It’s Time to Stop Giving Crypto Companies a Pass

The young industry is pushing back on attempts at regulation, but it’s undeniable that crypto is used for sanctions evasion and illicit activity.

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In response to growing concerns, including from U.S. sanctions officials that Vladimir Putin and his oligarch allies might look to cryptocurrency to conceal their financial movements, two bills—one in the House, sponsored by Rep. Brad Sherman (D-Calif.), the other in the Senate, sponsored by Sen. Elizabeth Warren (D-Mass.)—would authorize the president to impose financial sanctions on any digital asset trading platform that provides services to a sanctioned Russian person or entity. 

The pro-crypto lobby is unhappy, and has reportedly spent $460,000 to oppose the legislation. While the decision to side with Putin and his allies risks significant reputational damage for a burgeoning industry desperate for Washington’s legitimization, it should also serve as a wake-up call to congressional Republicans to stop giving crypto companies a pass.  

“These bills don’t target Russian oligarchs, who aren’t using (& can’t use) crypto to evade sanctions,” declared the policy director for the Blockchain Association, a lobbying group representing more than 70 crypto platforms. The statement is not true. Crypto can be used for sanctions evasion, and sanctions have always been applied to platforms that knowingly enable or facilitate sanctionable transactions. Indeed, Russian crypto abuses are nothing new. 

Russia has emerged as a haven for cybercriminals who live on the digital decentralized ledger known as the blockchain, and it’s already the third-largest cryptocurrency miner in the world. Russia is a hub for “ransomware-as-a-service” providers who operate on the dark web, often with the connivance or even support of Putin’s regime. Now, as traditional bank compliance programs shut down the oligarchs’ ability to move funds, cryptocurrency platforms are an attractive conduit for sanctions evasion. 

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  1. Avatar photo
    Ben Connelly

    Hmm. I like the decentralized aspects of crypto but I see the problem with money laundering. Still I’d like to see an opposing case to this one since I think there’s more to the story.

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  2. Avatar photo
    O.M.G. calling from Vaudeville, AZ

    I could not have been more right, and wrong, about what I have always said to my computer geek, liberdopian friends, about bitcon for going on over ten years, when I could have cornered that market with my own bank account (what it would be worth today would make Hunter Biden fringe). Bitcon has always been of completely no use to me. I have always been just fine with my Wells Fargo card as a means of exchange. Just as I have no need for privacy in any of my monetary exchanges, nor am I trying to evade taxes. I never foresaw the use to criminal syndicates, not to mention foreigners rightfully trying to hide their daily toil from gangster governments. That said, Yahtoshi Sakomoto, or whoever Keiser Sosha really is, really is just the. Bernie Madoff of Ponzi Schemes, who could not be more lucky for catching the Chinese Corona Communist Party virus. The scam is rightfully built off the full faith and discredit big government U.S. Treasury hyper printing press, and super computer programming, not to mention a billion dollar boost from one Elon Musk. To wit, I cannot stand so called miners, I mean geek squad money speculators that have made immoral profits off of blood diamonds, drugs and tax evaders…But, as always is the case, rabble rousers like the pseudo intellectual pure white trash neo international socialists like the hideous librarian witch Elizabeth Warren aim their pointy nose up the wrong arses…if the United States wants to sanction Putin and his oligarchs crime families, make like Michael Corleone in the ending of the greatest film ever made….for the upteenth time, speaking of anonymous, when is some so called leader in the still free western world going to finally place a billion dollar Bitcoin bounty on Putin’s head. In the meantime, here’s hoping for as many Ukrainian full metal jackets enter the skulls of Putin’s willing executioners. Computer geeks are not the open source of our free worlds problems. Gangsters and mass murderers are. Gotta run on. Thanks for taking my rant Dispatch. Peace through superior mental firepower

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    1. Brendan Bossard

      Why not place *any* government-backed bounty on Putin's head? Because this starts a game of one-upsmanship that can only lead to bad things in the long term. Let Putin's own people take care of him when they tire of international condemnation.

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      1. Avatar photo
        O.M.G. calling from Vaudeville, AZ

        Hi Brendan. Respectfully, i am not sure I understand the import of your question, let alone am I the slightest bit concerned of one upsmanship if and when one of the worlds most successful, powerful, dangerous gangster were rightfully, justly, finally summarily executed. And there is no such thing as “Putin’s own people”. There is such thing as Putin’s “willing executioners “ who are committing mass murder right fing now….hence, I could give a flying f what anyone who would not support Putin’s execution thinks, as they defend or commit evil on behalf of Vlad the Impaler. I know that many of those Sicko fans, I mean sycophants of Putin are just as unworthy of life as the dictator that those fing lowlifes support and defend, as they tire of international condemnation they earned for the evil they do.

