Senator Schumer Says Bitcoin Is Money Laundering

from the apparently,-he's-unfamiliar-with-cash dept

A few months back, we explored Bitcoin, and the growing attention it was receiving. The distributed currency has certainly been getting a lot of attention lately (causing the exchange rate to skyrocket). Of course, as with any such thing, there was bound to be some sort of backlash from political circles, and this one was extremely predictable. Last week, Gawker wrote a story about Silk Road, the online drug marketplace that users can only access via TOR and where the only currency accepted is Bitcoin. To be honest, the story sounds a little too good, and too "Hollywood" to be real, but perhaps it is real. I find it a little difficult to believe that it has all that many users, given the complex nature of getting it to work.

Either way, Senator Chuck Schumer, who can grandstand with the best of them, apparently got handed that article and saw an opportunity to publicly demand that something must be done about Silk Road. It seems clear from his remarks that Senator Schumer has never heard of TOR:
"Literally, it allows buyers and users to sell illegal drugs online, including heroin, cocaine, and meth, and users do sell by hiding their identities through a program that makes them virtually untraceable," Schumer said at a news conference Sunday. "It's a certifiable one-stop shop for illegal drugs that represents the most brazen attempt to peddle drugs online that we have ever seen. It's more brazen than anything else by lightyears."
Lightyears? Really? In another report he claims that Silk Road and other drug sites are "flooding our streets" with drugs. Except... they're not. There are probably a small handful of people using things like Silk Road today, and they're almost certainly doing it for home use, rather than to "flood the streets." But, that doesn't make for as good a form of grandstanding.

As for "the program that makes them virtually untraceable," he seems to ignore the fact that Hillary Clinton (his former co-Senator from the state of New York) has talked up the value of software like TOR, which makes identities untraceable, as an important tool for freedom of expression around the world. Thankfully, Schumer doesn't seem to go quite as far as directly blaming TOR, though he doesn't appear to separate TOR from Silk Road, despite them being two different things. Also, lightyears? Really?

What he does go after, however, is Bitcoin:
"It's an online form of money laundering used to disguise the source of money, and to disguise who's both selling and buying the drug," said Schumer.
Um. You know what else is a form of currency that is used to disguise the source of money? Cash. And, last I checked, it's still legal tender. Blaming the semi-anonymous nature of Bitcoin is severely misplaced. In fact, in the original Gawker article, there's an update at the end (perhaps Schumer didn't get that far, or never reloaded) where it points out that Bitcoin really isn't quite that anonymous, and quotes a Bitcoin developer as noting that trying to buy drugs via Bitcoin "is pretty damned dumb."

But, according to Schumer, it's "a form of money laundering."

This will get interesting. No matter what you think of Bitcoin (and I'm certainly not sold on the concept), it's pretty clear that governments will attack such forms of currency if given the chance. A silly story about something like Silk Road opens up just such a chance. My guess is that Schumer won't actually do anything about Bitcoin right now (the focus appears to be mainly on Silk Road), but it won't be long before we see more politicians seeking ways to "do something" about Bitcoin by falsely painting it as something evil, just because some people use it for illegal purposes.

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  1. icon
    E. Zachary Knight (profile), 6 Jun 2011 @ 9:52am

    but it won't be long before we see more politicians seeking ways to "do something" about Bitcoin by falsely painting it as something evil, just because some people use it for illegal purposes.

    That is the point isn't it? We should outlaw any new technology if it allows some people to use it for illegal purposes. That is the reason the US even has a gun debate today. Because some people use guns to kill people, we should not be allowed to own guns.

    Same for DVRs, VCRs, Modchips etc, because some people use them for illegal purposes we should ban the use of them for all people.

    Why bother enforcing laws and punishing those who actually commit crimes when we can ban the technology that allows for crimes to take place to begin with.

    We would have a whole lot fewer piracy and money laundering problems if we just banned the internet. After all, the majority of child porn is transferred over the internet. Same for piracy and money laundering. Just get rid of the internet and all these problems would simply vanish.

    While we are at it, we should probably ban the private ownership of automobiles because some people use them in drive by shooting, to run people over and for quick getaways from burglaries.

    We should also ban the use of motor fuels and other flammable substances because people can use them for arson.

    Don't even get me started on the use of the written word. People use that all the time to communicate criminal activity. No one should be allowed to communicate through written means.

    Also gatherings of people. We should ban people from gathering together in a single space because they might be colluding to commit crimes. Gatherings should be limited to 2 people max, but that should only be done with competent police supervision to prevent any kind of collusion to commit crime.

    Finally, we need to ban privacy in all its forms so that people will have no avenue to hide their crimes or plans and means to commit crime. If people have no privacy they will have no time to commit crime.

    Problems of the world have been solved.

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