value the currency for many of the same reasons people trust Federal Reserve notes: they believe they can exchange the currency for goods, services or a national currency at a later date." It does highlight some "unique features" that make Bitcoin especially suited for illegal activity -- but most of those just seem to be examples of Bitcoin being used for questionable activity, rather than specific features of Bitcoin.

It also suggests that the FBI isn't that worried about the fact that some uses of Bitcoin can be anonymous -- noting (correctly) that it's not as anonymous as some people think, and good old fashioned detective work can often uncover the people:

Although Bitcoin does not have a centralized authority, the FBI assesses with medium confidence that law enforcement can discover more information about, and in some cases identify, malicious actors, if the actors convert their bitcoins into a fiat currency. Thirdparty bitcoin services may require customers to submit valid identification or bank information to complete transactions. Furthermore, any third-party service that qualifies as a money transmitter, and therefore a MSB, must register with the FinCEN and implement an anti-money laundering program.

All in all, I actually expected more hyperbole and fear mongering, but seeing as this was meant for internal use, rather than for political gain, it seems like the paper was pretty even-handed. Of course, none of that matters at all if no one is using Bitcoin any more...

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Filed Under: bitcoin, chuck schumer, fbi

29 Comments

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bt, 15 May 2012 @ 12:24pm

Since when has...
Since when has the FBI used the phrase "fiat currency?" Never.
Fake report.
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- Anonymous Coward, 15 May 2012 @ 12:50pm
  
  uh... rrrrright!
  Inspector Clouseau solves another one.
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- Anonymous Coward, 15 May 2012 @ 1:23pm
  
  Re: Since when has...
  "Vat is dis 'baby'? De Fuehrer has never said 'baby'..."
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  - bt, 15 May 2012 @ 2:06pm
    
    Re: Re: Since when has...
    Instead of adding snark could you show an example of the FBI using that phrase in any statements or documents? In my years of casual reading I've never come across it. While on bitcointalk forums its rather popular.
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    - Some Other Guy (profile), 15 May 2012 @ 2:21pm
      
      Re: Re: Re: Since when has...
      What do your years of casual reading of FBI documents say about the odds that agents of the FBI may pick up knowledge from those they investigate, perhaps certain turns of phrase or specific technical terms in use by them?
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      - bt, 15 May 2012 @ 2:29pm
        
        Re: Re: Re: Re: Since when has...
        That idea depends on agents tasked with reporting about currency not knowing about "fiat currency" and never stating it previously. Then picking it up from bitcoin user's and wedging it into a report. Does a street cop put street slang into reports? No they use the language typically used previously.
        
        If you want to know the technical terms used you should take a few years worth of reports on counterfeiting and money laundering and give them a read. Spoiler: fiat currency does not make an appearance.
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        Anonymous Coward, 15 May 2012 @ 10:38pm
        
        Re: Re: Re: Re: Re: Since when has...
        Yeah right, fiat is 'slang' from bitcoin users:
        
        http://en.wikipedia.org/wiki/Fiat_money
        
        Maybe the agent who wrote the report studied economics
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        bt, 17 May 2012 @ 7:48pm
        
        Re: Re: Re: Re: Re: Re: Since when has...
        I never said it was slang only used by bitcoin users.
        
        I'm also not seeing anyone showing any instance of the FBI previously using it in reports. Considering the amount of reports done on currency it should be easy for those scoffing at the idea of the FBI never using it.
        
        The writing looks, tastes, and smells like the product of bitcoin users. The tone set and the language used, when the language is used indicate rubbish to me. Again I would like to an example of the FBI using "fiat currency" like that "report" did, as I never have come across such a use.
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      - Joe, 19 May 2012 @ 8:36am
        
        Re: Re: Re: Re: Since when has...
        Yep, language evolves. In 100 years time, it's probable that few people will even use the term fiat to describe printed money unless some big university immortalizes the word.
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  - Anonymous Coward, 15 May 2012 @ 5:30pm
    
    Re: Re: Since when has...
    Baby, baby, baby, oh?
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quawonk, 15 May 2012 @ 12:45pm

They don't control it, therefore it's bad.
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quawonk, 15 May 2012 @ 12:46pm

They don't control it, therefore it's bad.
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Anonymous Coward, 15 May 2012 @ 1:17pm

Of course, none of that matters at all if no one is using Bitcoin any more...

