On October 3, the U.S. Department of Justice filed accusations against the seven GRU officers, accusing them of a number of economic crimes, as well as cyber attacks. As the Grand Jury of the Western District of Pennsylvania states in a published document, “in order to acquire equipment that is necessary for hacking activities, the defendants conspired to launder money through a network of transactions designed to exploit the seeming anonymity of such cryptocurrencies like Bitcoin.” Further, the document states that the use of Bitcoin “allowed the conspiring defendants to avoid direct contact with traditional financial institutions.”
As for the details of allegedly committed criminal manipulations with Bitcoin, it was stated that the defendants “registered several hundred email addresses” so that “there were no paper documents that would leave traces of all their transactions,” while clarifying that the purchase of equipment for hacking activities was carried out using Bitcoins. But that's not all. It is alleged that the GRU received Bitcoins through mining, and the mined cryptocurrencies were used to pay for a domain name on the Internet to conduct phishing attacks, to obtain data on doping from 250 international athletes, as well as to pay for information services of other companies that are in the U.S.A.
Bitcoin Topic "Thrown in" to Impeach Trump
What do all these charges mean? It is noteworthy that three of the seven accused were involved in the investigation of the special prosecutor Robert Mueller as allegedly guilty of interfering in the American elections, in particular, in the campaign to elect the President of the United States in 2016. That is, in the end, all the accusations against citizens and organizations of Russia fit in one line, which leads to the impeachment of the current U.S. President Donald Trump. And it turns out that such goal setting of the entire range of investigations makes them obviously biased.
Trump's suggestion that the Mueller team is staffed for the most part by supporters of the losing presidential election, Hillary Clinton, was confirmed by The Washington Post. The fact that the grand jury, which, according to American law, makes accusatory documents, consists of people attracted from those parts of the United States where Trump’s support is extremely low was also pointed out by the former Speaker of the House of Representatives of the U.S. Congress, Newt Gingrich.
There are also gross factual errors: the GRU, like the KGB, does not exist in Russia. The GRU ceased to exist in 2010, and the Main Directorate of the General Staff of Russia was established in its place, but not necessarily with the same tasks and functions. Mistakes with such “trifles” are not just annoying, but make the fabric of the charges look like some kind of inaccurately written story in which the GRU falls into a crypto trap. Despite the fact that blockchain grants the opportunity to see those operations with Bitcoins, which are referred to in the documents of the U.S. Department of Justice, there is no solid evidence that these operations were carried out on the orders of any special service. What then is the secret meaning of this whole story?
Bitcoins appeared in the first investigation, and in the most recent one, as well as in the interim July document and the topic of their use became transparent, as they say in this case. In his investigation, Mueller states that Bitcoins in the amount of $95,000 were used to purchase domain names and computer servers "in order to ensure anonymity." For Mueller, the question of whether it was done in vain clearly did not matter. Then what happened from February to October, when it was recently stated that the use of Bitcoins not only could not provide anonymity but actually became the thread that supposedly “lead to” all the charges?
The Logic of the U.S. Authorities: "Bitcoin Has No Anonymity," "Tighten All the Rivets"
Pedaling the topic of lack of anonymity with Bitcoin has become an obsession in the U.S. government circles. On July 18, a few days after the interim report, a hearing was held in the U.S. Congress organized by the Committee on Agriculture, entitled: “Cryptocurrencies: A Review of New Assets in the Digital Era.” Managing partner Andreessen Horowitz, Scott Kupor, who participated in the debates, stated that “Bitcoins are, in fact, the most inconvenient means of preserving anonymity when transferring funds, since everything is recorded on the blockchain.” He was supported by Lowell Ness, managing partner of the law firm Perkins Coie, who said that “because of this quality of Bitcoin, evidence was found of Russia's interference in the American elections.” Summing up, Congressman Mike Conaway said that "We can only pray that all the criminals of the world will switch to cryptocurrencies because then it will be easy to apprehend them all." In the end, it all came down to giving more powers to the U.S. administrative authorities, which are already so broad-based, in particular, the FinCEN. This is the focus of the bills H.R.6411 FinCEN Improvement Act of 2018 and H.R.6721 FinCEN Modernization Act of 2018.
