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EU IP Office: Pirates Are Accepting Bitcoin to Hide Criminal Proceeds

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In a newly released report, the European Union Intellectual Property Office (EUIPO) has analyzed certain websites or ‘business models’ that infringe on intellectual property rights, some of which that relies on bitcoin and TOR.

The EUIPO, the authority that manages the EU trade mark and works alongside the IP offices of other EU member commissioned a research study on business models that actively infringe on intellectual property rights (IPR).

The study [PDF], commissioned in 2015 and released recently, highlights several methods and practices through which pirates and pirate-friendly domains use technologies to evade authorities. Altogether, 25 websites or business models were identified. Websites that were built up due to the “ingenuity” of IPR infringers who have even “outpaced” the development of legitimate business models that are playing catch-up to understanding e-commerce business models, according to the report.

These models, according to the report, are using new technologies to profit from illegal IPR infringements. More specifically, technologies such as bitcoin and TOR, says the EUIPO.

An excerpt from the forward of the report reads:

It [a piracy-centric shadow economy] more and more relies on new encrypted technologies like the TOR browser and the bitcoin virtual currency, which are employed by infringers of IPR to generate income and hide the proceeds of crime from the authorities.

Bitcoin the Money Trail

Most business models of the 25 under the scanner uses TOR technology, with many located on the Darknet. Bitcoin and other cryptocurrencies such as Litecoin and Anoncoin are seen as common payment options among these websites, with some websites favoring bitcoin payments with specific discounts on offer for users paying with the cryptocurrency. One TOR website that offers nearly 85,000 ebooks for free accepts user donations, with bitcoin also accepted.

There are at least three websites listed on the open internet, which accept VISA and MasterCard payment cards.

The cryptocurrency is viewed as a concern by the EUIPO because of the lack of evidence connecting bitcoin addresses or wallet IDs with individuals. In the report, Bitcoin gets a quick explanation for those who are uninitiated.

The Bitcoin blockchain distributed ledger is even recognized as a “vital security feature” that acts to negate malicious manipulation while avoiding regulation. Still, it’s hard to follow the money trail, according to the EUIPO. It states:

There are no public records connecting Bitcoin wallet IDs with personal information of individuals. Because of these Bitcoin transactions are considered semi-anonymous.

The study concludes by stating that its intention to help policymakers, society, and private businesses understand how IPR infringing websites function and how they are financed.

Last week, the EUPIO and Europol – the European Union’s criminal intelligence agency – came together to launch the Intellectual Property Crime Coordination Coalition (IPC3). The coalition will see law enforcement agencies within the EU and beyond gain better intelligence and coordination to combat infringements of intellectual property rights.

Featured image from Europa.

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