This week the US courts service (UScourts.gov) has shown increasing interest in Bitcoins. Their research is ongoing but hastily scaling-up from where it was last week.

Seems we have new orders from the top.

The question then becomes, who’s first in the Bitcoin firing line?

Bitcoin Miners.

Bitcoin Exchanges.

Bitcoin Wallet Owners.

Bitcoin Commerce.

A quick rundown and recommendations for enforcement:

Bitcoin Miners

Remaining continuously connected to the Bitcoin network by their very nature, tracking is certainly possible. Bitcoin Miners tend to be everyday technologically-savvy users with non criminal intent usually driven by greed, making them quick to fold once takedowns begin. US Bitcoin Miners will be hastily “replaced” by overseas Bitcoin Mining operations as the network adapts unless trust in the Bitcoin valuation is concurrently undermined, or a tactical global coordinated takedown is actioned.

Anti currency creation laws already in place here in the US could theoretically be applied to Bitcoin Miners making for a good media push.

Bitcoin Exchanges

Easiest targets of all, often residing overseas (from a US standpoint). They come in two types:

Electronic Bitcoin Exchanges.

Hard Currency Bitcoin Exchanges (cash/check).

Electronic/Online Bitcoin Exchanges are best shutdown via notifying national banking authorities together with applied pressure through usual diplomatic channels. Easy to shut down, with high reward for doing so, shutting down multiple Bitcoin Exchanges simultaneously would be the most effective action to take.

Bitcoins for cash or Bitcoins for check utilize real-world addresses for posting of cash or check payment in exchange for Bitcoins. Recommended takedown is through the address provided on the acceptors website using tactics for handling current mail and EBay fraud. Penalties must be severe to enable deterrent effects to handle enforcement, in most part due to the speed with which a Bitcoin cash exchange can be setup.

Bitcoin for cash operations are significantly smaller than online Bitcoin currency exchanges (thousands vs. millions).

Bitcoin Wallet Owners

The hardest to shutdown through laws due to their sheer number, inherent anonymity and worldwide spread. With little to gain by shutting down the individuals, they are an unlikely target. Predominantly driven by greed or criminal intent.

Bitcoin Commerce

With the popular EFF (Electronic Frontier Foundation) no longer accepting Bitcoin donations as of last week and citing US laws for their removal, we can see self enforcement is taking place within the Bitcoin network. Other outlets meanwhile, are still accepting Bitcoins as payment for hard goods.

Laws can quickly be introduced banning the use of Bitcoins and other artificial electronic currency as payment of goods or service. Without a legal use of Bitcoins, only the non-legal uses and users remain, increasing the efficiency and expected payoff of tracking users and enforcement actions.

Further Work

There is always the fifth option for law enforcement. Letting the Bitcoin Network remain.

More specifically, letting it run and using the entire Bitcoin network infrastructure as a honeypot sent from heaven.

Artificial Bitcoin Exchanges can be created to attach real identities with wallets, Bitcoin tracking mechanisms could be put in place at ISP level and backdoors placed in software. All points discussed here could be realistically implemented and operational inside a month.

The potential catch in such a net would be huge given the criminal push towards Bitcoins.

Either way, it will certainly be interesting to watch in the coming weeks.

What do you think?

Leave a comment