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Shadowy US spy firm promises to surveil Crypto users for the highest bidder

by Kit Klarenberg 
 
Part 2 - Who watches the watchers?

Ever since Bitcoin’s launch in 2009, anonymity has been an absolutely fundamental tenet of cryptocurrency. The ability to make and receive payments incognito through a secure, decentralized platform without needing to register a named bank account, or even interact with established financial gatekeepers at any stage, was and remains a unique selling point for the asset.

The principle of anonymity is taken so seriously by crypto practitioners and aficionados alike that industry platforms are graded according to their levels of privacy. Many crypto entrepreneurs, some of whom manage hundreds of millions of dollars for clients, conduct business without ever disclosing their names, or any identifying information at all. Venture capital firms have even invested vast sums in crypto ventures with wholly pseudonymous founders, an unprecedented sectoral development.

In recent years, however, there have been several clear indications that cryptocurrency anonymity is under significant threat, and indeed could already have been mortally compromised by the U.S. intelligence apparatus. In June 2021, it was revealed that the F.B.I. had successfully traced and recovered $2.3 million in Bitcoin extorted by hackers from Colonial Pipeline in a ransomware attack, which had shut down the company’s computer systems, causing fuel shortages and a spike in gas prices.

U.S. officials declined to reveal how they tracked where the ill-gotten funds had ended up, and identified the ultimate owners of 23 separate cryptocurrency accounts belonging to DarkSide, the hacking collective responsible for the cyberattack, although public statements by C.I.A. director William Burns in December that year may provide a clue. Speaking at a Wall Street Journal summit, he acknowledged that his Agency was engaged in “a number of different projects focused on cryptocurrency.”

This is something I inherited. My predecessor had started this,” he said. “Trying to look at second- and third-order consequences as well and helping with our colleagues in other parts of the U.S. government to provide solid intelligence on what we’re seeing as well.

While it’s certainly true that cryptocurrency’s anonymity is attractive to criminal elements and terrorist groups, there are a wide variety of entirely legitimate reasons for seeking privacy in financial transactions, and preventing regulators, big banks, and governments from keeping an eye on what one is doing.

For example, political and social movements of every stripe in all corners of the globe have embraced the asset, as they can be financially supported from overseas without any paper trail being left at either end. In turn, activists can send money to each other and make purchases in secret, and organize events and construct local and international support networks, leaving authorities none the wiser.

In Venezuela, cryptocurrency has provided vital respite to an entire country, as crippling U.S.-led sanctions have in recent years deprived both its government and citizens of access to, and the ability to buy, even basic necessities, including food and medicine. The national currency’s value reduced to almost zero, crypto transactions offer a literal lifeline by which goods and services can be accessed, and import and export restrictions imposed by Washington circumvented.

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