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US Justice Department Forms a Cryptocurrency Enforcement Network

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The US Justice Department recently released a report discussing the emerging threats of enforcement challenges arising out of the crypto industry. It mentions the establishment of a Cryptocurrency Enforcement Network.

Authorities interested in cryptocurrency regulation

As the interest in cryptocurrencies is growing in the US and the world, authorities are faced with a challenge to enforce existing legal and regulatory guidelines on the industry. In the latest report by the US Justice Department, US Attorney General William Barr said that cryptocurrencies could transform human interaction and the organization of society in fundamental ways. He said,

“ensuring that use of this technology is safe and does not imperil our public safety or our national security is vitally important to America and its allies.”

US Justice Department Forms a Cryptocurrency Enforcement Network

US Justice Department Forms a Cryptocurrency Enforcement Network

FBI Director Christopher Wray said that the agents have witnessed the threats of criminal usage of cryptocurrencies. He added that the technology is promising but is sometimes used to conduct illegal activities. Criminals use cryptocurrencies to hide their tracks across a number of investigations which include the trade of illegal goods on the dark web. Wray also noted that cryptocurrencies are being used to demand ransom payments.

Cryptocurrency Enforcement Network

To address the problems borne out of digital currencies, there is a 71-page report by the Cyber-Digital Task Force that demands more education and outreach. It also calls for closer cooperation between the private and public sectors. It suggests a direct engagement with financial institutions and banks alongside the crypto community.

The authors of the study note that all stakeholders of the industry, ranging from regulators to average users, have to take steps to uphold public safety and national security. One of the biggest issues in the Bitcoin payments network is that payments are irreversible. This makes it an appealing option for scammers as users cannot ask an authority to get their money back. Scams in the crypto industry are also very common. The Cryptocurrency Enforcement Network will aim to tackle these issues and make the technology safer.

US Justice Department Forms a Cryptocurrency Enforcement Network

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Crooked police chief sentenced to 8 years for dark web shenanigans

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Former police chief Yuri Zaitsev was recently sentenced to eight years in prison for acting as a bounty hunter for a dark web marketplace. In December 2018, Zaitsev was working as the leader of his unit within the Main Directorate for Drugs Control of the Republic of Khakassia — a law enforcement division which is analogous to the U.S. Drug Enforcement Administration, or DEA. At that time, he initiated contact with the operator of a dark net marketplace, offering to help hunt down a man who had appropriated drugs that were entrusted to him for placement in dead drops. 

In Russia, unlike the U.S., most dark web entrepreneurs do not trust the post office for shipments. The prevailing mode of dissemination of these illegal products is instead completed through dead drops — a method of delivery by which two parties can pass items or information back and forth without ever needing to meet in person.

According to the Main Investigation Department, the cop had received the equivalent of 52,000 roubles in Bitcoin (BTC) for his services. At the time, this was equivalent to approximately, $750 or 0.2 BTC. He was found guilty on charges of bribery and the disclosure of classified information.

According to Zaitsev’s wife, his prosecution was punishment for investigating senior officials within his agency. He was subsequently fired and prosecuted. From October-November 2019, Zaitsev uploaded a number of videos to YouTube in which he allegedly exposed corruption among senior officials in his Directorate. This appears to be what led to criminal charges against him for disclosure of classified information. In November 2019, Zaitsev uploaded an appeal to president Putin on YouTube in which he pleaded his case, but to no avail.

During the unrelated Silk Road investigation, numerous law enforcement officials fell afoul to what they perceived as easy, untraceable Bitcoin. DEA Special Agent Carl Force managed to elicit 1,200 Bitcoin from Ross Ulbricht. He obtained the funds using an elaborate scheme in which he had created multiple fake personas ranging from a major South American drug trafficker to a corrupt law enforcement official. One of the tasks assigned to him by Ulbricht was hunting down and murdering a former associate who allegedly had stolen Bitcoin from him. The actual thief was another law enforcement official involved in the investigation. The murder was staged by Force, but never materialized in actuality.

The events that took place in Khakasia a few years after the Silk Road saga seem in some ways like a cheap local knockoff of an expensive HBO show. As Marx once said, history repeats itself “the first time as tragedy, the second as farce”.

Crooked police chief sentenced to 8 years for dark web shenanigans

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