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        1. Brendan Bossard

          I appreciate your sentiments. I am referring to the probability that when government entities start backing bounties on world leaders' heads a dangerously petty and unstable geopolitical state will develop. In this case, Putin would not be the last. China, North Korea, Iran, or any number of othe malefactors could say, "The US did it! Why can't we?" And you have the one-upsmanship that I assert. Our own Senate vis-a-vis the filibuster is an example of this dynamic. (Whether one thinks the filibuster is a good thing is not relevant to my point.)

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          1. Avatar photo
            O.M.G. calling from Vaudeville, AZ

            Good morning Brendan. I to appreciate your pushback. I prefer clarity to agreement. Right now innocents are being murdered in mass by Putin’s people, I mean willing executioners. You are either with U.S. and peoples that yearn to breathe free, or you are just fine with unstable “geopolitical[wtf] states…better them than me…Not to play games with words, or mean to patronize you, but I have and never will call a mass murderer a “leader”, just as I have already called for Putin’s fellow gangsters of the world disunited, Premier Mao, I mean Xi, the puny man of North Koreas crime syndicate, and the A hole a tollah of Irans summary execution on different Dispatch threads, and elsewhere, for my entire adult life. Accuse me of filibustering all you want. I know not what you mean, as I respectfully just try to reply, in earnest, to everything you say, and at best, let you know exactly where I am coming from and mean what I say. To wit, we still free peoples in the Western world are ruled by a lot of cowards and idiots that won popularity contests. Many of them should be in jail right fing now for aiding and abetting Putin, a la Angela Merkel and Gehrard Schroeder, and Biden should be in assisted living, and Americas Biggest Sore Loser Donald J Trump at the very least should be pretty in pink in America’s Roughest Sheriff’s Joe A hole April Horseshoe penitentiary. In the meantime, here’s hoping someone does shoot Putin between his evil eyes and evil skull and as many Ukrainian full metal jackets enter the skulls of Putin’s willing executioners. The probability of someone disagreeing with that sentiment only concerns me to what extent they can hurt me or other innocents, because I could give a damn what they think because every single one of them is unworthy of life, liberty or the pursuit of happiness because I do not forgive them for what they have done. Peace through superior mental firepower

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  3. Acre00

    This article is probably the worst posted by The Dispatch. Completely one sided, not a basic explanation of the concerns driving crypto. I'm surprised there wasn't a "Won't somebody please think of the children!" thrown in

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    1. Rick K

      Yeah pretty disappointing. As if the confidentiality and liquidity should only be considered useful to Friends of Putin. This guy should drop a job app at Fusion GPS. At heart, a statist who probably dreams of the day cash is gone so his government can finally know everything about everyone.

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    2. Avatar photo
      Pat Riot

      What is the "other side of the story" then?

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      1. Acre00

        See my response to Narwal below

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    3. Avatar photo
      Narwhal

      Out of curiosity, do you own any cryptocurrency? A simple yes or no will suffice. I’m not asking how much, if any, or what type, etc.

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      1. Acre00

        Nope, too volatile for me.

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        1. Avatar photo
          Narwhal

          Thanks.

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  4. Avatar photo
    Pat Riot

    Has *any* ransomware attack ever occurred using something *other* than cryptocurrency? I'm really curious about that. Logistically it seems like it would be nearly impossible for an attacker to get their money the old-fashioned way and still evade the authorities.

    As such, demanding these networks be trackable by law enforcement sounds like a no-brainer: with one set of regulations we could eliminate an entire *class* of crime.

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    1. Acre00

      Ransomware attacks far predate cryptocurrency

      https://techmonitor.ai/technology/cybersecurity/ransomware-and-cryptocurrencies#:~:text=But%20the%20early%20ransomware%20attacks,simply%20fuelled%20the%20growing%20trend.

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      1. Avatar photo
        Pat Riot

        Got it. How did they do it? Stacks of physical cash? Swiss bank accounts (which no longer work for criminals)?

        It seems like hackers--especially foreign hackers--would have a *hell of a time* trying to get paid and not get caught doing it.

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      2. Avatar photo
        Narwhal

        Fair enough.

        Despite not being an owner of cryptocurrency, you do seem to be a defender of it to some degree or another.

        Could you give two or three examples of the positive effects or beneficial qualities of cryptocurrency?

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        1. Acre00

          There are two separate things I will argue in this thread. The first is a defense of the concept of cryptocurrency. I have no desire to argue for any particular cryptocurrency, nor the way that it is being done now specifically. The second is the idea that this article is bad and the author(and editors) should feel bad.

