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How long is the arm of the law? From August 7th to 14th

August 15, 2020

Every Friday, Law Decoded provides an analysis of the week’s critical political, regulatory and legal stories.

publisher’s Note

The DeFi have stolen the show lately. The spectacular ups and downs of unchecked tokens, known as meme food, which change hands in growing liquidity pools They left many of us unimaginative onlookers, mostly blinking.

In this area, I cannot make particularly provocative comments that go beyond the line that comes to mind: “It won’t end well.” Trace it back to a Midwestern guess that the money you make too fast is never really yours. However, the DeFi and Yield Farming situation is too close to the ICO boom to make it any more convenient. A fascinating technology few understand attracts people who can make a lot of money at the expense of other people who want to make a lot of money.

How long is the arm of the law? From August 7th to 14thHow long is the arm of the law? From August 7th to 14th

With the ICO boom It took the SEC a long time to put the tools together for the billions of dollars that have changed hands, but they have a handle. Likewise, a Calvinist sense of inevitability tells me that the law will come because the law wants to be paid. In this light-hearted spirit, we will review a number of recent updates to the government’s ability to prosecute and punish illegal use of cryptocurrencies.

US sets new standard for tracking terrorist-linked cryptocurrencies

In groundbreaking news for the future of illicit cryptocurrency funding The Justice Department announced the seizure of millions of dollars in cryptocurrency destined for al-Qaeda, ISIS and the militant arm of Hamas.

It was obvious to anyone who watched it US federal agencies have worked hard for years to fight cryptocurrency as a channel to finance terrorism. The mapping is often used to discard cryptocurrencies in their entirety. However, It is easy to see a number of philosophical parallels between modern terror and Bitcoin.

Al-Qaeda, for example, has spent decades developing a network of decentralized cells made up of pseudonymous operators. That has proven incredibly resilient against the more armed established nations. Doesn’t that remind you of Bitcoin nodes? Not to mention, companies like ISIS these days are more likely to rely on preferred encrypted messages like Telegram and Signal to recruit and communicate rather than the traditional mountain satellite phone.

An important moral distinction to interrupt such philosophizing is the following Bitcoin doesn’t kill people, but like all money, many people are willing to kill to get bitcoin.

The latest announcement of the investigation was clearly a bomb. The Department of Justice, the Department of Homeland Security, the IRS, and the FBI are taking a long time to work together on anything. This is the product of years of work. Major media outlets like the New York Times and Washington Post have been flagged so the story can be expanded immediately. The DoJ wanted to get the message across as much as possible: Watch out, here comes the government.

The Russian bear never sleeps

In related news from the other side of the world Rosin monitoring, Russia’s watchdog of illegal funding, develops a new analysis system for tracking transactions in the blockchain.

While recent developments around the world, particularly Chainalysis, Ciphertrace, and the younger Elliptic, have done much to remove the veil of “anonymity” that governments fear so much on networks like Bitcoin, Rosinfomonitoring’s plans appear to include tracking privacy coins like Monero and Dash.

Despite the widespread and growing interest in the region and the question of how private some of these so-called data protection coins are, Some turned out to be faster in adapting their technology than the people who tried to pursue it.

For public appearances, Russia comes into play relatively late. Despite a lack of resources from the USA or China The technological agility of the Russian secret service routinely exceeds all expectations.

While government agencies continue to be on board the possibilities of crypto, there is one major barrier that resources don’t always outweigh. In the more security-sensitive areas of technology in general and cryptocurrencies in particular, there is a deep hostility towards cooperation with the government. When you choose to use privacy tokens, many of the people who understand them best are the same who least want to collaborate with the government. On the flip side, the intelligence community, at least in the US, is struggling to align its security clearance processes with the hackers and cypherpunks they would need to hire in order to remain competitive.

Another ICO bites the dust

The SEC arrested another boom-era ICO. in news that has already become known.

The ICO in question for Boon.Techs Boon Coins raised only $ 5 million, and the demand from the authorities isn’t particularly extreme. The SEC is demanding the return of these funds to investors, penalties of less than $ 1 million, and prohibiting the project’s executive director from holding public office.

And counts? The contract is part of what appears to be an ongoing trend for the SEC to improve its engineering and crypto jargon skills. Even in small enough cases that they probably weren’t wasting a ton of the Commission’s resources. As usual, The pursuit of an ICO of this magnitude is based on an apparent theft of funds – lambos appearing on the driveways of recently purchased homes from token traders using funds they cannot support. This case is interesting because it shows an increase in random technological knowledge.

further reading

Kelman Law leads us through of the mosaic of money transfer licenses required in each of the US states

Jerry Brito, CEO of the non-profit lobby group Coin Center, advocates the language of “allowed” and “not allowed” networks.

The global payment processing system, SWIFT evaluates what digitization can do to meet the identification requirements for “know customers”.

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