US Secret Service Warns Congress About Future Implications of Unregulated Anonymous Cryptocurrencies
Thanks to a great number of incidents and the coin’s ever-growing popularity on the Dark Web, it’s no surprise that Monero has now captured the unwanted attention of many governments.
Represented by deputy assistant director Robert Novy, the US Secret Service’s Office of Investigation has officially warned Congress regarding the potentially illicit activities such as fraud and money laundering associated with privacy coins such as Monero and Zcash and the risk of not regulating their usage, as reported by Forbes.
“It is critical that the United States continues to work internationally to improve controls related to digital currency through organizations like the Financial Action Task Force. 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,” Novy recommended in his prepared testimony.
Novy sat down with the House Financial Service subcommittee at the hearing, and his testimony also addressed the ever-growing negative impact of malware and other technological crimes in connection with cryptocurrency.
“The growing popularity of blockchains has also resulted in the growth of criminal activities closely related to its proprieties. These include: crypto-jacking, thefts of private keys, ransomware, and attacks on blockchain networks themselves. Crypto-jacking is the use of malware or compromised websites to use, without authorization, computing power of others for cryptocurrency mining. Control of assets on a blockchain is maintained through exclusive control and access to the associated private cryptographic key; however, there have been numerous instances of cryptocurrency heists, involving major exchanges, wallets and individual users resulting from the theft and illicit use of private cryptographic keys. While ransomware, which impairs the operation of a computer as part of an extortion demand, has been around since the late 1980s, its growth over the last four years has substantially been driven by use of cryptocurrencies as the means of paying extortion demands.
Finally, we have observed a few instances of attacks on blockchain systems themselves, either to impair their operation, as part of a broader scheme, or as part of a to defraud other users of the cryptocurrency. All such activities typically involve violations of the Computer Fraud and Abuse Act (18 U.S.C. § 1030) and potentially other criminal statutes.”
Most illegal activities are not crypto-related
The deputy assistant director of the US Secret Service was not the only one to speak at the hearing. In spite of Novy’s warnings, FinCEN’s associate director of the enforcement division, Thomas Ott, calmly pointed out that most illegal activities still occur by conventional means, and are not directly related to cryptocurrency, Forbes reported.
“While traditional financial methods remain the primary vehicle for most illicit activity, FinCEN believes virtual currency presents specific illicit finance risks and that without vigilance and action, the scale of this activity could grow.”