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FBI Fears Bitcoin’s Popularity with Criminals


The FBI sees the anonymous Bitcoin payment network as an alarming haven for money laundering and other criminal activity — including as a tool for hackers to rip off fellow Bitcoin users.

That’s according to a new FBI internal report that leaked to the internet this week, which expresses concern about the difficulty of tracking the identify of anonymous Bitcoin users, while also unintentionally providing tips for Bitcoin users to remain more anonymous.

The report titled “Bitcoin Virtual Currency: Unique Features Present Distinct Challenges for Deterring Illicit Activity,” (.pdf) was published April 24 and is marked For Official Use Only (not actually classified), but was leaked to the internet on Wednesday.

In the document, the FBI notes that because Bitcoin combines cryptography and a peer-to-peer architecture to avoid a central authority, contrary to how digital currencies such as eGold and WebMoney operated, law enforcement agencies have more difficulty identifying suspicious users and obtaining transaction records.

Though the Bureau expresses confidence that authorities can still snag some suspects who use third-party Bitcoin services that require customers to submit valid identification or banking information in order to convert their bitcoins into real-world currencies, it notes that using offshore services that don’t require valid IDs can thwart tracking by law enforcement.

Bitcoin is an online currency that allows buyers and sellers to exchange money anonymously. To “cash-out,” the recipient has to convert the digital cash into U.S. dollars, British pounds or another established currency. Bitcoin is used as a legitimate form of payment by numerous online retailers selling traditional consumer goods, such as clothing and music. But it’s also used by underground sites, such as Silk Road, for the sale of illegal narcotics.


1 Comments in Response to

Comment by Ed Price
Entered on:

Several points.

1. If you do business with a crook, have you done enough due diligence? Will he steal your money and run, without giving you what you paid for? Initially, a lot of gullible people will lose funds by using Bitcoin. Of course, they have lost a lot using the U.S. dollar.

2. If you can make and use Bitcoin, you can make and use Bit-anything - Bit-email, Bit-website, Bit-gambling, Bit-blog, Bit-etc.. Consider The Onion Router. But you can't make Bit-location for real stuff. You can't buy a refrigerator using Bitcoin and hide the address of the sender and the manufacturer when you receive it. For physical stuff, there is always some kind of "paper trail."

3. Probably the largest use of Bitcoin will be for money laundering. However, most of the time, the term "money laundering" is used by "authorities" to refer to some form of legalized, governmentally accepted, form of Ponzi pyramid scheme, where the Government and the big bankers screw their citizens, the people, royally. This means that the more people use Bitcoin, the more the governmental and banking Ponzi schemes are threatened. Because of this, governments will use all kinds of propaganda to de-popularize things like Bitcoin - including this article, above.

4. We are in for a whirlwind of Government backed terrorism that will attempt to keep us within their management. The usual form that this follows is, GOVERNMENT WILL ACT TO PROTECT US FROM TERRORISM THAT GOVERNMENT CREATES. In other words, it will be like a gigantic Maffia protection racket multiplied hundreds of times over... done by our government to us. It's been done to us already, for a long time, in things like WWII and the other wars, Ruby Ridge, Waco, Oklahoma City, 9/11, and others, but it will get worse.

5. One of the most important things to do is to continually develop all kinds of real-life needs for the Internet, for computers, for electronic communications. And the most important area is to develop these uses with Government people, with those who provide the necessities of life, and with those people who earn their bread and butter from supplying us with little or nothing but receive great amounts of our money for it - the ruling class. Why? Because once electronic communications become so imbedded in their lives that they have no other way of making money, they will be the ones who make sure that the Internet is always around. And we will always be able to use it to turn the tables on them and free ourselves.

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