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US Secret Service Asks Congress for Help to Prevent Illicit Use of Privacy Coins

June 23, 2018 |

US Secret Service Asks Congress for Help to Prevent Illicit Use of Privacy Coins

The US Secret Service is worried about the illicit use of cryptocurrencies. A high-ranking official of the agency has urged Congress to consider additional legislation to address anonymity-enhanced cryptocurrencies and services intended to obscure transactions on blockchains such as tumblers or mixers.

Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space

Undermining US Laws

US Secret Service Asks Congress for Help to Prevent Illicit Use of Privacy CoinsDeputy Assistant Director of the US Secret Service’s Office of Investigations, Robert Novy, gave a testimony before the House of Representatives Financial Services Subcommittee on Terrorism and Illicit Finance on June 20.

Novy explained that his agency is primarily concerned with the use of cryptocurrencies “in criminal schemes that undermine the integrity of financial and payment systems, their use in cases of fraud, and their general use as a means of money laundering,” stating:

While some digital currencies have operated lawfully, others have been used extensively for illicit activity…The growing illicit use of digital currencies risks undermining the effectiveness of existing U.S. laws and regulations, especially those intended to limit the ability of criminals to profit from their illicit activities.

Asking Congress for Help

US Secret Service Asks Congress for Help to Prevent Illicit Use of Privacy CoinsIn his testimony, Novy asked “Congress for help in preventing cryptocurrencies like monero and zcash, which provide users with enhanced privacy and anonymity features, from being used for illicit purposes,” Forbes elaborated.

Referencing “the global nature of the Internet and modern communications,” Novy claimed that “digital currencies are particularly well-suited for supporting crimes that are transnational in nature.” He proceeded to tell Congress:

We should also consider additional legislative or regulatory actions to address potential challenges related to anonymity-enhanced cryptocurrencies, services intended to obscure transactions on blockchains (i.e. cryptocurrency tumblers or mixers) and cryptocurrency mining pools.

US Secret Service Asks Congress for Help to Prevent Illicit Use of Privacy CoinsAccording to Forbes, Greg Nevano, an official in the investigations division of the Immigration and Customs Enforcement, agreed with Novy. “These new anonymity-enhanced cryptocurrencies are clearly ripe for illicit use in an effort to subvert legitimate law enforcement inquiries,” he was quoted, adding the claim that “although it is more difficult to trace the movement of illicit proceeds using these newer anonymity-enhanced cryptocurrencies, it is not impossible.”

Novy further suggested that law enforcement must adapt his agency’s “investigative tools and techniques to dismantle criminal groups that use these instruments for fraudulent activity or money laundering.”

What Criminals Prefer

Novy also claimed that “in recent years, criminals have increasingly used digital currencies to facilitate illicit activities on the Internet.” He elaborated, “some digital currencies are primarily used to purchase illicit goods and services,” while others “are primarily used for money laundering—particularly transnational transfers.”

US Secret Service Asks Congress for Help to Prevent Illicit Use of Privacy CoinsIn his testimony, Novy described the characteristics of digital currencies preferred by criminals based on the agency’s investigations.

Firstly, they have “widespread adoption as a medium of exchange for intended criminal activities,” in addition to “the greatest degree of anonymity.” Their ability for “protection against theft, fraud, and lawful seizure” is also important, as is the ability to “be readily exchanged to and from their preferred currency.” The last characteristic mentioned is “the ability to quickly and confidently transfer value transnationally.”

Citing that “the Secret Service has been at the forefront of investigating the illicit use of digital currencies,” Novy detailed the agency’s prior work in shutting down “two major centralized digital currencies that supported extensive criminal activity: E-gold Ltd. (in 2007) and Liberty Reserve (in 2013).” In addition, the agency also recently shut down a number of crypto exchanges including Western Express and Btc-e, he conveyed.

Zcash Company’s Response

US Secret Service Asks Congress for Help to Prevent Illicit Use of Privacy CoinsZcash, a cryptocurrency with strong privacy features, was created to protect the privacy rights of everyday citizens. The Zcash company, led by the famed computer scientist Zooko Wilcox, exists to support the privacy coin, but claims that it does not control Zcash or have special access to the cryptocurrency’s transactions.

