US Attorney General Says Use of Bitcoin on the Darknet is a Big Problem

During a recent Department of Justice oversight hearing before the United States Senate Committee on the Judiciary, Attorney General Jeff Sessions testified about the concerns federal law enforcement have about the use of cryptocurrency on the darknet. The Attorney General’s remarks on the darknet were in response to a question from Democratic Senator Dianne Feinstein of California. Senator Feinstein’s question was asked nearly three hours into the hearing. The fear of the freedoms that cryptocurrencies and the darknet provide has created bipartisan support for a crackdown.

Senator Dianne Feinstein brought up the subject of the darknet by referencing an article that appeared in The New York Times in which the newspaper reported on drug trafficking and other illegal trades that are conducted on darknet marketplaces. “It seems to me that the problem of the dark web being used by criminals is going to grow in the coming years,” Senator Feinstein said to the Attorney General during the Judiciary Committee’s hearing. Senator Feinstein said that she felt there was a lot of concern in the law enforcement community about criminals using the darknet. The Senator then asked Attorney General Sessions if he had any plans to address the illegal trades taking place on darknet markets.

“We are very concerned about that. The FBI’s very concerned about that. They did take down, I think, the two biggest dark web sites. This last one, AlphaBay, we took down recently, they had 240,000 sites [sic] where individuals were selling, for the most part, illegal substances or guns on that site, including fentanyl,” Attorney General Jeff Sessions testified in response to Senator Feinstein’s question. The Attorney General continued his testimony saying, “They use Bitcoin and other untraceable financial capabilities, and it is a big problem.” While Bitcoin is far from untraceable, it appears Attorney General Sessions was alluding to Bitcoin tumbling/mixing services and privacy-centric cryptocurrencies such as Monero and zCash, which have been on federal law enforcement’s radar for some time now, when he mentioned “other untraceable financial capabilities”.

New laws which seek to regulate the darknet and cryptocurrencies could be on the horizon. During the Judiciary Committee’s hearing, Senator Feinstein herself appeared very eager to introduce such new legislation which would crackdown on the use of cryptocurrencies and the darknet. “I’d like to work with you on it, if it requires legislation in particular,” Senator Feinstein said to Attorney General Sessions after the Attorney General had concluded his remarks on cryptocurrencies and the darknet. President Donald Trump and officials within his administration have flirted with the idea of regulating the internet and infringing on the 1^st Amendment of the Constitution, on more than a few occasions; and so any such legislation like the kind Senator Feinstein alluded to during the hearing that would seek to restrict the use of cryptocurrencies and the darknet would seem likely to be signed into law if passed by Congress.

At a rally held during his campaign for the President, Donald Trump made comments in which he seemed to oppose the free and open internet. “We’re losing a lot of people because of the internet. We have to see Bill Gates and a lot of different people that really understand what’s happening. We have to talk to them about, maybe in certain areas, closing that Internet up in some way,” Trump said at a rally held on board the USS Yorktown while the ship was docked in South Carolina. Trump went on to mock those who would defend digital rights in the face of such a crackdown on the internet, saying, “Somebody will say, ‘Oh freedom of speech, freedom of speech,’ These are foolish people.” Ironically, Trump’s victory relied in part on his supporters access to the free and open internet, and many of the President’s biggest supporters hold free speech in high regard.

Attorney General Jeff Sessions has often called for ramping up the war on drugs and returning to the failed harsher policies of the “Just Say No” and “Tough on Crime” eras that arose during the Reagan administration in the ‘80s and the Clinton administration in the ‘90s. Not long after being confirmed by the Senate, the new Attorney General vowed to pursue more prosecutions involving drug and firearms crimes. Sessions has also begged Congress to end the protections for state medical marijuana programs, and reversed Department of Justice policies on mandatory minimum sentences that were enacted by former Attorney General Eric Holder. Federal prosecutors will now seek to have low level and nonviolent drug offenders be given draconian mandatory minimum sentences.

It remains to be seen what kind of new legislation will be introduced. Current regulations on cryptocurrencies are already causing more problems for legitimate businesses than for criminals. Recently, cryptocurrency exchange Bitfinex announced it would no longer serve American customers because of current regulations and new regulations that they anticipate will be created in the near future. Senator Feinstein’s exchange with the Attorney General was not the only time during the hearing that the darknet was mentioned. Later in the Judiciary Committee’s hearing, Senator John Cornyn of Texas mentioned his bill to reauthorize the Providing Resources, Officers, and Technology To Eradicate Cyber Threats to Our Children Act, better known as the PROTECT Our Children Act. Under that legislation, more computer forensics resources are given to federal, state, and local law enforcement, as well as resources to help defeat anonymity services like Tor. While Senator Cornyn says his bill is meant to “fight the scourge of child pornography and fight predators who take advantage of the dark side of the internet to harm children,” it also could end up harming digital rights by helping the government break anonymity services.