OPINION: Ever since its entry into the mainstream, Bitcoin [BTC] has been criticized for being supportive towards illegal activities to the tune of money laundering and funding terrorists. Moreover, Bitcoin primarily gained prominence during the heyday of dark web-based black marketplace Silk Road, where illegal items such as drugs and unlicensed guns were purchased using the cryptocurrency.
The latest in the accusations against the currency comes with the indictment of 12 Russian Intelligence agents, who are alleged to have used Bitcoin to influence and undermine Hillary Clinton’s position in the 2016 United States Elections. The indictment by Robert Mueller details the specifics of the activities carried out by the agents.
The Russian Main Intelligence Directorate, known as GRU, assigned units 26165 and 74455 to this task. The former was tasked with customizing and developing malware known as X-agent, which was reportedly installed on 10 computers belonging to the Democratic Congressional Campaign Committee [DCCC] and the Democratic National Committee [DNC].
These were the committees put in charge of the administration of the election. The compromised computers allowed the hackers to gain access to sensitive information. The malware allegedly stayed on servers until October of 2016.
The hackers hijacked the email address of Chairman of the Clinton Campaign through spear phishing. They introduced a fake password reset link into an email sent to the Chairman, which then allowed them to gain access to the 50,000 sensitive emails contained within the account.
The culmination of these events came with the planned leak of sensitive emails detrimental to the presidential campaign of Hillary Clinton. This was overseen by the second GRU unit 74455.
The emails were leaked around June 2016, where the agent’s utilized online personas of ‘DCLeaks’ and ‘Guccofer 2.0’ to dispense the information. Bitcoin entered the play at this point, with the hackers allegedly funding the purchase of the dcleaks.com domain and the server upon which it was hosted through Bitcoin. They also used Bitcoin to buy the servers which were used for the phishing attacks, along with additional charges of money laundering through the cryptocurrency.
They utilized a variety of methods to hide their identity during the process, moving the coins through multiple exchanges, tumbling the coins with many other cryptocurrencies, and using prepaid cards to hide their tracks.
The agents mined Bitcoin for the purchase of the domain, using the same wallet address to buy accounts, services and domains used in “election-related hacking activity”. The mined Bitcoins were sent to a wallet controlled by one ‘Daniel Farell’, which was then used to buy a VPN to administer a software used to steal the data.
Even as many would be quick to point fingers at the cryptocurrency for its role in the attack, it is important to note that the information that was obtained by the probe was because of Bitcoin. The blockchain performed its function as a public ledger, recording every single transaction the hackers undertook to prepare and mount the attack.
It is important to note that traditional fiat currencies do not have the public and trustless accountability offered by the blockchain. Many argue that Bitcoin is much more transparent than the typical systems in place today due to the fact that all transactions are recorded in an immutable fashion. Even as Bitcoin offers a slight measure of anonymity through unidentifiable wallet addresses, this is a kind of pseudonymity at best, as transactions can be identified as belonging to specific wallet addresses.
The indictment offers an example of this transparency, saying:
“For example, on or about February 1, 2016, the gfadel47 account received the instruction to “[p]lease send exactly 0.026043 bitcoin to” a certain thirty-four character bitcoin address. Shortly thereafter, a transaction matching those exact instructions was added to the blockchain.”
Arguably, the investigation made heavy-handed use of the blockchain to incriminate the accused. This is implied by the statements made in the indictment, including the one mentioned above. The use of the blockchain is reiterated in another passage of the indictment, which states:
“The pool of bitcoin generated from the GRU’s mining activity was used, for example, to pay a Romanian company to register the domain dcleaks.com through a payment processing company located in the United States.”
For all the FUD caused by regulatory and governmental organizations over the use of Bitcoin for “illegal activities”, it is very apparent that the publicity and transparency offered by Bitcoin’s blockchain enable clearer tracking of illegal activities. Arguably, this is not something that can be achieved using fiat, except in the case of moving a large portion of funds through a monitored payment channel.
The event might cause regulators such as the SEC and FBI to look at cryptocurrencies as a whole in a different light, but it is important to note that every single transaction on the network is accounted for. The implications for this are huge, as a potentially easy-going regulatory reform may lead to even more transparency on the blockchain, further reducing criminal activities.
Many might view this as another setback to cryptocurrencies, but it is apparent to many more that this might as well be a watershed moment in the history of the technology.
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