Meanwhile, on September 7, at a hearing held in the House of Representatives of the U.S. Congress, Yaya J. Fanusie, director of analytics at the Foundation for the Study of Sanctions and Illegal Financial Transactions for the Defense of Democracies, said that cash dollars provide more anonymity for criminals than Bitcoins, and it is questionable whether the cryptocurrency can offer the same advantage.
From Investigations to Discrediting Bitcoin
The fact that Bitcoin works on the blockchain, and thus maintains all the records of transactions means that there is no anonymity, but this fact has already been interpreted as a weakness of cryptocurrencies and their vulnerability to hacker attacks, as evidenced by the discussion in the Twitter account of former U.S. intelligence analyst Jason Buttrill. Such a thesis, however, is false: the Bitcoin network has never been hacked since it appeared, that is, for nine years.
All this looks like a planned campaign based not only on the political goal outlined above, but also pursuing an attempt to discredit Bitcoin and cryptocurrencies in the broader sense of the word. In the realities of the United States, there is nothing more negative about cryptocurrencies than tying up Bitcoins and the intervention of the “ubiquitous” agents of the GRU in order to finally marshal society against cryptos.
The fact that there is an incomprehensible delay in building clear rules regarding cryptocurrencies in U.S. government circles is obvious to everyone, including U.S. congressmen, as Tom Emmer said and what the letter of September 19 signed by five congressmen testifies to the IRS (U.S. Internal Revenue Service Department) demanding not only taxing cryptocurrency activities but working out measures for fiscal stimulation of new financial technologies. The executive branch of the United States is still responding weakly to such appeals from legislators.
Meanwhile, in the U.S. Department of Homeland Security, one of the country's 22 special services, they emphasize that cryptocurrencies are easy to track when they are exchanged for fiat. At the same time, the department emphasizes that the volume of criminal transactions with cryptocurrencies is insignificant compared to how many such transactions are carried out with fiat, in particular, with the U.S. dollar. On the basis of statistics, fiat, not cryptocurrencies, should be subject to all restrictions.
But in Congress, there are those who support the general critical attitude towards Bitcoin of the executive power of the United States. Congressman Emanuel Cleaver demanded that the cryptocurrency industry respond to the fact that Bitcoin is used for dishonest purposes. Cleaver joined those colleagues in Congress who, like Bill Huizenga, for example, stated that “everyone is thinking whether Bitcoin is a fish or a bird, or maybe it is a porcupine,” as well as Brad Sherman, who demanded a ban be imposed on cryptocurrencies.
It is curious that the mining of cryptocurrencies has become an “unreliable occupation” on the basis of the presented charges against Russia, which means that the U.S. authorities can follow the path of China and prohibit this activity. At the very least, economic attempts to “strangle” it have already been made. Energy tariffs were raised significantly for miners in the states of Washington and New York, which now turned out to be higher not only for those intended for individuals but also for companies from other sectors of the economy.
Politics and Cryptocurrencies: No Good Can Come from Such a “Symbiosis”
How should the cryptocurrency industry respond? The mysterious origin of Bitcoin should not scare anyone. As the internet was once developed by the U.S. Department of Defense, Bitcoin can be in some sense a product of the CIA, as Natalya Kaspersky said, although it is unlikely.
An important time has come for the cryptocurrency industry: its voice must be clearly heard not only at the meetings and discussion threads on Reddit but it is necessary that new financial technologies start working as quickly as possible for the benefit of humanity. Blockchain and cryptocurrencies are not only fast, cheap, and secure financial transactions, but also an effective means of fighting corruption, the solution of all pressing problems of humanity from improving the quality of food to solving the problem of traffic jams and the lack of parking spaces. Adding politics to the question of the development of mass use of cryptocurrencies only creates obstacles for this process: the arguments of the cryptocurrency community in defending their point of view on all the “levels” of power should be as accurate and verified as the work of the blockchain itself.