The Department of Justice gave bitcoin investors an unexpected assist earlier this month. On February 8, the DOJ announced that it had seized more than 94,000 bitcoins that were allegedly stolen when Bitfinex was hacked in 2016. The DOJ also announced that it arrested the couple it believed had laundered the stolen proceeds.
“Today’s arrests, and the department’s largest financial seizure ever, show that cryptocurrency is not a safe haven for criminals,” said Deputy Attorney General Lisa Monaco while announcing the arrests. “In a futile effort to maintain digital anonymity, the defendants laundered stolen funds through a labyrinth of cryptocurrency transactions. Thanks to the meticulous work of law enforcement, the department once again showed how it can and will follow the money, no matter what form it takes.”
Normally, the DOJ making bitcoin-related arrests is bad news for the crypto markets. But these DOJ arrests are actually good news.
Two of the biggest complaints policymakers have about bitcoin are:
- Criminals use it.
- Bitcoin makes it too easy to launder money.
The first argument is nonsensical. Criminals use cash, diamonds, artwork and pretty much anything they can get their hands on to commit and get away with crimes.
The second argument is the type of thing that isn’t true. But if it gets repeated often enough, people believe it. And the idea that bitcoin makes it easy to launder money has been repeated often enough that people really do believe it.
Bitcoin transactions are written onto a public blockchain. And each bitcoin has a unique signature. So you can trace the exact movement of every bitcoin in existence. You might not be able to tell who owns each bitcoin every step of the way. But the transaction history is right there in public for anyone who knows where to look.
So bitcoin is actually easier to trace than cash. As a dollar bill passes hands, you can’t keep track of where it is, let alone who has it.
And as the recent DOJ arrests show, the authorities are able to track and recover stolen bitcoin. And they’re able to arrest the people who try to launder stolen bitcoin.
The DOJ proved what crypto enthusiasts have known all along: criminals who use bitcoin are begging to be caught. And concerns about crypto’s use in money laundering are overblown.
That makes the longer-term outlook for bitcoin (and crypto in general) much stronger. One of the chief policy complaints about bitcoin is disappearing before our eyes, courtesy of the U.S. government.
Thank you, DOJ. We appreciate it.