Ex-FBI Chief: Virtual Currencies Hinder Criminal Investigations

The Federal Bureau of Investigation's work is being hampered by the criminal use of virtual currencies.

May 11, 2017 at 5:34 p.m. UTC
Updated Sep 11, 2021 at 1:19 p.m. UTC

The Federal Bureau of Investigation's work is being hampered by the criminal use of virtual currencies, the agency's now-former director said last week.

James Comey, who was first appointed to the position in September 2013 by former President Barack Obama, spoke before the Senate Judiciary Committee on 3rd May, discussing the issue as part of a broader conversation about the agency's efforts.

His appearance came just days before he was fired from his position on Tuesday night by President Donald Trump, setting off a firestorm in US political circles given that the FBI is investigating the Trump campaign and its connections to the Russian government.

What he said: During his testimony, Comey discussed how an increasing number of criminals are "going dark" - that is to say, obscuring their paths using technology. As a result, federal investigators are feeling the pinch - "[affecting] the spectrum of our work", according to Comey.

Here's where he specifically mentioned virtual currencies:

"Some of our criminal investigators face the challenge of identifying online pedophiles who hide their crimes and identities behind layers of anonymizing technologies, or drug traffickers who use virtual currencies to obscure their transactions."

What's the impact: According to Comey, the agency is trying to find solutions - but thus far, these efforts aren't bearing much fruit.

He called the hunt for fixes "a time-consuming, expensive, and uncertain process", going on to say even the possible approaches they've found are imperfect at best.

"Even when possible, such methods are difficult to scale across investigations, and may be perishable due to a short technical lifecycle or as a consequence of disclosure through legal proceedings," Comey explained.

Nor is the FBI the only agency of its kind to voice this concern. In March, two leading law enforcement bodies from the European Union published a statement which acknowledged that the tech is making it hard to "follow the money" during investigations.

Image Credit: Arif Shamim/Flickr

The Festival for the Decentralized World
Thursday - Sunday, June 9-12, 2022
Austin, Texas
Save a Seat Now

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Trending

1
CoinDesk - Unknown
After Armstrong Tweet, India's Crypto Policy Body Says No Contempt of Court Challenge vs. RBI

The Coinbase CEO last month suggested the RBI's "shadow ban" of crypto exchanges violated a Supreme Court ruling.

The Coinbase CEO last month suggested the RBI's "shadow ban" of crypto exchanges violated a Supreme Court ruling.

CoinDesk - Unknown
2
CoinDesk - Unknown
Portuguese Congress Rejects Two Bills Seeking to Tax Crypto

The proposals were submitted by two leftist parties. The government, which also seeks to apply taxes, hasn’t submitted a proposal so far.

The proposals were submitted by two leftist parties. The government, which also seeks to apply taxes, hasn’t submitted a proposal so far.

CoinDesk - Unknown
3
CoinDesk - Unknown
First Mover Asia: Regulatory Attention on Terra Could Change South Korean Trading Environment; Bitcoin Goes Sideways

The founders of two prominent crypto-related organizations said tightened restrictions could make it difficult for foreign tokens to list on Korean exchanges, discouraging projects from trying.

The founders of two prominent crypto-related organizations said tightened restrictions could make it difficult for foreign tokens to list on Korean exchanges, discouraging projects from trying.

CoinDesk - Unknown
4
CoinDesk - Unknown
A16z Doubles Down on Crypto Investments Despite Market Downturn, and NFL Launches Play-to-Earn NFT Game

The most valuable crypto stories for Wednesday, May 25, 2022.

The most valuable crypto stories for Wednesday, May 25, 2022.

CoinDesk - Unknown