The company responded to the Secret Service’s recommendations in an official blog post on Friday:

We believe it is in the best interest of the citizens of the United States, the US Secret Service, and other governmental organizations to advocate for privacy rights and protect its citizens and businesses from harm.

What do you think of the US Secret Service’s recommendations to Congress? Let us know in the comments section below.


Images courtesy of Shutterstock, Twitter, and Zcash Company.


Need to calculate your bitcoin holdings? Check our tools section.

The post US Secret Service Asks Congress for Help to Prevent Illicit Use of Privacy Coins appeared first on Bitcoin News.

Bitcoin News

Arguments Erupt Over Immigration at the White House

June 23, 2018 |

The White House has seen arguments erupt since President Trump signed an executive order to keep migrant families together at the US border, the New York Times reports. Sources say the quarrels began Thursday night and resumed Friday when Kevin McAleenan, who heads Customs and Border Protection, asked how his…
Newser

New video shows woman trying to resist YouTube stunt that killed boyfriend

June 23, 2018 |

A transcript shows a Minnesota man urged his girlfriend to shoot him for a videotaped stunt that ended in his death.
FOX News

Lawmaker Who Beat Mark Sanford Is Badly Injured

June 23, 2018 |

A South Carolina lawmaker who defeated US Rep. Mark Sanford in his re-election bid has been seriously injured in a car wreck and will require weeks of recovery and more procedures, according to her spokesman, the AP reports. State Rep. Katie Arrington has undergone surgery for her injuries and was…
Newser

Wendy McElroy: Crypto as Class Warfare

June 23, 2018 |

Crypto as Class Warfare

The Satoshi Revolution: A Revolution of Rising Expectations
Section 4: State Versus Society
Chapter 9, Part 1
Crypto as Class Warfare

“Antagonism between the classes will be removed. I do not envisage a dead and artificial level among the people. There will be a variety among them as there is among the leaves of a tree. There will certainly be no have-nots, no unemployment, and no disparity between classes and masses such as we see to-day. I have no doubt whatsoever that if non-violence in its full measure becomes the policy of the State, we shall reach essential equality without strife.”

-Mahatma Gandhi

Cryptocurrency is the realization of an anarchist dream that dates back centuries:  a free currency and a free banking system. Crypto is in its infancy, which means  its future applications are electrifyingly unpredictable, except in one regard: any successful application will fill a human need. No human needs are as acute as food and shelter, which require money and exchange. To control the flow of money and exchange, therefore, is to control life itself. And the financial flow is often captured by one word: banking.

In their quest for free banking, social reformers of the past made a distinction that is often lost today. Namely, banking is at the core of class warfare. The ramifications of that insight rests upon the definition of “class” being used: capitalist v. worker, nobles v. peasants, the political v. the productive. Crypto departs sharply from the meaning imposed by socialists centuries ago–capitalists v. workers–and expresses a 21st century form of financial class warfare: the political v. the productive.

The extraordinary crypto network is not a banking system, as traditionally conceived, but it can replace most banking functions. And future evolution within crypto applications may wipe out any remaining need for central banks.


Past Banking Experiments

19th century anarchists knew that freedom hinged upon what French radical Pierre Joseph Proudhon called a Bank of the People—a bank that served the financial interests of workers, not of the elite. Proudhon’s vision was a cooperative bank that provided low-interest credit and which issued notes based on labor instead of money based on gold.

The many attempts at free banking usually had a theme in common; they failed. Three factors played a significant role.

Ideology. Early anarchists accepted the socialist concept of a “Labor Theory of Value.” That is, the just economic price of a good or service is determined by the labor needed to produce it. The theory forms the linchpin of socialism’s condemnation of “the capitalist,” who steals the wealth earned by “the worker” when he charges and pockets more than the cost of production for a good. In short, socialists believe embedded labor, not subjective value or supply and demand, determine a just price. Banking experiments of the past tended to stumble and fall over this deeply flawed economic model. Not until Murray Rothbard fused individualist anarchism with Austrian economics, and popularized them both, did free-market anarchism emerge.

