Bitcoin Is a Bad Way to Fund the Ottawa Protest, and That's a Good Thing

Funding an illegal protest isn’t right in any currency, even if the government’s use of the Emergency Measures Act should worry all Canadians.

By JP KoningLayer 2
Feb 17, 2022 at 5:18 p.m. UTC
By JP KoningLayer 2
Feb 17, 2022 at 5:18 p.m. UTC

J.P. Koning, a CoinDesk columnist, worked as an equity researcher at a Canadian brokerage firm and a financial writer at a large Canadian bank. He runs the popular Moneyness blog.

Bitcoin has been advertised as a viable way for getting funds to the truck convoy protestors in Ottawa when fiat-based tools like GoFundMe don't work. But it has proven to be a less-than ideal way to fund the trucker convoy. And that's a good thing for Canadian democratic society.

The 20-day Ottawa protest has long since transitioned into illegal territory. Like any other illegal protest on Canadian soil, it needs to be ended. Unreliable funding only helps to reduce the mischief, especially if that funding can be nudged into functioning even less reliably.

J.P. Koning, a CoinDesk columnist, worked as an equity researcher at a Canadian brokerage firm and a financial writer at a large Canadian bank. He runs the popular Moneyness blog.

Don't get me wrong. As a Canadian, I realize that democratic protest is vital. It is one of many ways for citizens to change minds and initiate change. Money is integral to supporting protest. And the Ottawa trucker convoy – which started as a protest against coronavirus vaccine mandates – has aptly demonstrated the power of several new protest-friendly, internet-based financial tools: crowdfunding, instant personal bank transfers and bitcoin.

A GoFundMe campaign to fund the Ottawa convoy began on Jan. 14, hitting $7.9 million just a few weeks later. When the campaign was canceled by GoFundMe on Feb. 4 for breaking its terms of service, a replacement campaign hosted on competing U.S. crowdfunding site GiveSendGo beat that amount within a few days. It currently stands at $9.5 million.

A parallel bitcoin fundraiser, organized by a trucker-support group called HonkHonkHodl, on Tallycoin, a bitcoin-based crowdfunding site, quickly raised 21 bitcoins ($900,000). Another $400,000 was reportedly donated to organizers via Interac e-Transfer, Canada's version of Zelle.

When protest becomes illegal, it's the task of the police to step in and break it up. Any inability to do so on their part hurts one of the other key pillars of democratic society: rule of law. If the law no longer functions, Canada would quickly descend into a state of perpetual chaos.

By Feb. 9, the protest had reached the illegal stage. That day, the Ottawa police department notified protestors they were engaging in mischief, a criminal offense. The "unlawful blocking” of streets was resulting in citizens being denied the "lawful use, enjoyment and operation of their property," declared the police department's press release, and the convoy was henceforth required to cease its blockade of downtown Ottawa.

But the protestors didn't comply.

When protests are illegal, law enforcement has a number of tools at its disposal to restore order including arrests, fencing, space control and negotiation. But the Ontario provincial government added an additional lever that (as far as I know) has never been used to control an illegal Canadian protest: It shut down the convoy's massive crowdfunding campaign.

Ontario's attorney general secured a restraint order from an Ontario judge freezing all donations received via the convoy's two GiveSendGo campaigns. The restraint order, which was issued under Section 490.8 of Canada’s Criminal Code, also extended to GiveSendGo funds already transferred to convoy organizers, including the convoy’s non-profit organization. The legal justification for the restraint order was the usage of the funds to commit the "indictable offense of mischief."

GiveSendGo boasted that the restraint order didn’t apply to it, but it was an empty boast. Any Canadian bank that received a wire transfer from GiveSendGo for credit to the convoy’s bank account was obligated to immediately freeze it, on pain of breaking the law. The order had neatly crippled the $9 million in crowdsourced funds.

Although the Tallycoin bitcoin fundraiser was not named in the restraining order, it was no less vulnerable to being frozen than the funds on GiveSendGo. The coordinators of the bitcoin fundraiser had envisioned distributing the 21 crowdfunded bitcoins to the same set of convoy leaders who were beneficiaries of the GiveSendGo campaign. The convoy leaders would then convert the bitcoins into Canadian dollars via an exchange and spend them.

It's pretty easy to spot the weakness. The very same judge who issued a restraint order on the nonprofit organization's GiveSendGo funds could have also issued it on the bitcoins raised on Tallycoin by the nonprofit. No bitcoin exchange in Canada was going to touch those funds, thus confining the 21 bitcoins to the same purgatory as the $9 million in GiveSendGo funds.

The coordinators of the bitcoin fundraiser have since shifted to a complicated strategy of paying bitcoins directly to truckers, the idea being to avoid single points of control. But evading centralized infrastructure means subjecting truckers to all of bitcoin’s pain points, reducing the fundraiser’s effectiveness so it shouldn’t be much of a concern to law enforcement.

Efforts to quell the illegal protest have since crescendoed with the federal government's invocation of the Emergency Measures Act, a law that gives the federal government extra powers during times of national crisis. Among other things, the Emergency Measures Act temporarily allows Canadian financial institutions to freeze accounts of any individual or business affiliated with the illegal blockades. A court order need not be secured, and the government says it will protect the banks from being sued for damages.

In addition, financial institutions must disclose to the Royal Canadian Mounted Police or Canada’s intelligence agency, CSIS, whether they are holding funds for participants in the protest.

The measures will help foil bitcoin person-to-person funding attempts. The RCMP has sent letters to Canadian cryptocurrency exchanges asking them to cease dealing in 30 different bitcoin addresses, presumably those involved in the Tallycoin fundraiser. Because bitcoin transactions are public and traceable, exchanges will be able to freeze trucker accounts if they are linked to the embargoed addresses.

The powers afforded by the Emergency Measures Act make me very uncomfortable. It's one thing to use regular legal channels like Section 490.8 of the Criminal Code to secure restraint orders on large actors involved in mischief and unlawful blockades. That seems like a reasonable addition to law enforcement's arsenal of tools for ending illegal protests. We know it worked. The $9 million in GoFundMe funds are immobilized.

But it's a completely different thing to introduce special measures for freezing any and all accounts associated with the protest, and to do so without a court order or the opportunity for citizens to take banks to court. Undeserving Canadians who may have donated $20 to a cause they didn't entirely understand could get caught up in the blast radius.

Canadians don't yet know all the gritty details that led the government to invoke the Emergency Measures Act. But when the time comes for the automatically mandated official inquiry into the government's actions, the government will have to prove to citizens that it meant to prevent something more than just the "unlawful blocking” of Ottawa streets, but something truly sinister. Until it does so, the powers afforded by the Emergency Measures Act should worry all Canadians.

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J.P. Koning, a CoinDesk columnist, worked as an equity researcher at a Canadian brokerage firm and a financial writer at a large Canadian bank. He runs the popular Moneyness blog.

J.P. Koning, a CoinDesk columnist, worked as an equity researcher at a Canadian brokerage firm and a financial writer at a large Canadian bank. He runs the popular Moneyness blog.

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