          I support the idea of cryptocurrency because I feel

          I support the idea of cryptocurrency primarily because I believe there is a significant liberty interest in making financial transactions without being surveilled. We are moving toward a society where our every move, every call, every message, every transaction, is being recorded. Some of this is by the government directly(direct capture of calls, interception of gps signals, license plate readers, etc), some of it is done by private institutions(ie, banks, phone companies, etc) and then reported to the government. Even if it is only held by a private party it can be misused. Cash performed this role in the past, but as we enter a cashless society the need for an alternative arises.

          The best practical defense of cryptocurrency is ironically the very argument made for banning it: it allows one to avoid government oppression. This has notable downsides, but also upsides. Sometimes it's trivial, like avoiding embarrassment when buying porn or a sex toy. Other times it's for serious; for instance, I've read articles about Venezuelans using it to get around government seizures of other currencies. If you'd like some specific examples I can find some and post links.

          To be sure, there is a government interest in enforcing the law. It should also be noted that crypto isn't completely anonymous. It can be tracked if one has the resources to put towards it - that's how the feds caught the head Silk Road. If they have a big enough fish they're trying to catch, they don't need this regulation. The government just wants to make its job easier.

          The article is bad and the author should feel bad because the article doesn't mention any of this, and tries to imply that the only reason anyone is against it is because they're in favor of Russia and its ransomware. It's a straight ad hominem argument, void of any actual substance. I could write an article the exact same way asking why the author supports the persecution of minority faith in the middle east, since it removes the ability of those people to buy religious goods anonymously.

          There is a good version of the argument presented here. The Soho Forum did a debate on this a while back that was quite good. This article does not present the good version.

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          1. Avatar photo
            Pat Riot

            So... you want *anonymous transactions*. I think that's fine as long criminals can't exploit this, e.g. law enforcement with valid subpoenas need to be able to break that anonymity.

            I get the problem with rouge governments but anonymous currency isn't going to help you against them in any case since they can attack your physical body. All cryptography can be unlocked with the "rubber hose cryptanalysis". The *only* solution to bad governments is to destroy them with military or political action.

            The entire *premise* that Bitcoin was going to allow "transactions without the government" is belied by the regulations that are *already* placed on it: in order to transact outside of Bitcoin itself (e.g. buy any tangible thing or trade it for hard currency), then... it involves a government. There's no way around that, and the implicit enforcement of contracts demands it: if you buy a car with Bitcoin anonymously and the car dealer so no you didn't never heard of this guy go away police arrest that car thief.

            And yes, most of today's cryptocurrencies aren't anonymous and are indeed even *worse* from a privacy standpoint for most people.

            If somebody offered a fast, *actually private* means of anonymous transactions that could be uncovered with a valid legal subpoena, then I agree that would be useful for transactions you don't want to share publicly, or with marketing companies tracking you. And this system would necessarily be limited to *small* transactions that would tolerate the risk of the transaction being unenforceable in the event of a contract breach (e.g. your Snickers Bar getting stuck in the machine or some equivalent).

            Also, in order for the currency to be useful, it would need to be tracked to the US dollar, otherwise it's just a speculative instrument not a viable means of transacting.

            It sounds, in other words, like somebody should just come up with a competitor to PayPal that is actually anonymous. Problem solved.


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        2. Avatar photo
          Pat Riot

          It allows people to gamble without getting on that pesky airplane to Las Vegas or driving to your local native American reservation. Surely this saves America thousands of gallons of gas and jet fuel every year.

          Edit: I just noticed you asked for *all* of the benefits. Here's the remaining list:

          2. It enables criminals to profit from their activities.

          3. It allows people to buy things anonymously, as long as:

          a) It's something that makes sense to be purchased that way (e.g. not a physical thing that would require a shipping address);

          b) You don't mind waiting about 15-30 minutes for a $4 transaction to take place (whereas a normal credit card transaction takes about three seconds).

          c) You don't mind holding a *volatile speculative instrument* that could crash in value.

          d) You don't mind the hoops you need to jump through (not to mention crazy high brokerage fees) in order to purchase your cryptocurrency.

          Paying for stuff in cryptocurrency, in other words, is like paying for something (directly) with your stock in GameStop. It can technically work, but it's really impractical and has no benefit over normal credit cards for almost all purchases people make.


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          1. Avatar photo
            George.Skinner

            Law enforcement agencies like the FBI have gotten pretty good at tracing and seizing cryptocurrency (e.g. after the Colonial Pipeline ransomware attack), so I'm not sure points 2 or 3 really hold anymore either. Blockchain technology also turns out to be a really good way to develop links between people and transactions. Unfortunately, that kind of goes to the heart of cryptocurrency's only killer app. Otherwise, it's an obsession for the cyber enthusiasts who'd otherwise be gold bugs.

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          2. Acre00

            Given that you didn't know ransomware predated cryptocurrency until about an hour ago, I kinda doubt you're an authority on crypto

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          3. Avatar photo
            Narwhal

            I sense some sarcasm.

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