Structure. Many alternate institutions depended on the system against which they rebelled. Proudhon’s proposed Exchange Bank, which was intended to be an umbrella structure for smaller Banks of the People, is an example. The Exchange was meant to replace France’s central bank and to obsolete the financiers who preyed on workers. In his periodical Liberty, the iconic 19th century American anarchist Benjamin Tucker explained, “The Bank of Exchange was to be simply the Bank of France transformed on the mutual principle.” Thus, it was a vision of reform—radical reform, to be sure—but not a vision of revolution.

The alternate institutions that fared better tended to be part of a broader support system for a specific community, such as the social agencies operated by early labor organizations in America for their members. Those organizations exemplified the class awareness; for example, the Knights of Labor refused membership only to bankers, lawyers, gamblers, and saloon-keepers, who were viewed as the bane of working people.

Legal Opposition. Two circumstances that invited a backlash from authorities were intersection and visibility.

Intersection: In 1848, Proudhon approached Louis Blanc, a minister in the French Provisional Government, for assistance in transforming the Bank of France into an Exchange Bank. Proudhon was unsuccessful. But because his bank was partially based on government approval, it floundered. Today, so-called alternative financial institutions apply for licenses or otherwise comply with regulations. In doing so, they either go out of business or  cease to be alternatives; they become part of the problem.

Visibility: When an alternative financial institution threatens the status quo, and is seen to do so, it is dismantled. Transparency is not its friend.

A case on point is the massive network of voluntary labor unions in 19th century North America, which provided millions of workers with everything from credit to life insurance. The voluntary labor unions were also hotbeds of political dissent. President Franklin D. Roosevelt all but eliminated them by establishing a monolithic Big Union that enjoyed government privileges through legislation such the Wagner Act (1935); the fact that modern unions were backed by Big Business should have been a red flag. An article entitled “The Great Lie of the Modern Union,” explained, “The modern union that arose…” was “the opposite of what it claimed to be. It did not voice workers’ rights. It silenced them.” The decline of voluntary labor unions meant their financial safety nets evaporated.

Revolutionizing Class Definition

Cryptocurrency is not “new under the sun” in providing an alternative to government banking. It is not even new in providing a free-market one. But the dynamics of crypto are stunningly unique. The algorithms and blockchain are able to blow past three of the main pitfalls of previous alternatives—ideology, structure, and legal opposition.

Satoshi Nakamoto designed bitcoin and the blockchain to bypass a central banking system that served the status quo, not the individual. Given that the central banking system is not capitalistic but exists in communist societies, as well, the capitalist v. worker class analysis does not apply to crypto. Another form of class analysis fits perfectly.

Before discussing class analysis, however, it is necessary to define the word “class.” A class is a group of people or things with common characteristics. The grouping occurs because it is useful to whoever is defining the category. A researcher of financial habits might break his subjects into credit card users and non. A doctor studying drug addiction might split his patients into cocaine users and meth addicts. A classification can be defined by almost any shared characteristic: hair color, sexual orientation, preference in deodorant…

But if capitalists v. workers does not work well with crypto, what is the basis of crypto class analysis? It is the state v. society.

In his classic work, The State, the German sociologist Franz Oppenheimer spearheaded an analysis of these key terms.

Oppenheimer defined the state as “that summation of privileges and dominating positions which are brought into being by extra-economic power [force].” As well as the visible structure of politicians and bureaucrats, the state includes all agents (such as the military and law enforcement), affiliates (such as banks), and cronies (such as corporations and the mainstream media). Rothbard expounded on the concept. “I define the state as that institution which possesses one or both (almost always both) of the following properties: (1) it acquires its income by the physical coercion known as ‘taxation’; and (2) it asserts and usually obtains a coerced monopoly of the provision of defense service (police and courts) over a given territorial area.”

