On Lawfare Nicholas Weaver discusses the recent closure of the currency exchange site BTC-e, its effect on the ransomware market, and how the technology of Bitcoin may be a bit tricky for criminals to handle. The US prosecution requires that criminal activity took place on US territory, and Tradehill, which was used by the owner of BTC-e for alleged money-laundering, is in California:
Since Tradehill was located in California, this gives a strong California nexus for all these charges, which is very important. BTC-e may be a global criminal enterprise, but the U.S. Attorney has to prove that each crime has a tie to the district where the prosecution takes place. With MtGox located in Japan and BTC-e in Eastern Europe, only Tradehill’s involvement gives the United States jurisdiction to prosecute for the theft [from MtGox].
It also is remarkably easy to prove. The “Blockchain is forever,” as the saying goes—which makes a criminal’s Bitcoin mistakes forever as well. Since it is now straightforward to identify the chain of custody as Bitcoin transfers were stolen from stolen from MtGox, then moved to a wallet belonging to Vinnik on TradeHill, these charges will be much easier to prove and won’t require decoding a maze of shell companies and Eastern European financial transactions.
And, in the age of computers, such tracing may be the matter of seconds, rather than the laborious checking of paper files from yester-era. Something to consider, young criminals.
