Each transaction is recorded in a permanent, publicly available ledger known as a blockchain. While bitcoins can be minted, moved and stored without the oversight of any central authority such as the government, every bitcoin transaction is recorded in a permanent publicly available ledger known as a blockchain. While digital currency can be created, moved and stored outside the scope of any government or financial institution, each payment is recorded in a permanent fixed ledger, called a blockchain. He said the department has made “many seizures, in the hundreds of millions of dollars, of unhosted cryptocurrency wallets used for criminal activity.
Justice Department Raimondi said the seizure of the Colonial Pipeline ransom was the latest covert operation by federal prosecutors to recover illicitly obtained cryptocurrency. Haun added that the speed with which the Department of Justice seized most of the rescue was “innovative precisely because of the use of cryptocurrencies by hackers. One of the biggest myths surrounding Bitcoin and other cryptocurrencies is that they are mainly used by criminals to finance illicit activities. Cryptocurrency experts said hackers could have tried to make their Bitcoin accounts even more secure.
One of the defining characteristics of a cryptocurrency is that its general ledger, which contains all the transactions that have been made, is visible worldwide. This is because the very properties that make cryptocurrencies attractive to cybercriminals, the ability to transfer money instantly without the permission of a bank, can be exploited by law enforcement to track and confiscate criminal funds at the speed of the Internet. Startups with names like TRM Labs, Elliptic and Chainalysis that track cryptocurrency payments and flag potential criminal activity have flourished as law enforcement agencies and banks try to stay ahead of financial crime. The narrative that Bitcoin and other cryptocurrencies are predominantly used for criminal activity is simply not true.
However, for the growing community of investors and cryptocurrency enthusiasts, the fact that federal investigators had tracked the ransom as it progressed through at least 23 different electronic accounts belonging to DarkSide, the hacker collective, before accessing an account showed that the law enforcement was growing along with the industry. Named officials, including U.S. Treasury Secretary Janet Yellen and European Central Bank President Christine Lagarde, have made statements this year that cryptocurrencies are of concern when it comes to terrorist financing and money laundering activity. The government has been engaging with and learning from the cryptocurrency community, says Bill Gleim, head of machine learning at Coinalytics, a company based in Menlo Park, California.
Given the public nature of the ledger, cryptocurrency experts said, all law enforcement had to do was figure out how to connect criminals to a digital wallet, which stores Bitcoin. Matthee is part of a team launching a new anonymous online marketplace called Shadow this year, which will use its own cryptocurrency, ShadowCash. Once you look beyond the scary headlines and develop an understanding of the fundamental principles behind Bitcoin and other cryptocurrencies, you will see how beneficial the technology is and how it can radically transform the financial sector.