Oppenheimer defined society as “the totality of concepts of all purely natural relations and institutions between man and man.” Rothbard explained that a free society was “one where there is no legal possibility for coercive aggression against the person or property of an individual.” Society was the total of human interaction that occurred in the absence of institutionalized force.

Force and the threat of force are necessary to the state because it produces nothing. Its only source of “income” is the wealth it grabs from others, including through taxation, confiscation, fines, fees, tariffs, inflation, bribes… To exist, the state must steal. By contrast, society consists of voluntary exchanges that produce wealth, whether in terms of money, culture, family, spirituality, and other human values. An exchange occurs only when all parties to a transaction agree to its terms, which means all parties benefit.  occur. Rothbard highlighted the difference between state and society. “If I cease or refrain from purchasing Wheaties on the market, the Wheaties producers do not come after me with a gun or the threat of imprisonment to force me to purchase; if I fail to join the American Philosophical Association, the association may not force me to join or prevent me from giving up my membership. Only the state can do so; only the state can confiscate my property or put me in jail if I do not pay its tax tribute.”

Individuals who interact through force and privilege—“extra-economic power”– are the political class. Individuals who interact voluntarily are the productive class. The dynamic is political v. productive. The two are antagonistic because the political class is a parasite on the productive class, and it cannot exist otherwise.

Before crypto, even people who saw this class divide clearly were forced to use the state because so much of modern life was monopolized by it. Banking and the issuance of currency are fine examples. This essential realm of human interaction became a state monopoly. Little could be done about it; a bank account was almost a requirement of daily life, and it was extremely difficult to send money overseas without involving banks or other authorized institutions. No more. Crypto upends the state’s monopoly.

As with ideology, crypto is also able to answer the issues of structure and legal opposition that plagued prior financial alternatives to the state.

[To be continued next week.]

Reprints of this article should credit bitcoin.com and include a link back to the original links to all previous chapters


Wendy McElroy has agreed to ”live-publish” her new book The Satoshi Revolution exclusively with Bitcoin.com. Every Saturday you’ll find another installment in a series of posts planned to conclude after about 18 months. Altogether they’ll make up her new book ”The Satoshi Revolution”. Read it here first.

The post Wendy McElroy: Crypto as Class Warfare appeared first on Bitcoin News.

Bitcoin News

TMZ

What’s the Big Frigin’ Difference?!

June 23, 2018 |

Don’t let these two almost identical images of Paris Hilton throw shade your way, show off what you’ve got by seeing if you can figure out the differences between these two super similar snaps! **HINT — There are THREE differences in the above…

TMZ.com

Boeing’s robot submarine is back roaming off the California coast

June 23, 2018 |

Boeing Co.’s Echo Voyager has headed back to sea for a second round of testing, as the aerospace company looks to demonstrate the underwater drone’s more sophisticated capabilities for a U.S. Navy contract competition.

The 51-foot-long, yellow and grey autonomous undersea vehicle is being designed…


L.A. Times – Business

Troubled Talks Hold Post-Brexit Security in the Balance

June 23, 2018 |

European pledges to pursue close security ties with Britain after Brexit have been numerous since the U.K.’s vote to leave the bloc two years ago today—but to some, they are starting to ring hollow.
WSJ.com: What’s News Europe

Very Special ‘Student’ Makes Appearance in School Yearbook

June 23, 2018 |

A service dog has his own photo in an upstate New York middle school’s yearbook. Oscer accompanies 14-year-old Hudson Golebiewski, an eighth-grader who has autism, to the Vestal Middle School. Like the other students, the 3-year-old golden retriever was photographed against a gray background and was placed in the book…
Newser

Up to 9K Whiskey Barrels Just Crashed to the Ground in Ky.

June 23, 2018 |

Thousands of whiskey barrels crashed into a massive heap Friday when a large section of a decades-old storage warehouse collapsed at a distillery in the heart of Kentucky bourbon country. The damaged warehouse at the Barton 1792 Distillery in Bardstown held about 18,000 barrels, and it appeared that up…
Newser