Therein is the key. If it were being widely adopted, there would be hyperbole, embellishment, overstatement, fear mongering, terrorist plots, pot dealers, dead baby seals, electric cars, fully automatic weapons, and probably mention of that guy who put the flaming bag of poop on your doorstep that one time for good measure.
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weneedhelp (profile), 15 May 2012 @ 1:37pm

the FBI
"the FBI is trying to understand Bitcoin, sending around a document warning that criminals might (*gasp*) use Bitcoin. "

Takes one to know one.
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Zos (profile), 15 May 2012 @ 1:38pm

it's still in use, though it's definitely taken some hits.
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- Zos (profile), 15 May 2012 @ 1:39pm
  
  Re:
  http://www.bitcoindir.com/ (directory of sites that accept bitcoins, no idea how inclusive)
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- RonKaminsky (profile), 15 May 2012 @ 5:31pm
  
  $276K of trading per day on Mt. Gox alone
  Yes, the report itself showcases information about the trading volume on Mt. Gox currently being around $276K per day.
  
  In my opinion, however, just trading shouldn't really be considered "use". The report has no firm information on the volume of bitcoins actually used to buy real goods or services.
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iamtheky (profile), 15 May 2012 @ 1:46pm

just antagonizing
bitcoin defenders using the FBI investigation as a defense for its legitimacy in 3..2..
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- The Moondoggie, 15 May 2012 @ 10:17pm
  
  Re: just antagonizing
  We all know that bitcoin has been used by the netizens' criminal members in the Deep Web and .onion sites to spread/sell CP, drugs, smuggled goods, etc. way back. Also used in illegal betting, payment for mercenary services, etc.
  
  Fun times...
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Mangix, 15 May 2012 @ 1:52pm

Not Quite Correct
"for many of the same reasons people trust Federal Reserve notes: they believe they can exchange the currency for goods, services or a national currency at a later date."

It's not that people have actual faith in the Federal Reserve. It's that they have no choice. Legal tender laws essentially eliminate any other form of currency as a legal means of exchange. See the Liberty Dollar case a while back as an example.
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- Anonymous Coward, 15 May 2012 @ 2:30pm
  
  Re: Not Quite Correct
  Legal tender is not what it used to be: try paying a 2 euro coffee with a 500 euro note in a bar.
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- JimB, 15 May 2012 @ 3:33pm
  
  Re: Not Quite Correct
  I'm perfectly willing to accept payment in gold, silver, platinum, or diamonds in lieu of Federal Reserve notes. I suspect I could arrange a transaction for almost anything I need in the future using the same medium of exchange. While not strictly 'legal tender' as a means of payment it would be widely accepted I suspect.
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fogbugzd (profile), 15 May 2012 @ 2:23pm

The most common item used for money laundering as well as smuggling is the US $100 bill. Perhaps we need to investigate the US treasury department along with bitcoin.
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Anonymous Coward, 15 May 2012 @ 4:56pm

Wasn't Falkvinge one of the early BitCoin scammers? Figures. I hope the FBI starts with him when they start rounding up the grifters who duped everyone.
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- Anonymous Coward, 16 May 2012 @ 2:10am
  
  Re:
  Just because you don't believe in the bitcoin system does not mean everyone who uses it is a scammer.
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Anonymous Coward, 15 May 2012 @ 7:08pm

Bitcoin rules.
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Anonymous Coward, 16 May 2012 @ 4:11am

The authors of bitcoin have said that bitcoins aren't really anonymous.
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Anonymous Coward, 16 May 2012 @ 6:28am

Nobody uses bitcoin anymore? Anymore? It's hardly 3 years old. People are just beginning to use it.
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Bitcoin Value, 22 Feb 2014 @ 9:59pm

Bitcoin Value - What is Bitcoin Mining and Exchange
http://www.youtube.com/watch?v=2c98kK6okFs Bitcoin Value

BITCOIN is about to take over the world!

The price of Bitcoin is increasing at an exponential rate and it's going to continue at least until it is worth between $20,000 and $100,000 / 1 BTC.
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