Cryptocurrencies fell under the global spotlight this week, as new evidence surfaced indicating that Russian hackers used bitcoin as a payment instrument to wage cyber attacks on Hillary Clinton's 2016 presidential campaign. An indictment released Friday describes hackers' methods in acute detail, highlighting how cryptocurrencies have become both a tool and a challenge for intelligence agencies in cross-boarder investigations.
In other news, Coinbase announced that it is working with regulators while considering adding five new cryptocurrencies, including privacy-focused Zcash. Meanwhile, President Trump's latest foray into consumer protection has spawned an inter-agency working group focused on cryptocurrency fraud, led by the Justice Department. Still, cryptocurrencies have yet to garner substantial "investor demand" according to Blackrock CEO Larry Fink, who announced that his firm, currently managing over $6.3 trillion in assets, would also be forming a working group on the subject.
An indictment released by the US Department of Justice last Friday included details on how Russian hackers used bitcoin to purchase assets involved with their attack of the Democratic National Committee and Hillary Clinton’s 2016 presidential campaign. In an effort to obfuscate their activities, hackers reportedly purchased cryptocurrency mining equipment with fiat currency and minted the equivalent of nearly $95,000 in bitcoin, later used to purchase servers, register domains, and fund other parts of their attack on US-assets. When asked to comment on the topic, Chainalysis COO Jonathan Levin noted:
"The fact that cryptocurrencies are global and real time means that you might only find out about these things after the fact," Mr. Levin said. "We need to think about the responsibilities that we all have in a world where payments move seamlessly across borders in the blink of an eye."
CEO Fink SaysBlackrock CEO and asset-management magnate, Larry Fink, said Monday that Blackrock had assembled a working group to look at possible implications of cryptocurrencies, such as Bitcoin on the firm. While Fink also commented that Bitcoin "does not see massive investor demand," with more than $6.3 trillion in assets under management, at least some of Blackrock's investors are curious about the emerging tech. How about this: As one of the most influential actors in the asset management space, any move towards cryptocurrency adoption by Blackrock would signal a major shift in the industry.
A post made by Coinbase on Friday noted that the exchange, one of the world's largest by trading volume, is considering adding up to five new tokens on its platform. Delineating that the exchange is only "exploring" the option of adding these new coins, the announcement is likely aimed to protect the mentioned tokens from wild price swings caused by false indications of support - as was the case when the firm released APIs signalling their support of Bitcoin Cash (BCH) before its official launch.The announcement also highlights the exchange's focus on working with local law enforcement and regulators in offering support for these coins, some of which introduce new aspects of privacy.
The public comment period is now open for a proposed SEC rule change that would allow the creation of a Bitcoin ETF, launched by SolidX and facilitated by the Chicago Board of Options Exchange (CBOE). While industry tailwinds continue to point towards the approval of a Bitcoin ETF in the future, many of the issues halting past proposals have yet to be resolved.
The Justice Department, Securities and Exchange Commission, Federal Trade Commission, and Consumer Financial Protection Bureau are increasingly focusing their resources on scams tied to Bitcoin and other cryptocurrencies, as indicated by the formation of a new interagency taskforce, announced Wednesday. Despite the agencies' individual interests in cryptocurrencies, the taskforce is aimed to discuss topics pertaining to consumer protection, including "cyber fraud" and "digital currency fraud."
This episode of the The Cyberlaw Podcast hosts Alan Cohn, Jack Hayes, Lisa Zarlenga, and Chelsea Parker in a discussion on cryptocurrency anti-money laundering policies, FinCEN's recent letters to ICOs, and cryptocurrency tax treatment.