Justice Department wary of Bitcoin, Attorney General says

WASHINGTON Wed Apr 9, 2014 6:09am EDT

United States Attorney General Eric Holder appears before the House Appropriations Commerce, Justice, Science and Related Agencies subcommittee, on Capitol Hill in Washington April 4, 2014. REUTERS/Gary Cameron

United States Attorney General Eric Holder appears before the House Appropriations Commerce, Justice, Science and Related Agencies subcommittee, on Capitol Hill in Washington April 4, 2014.

Credit: Reuters/Gary Cameron

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WASHINGTON (Reuters) - The Justice Department will have to be creative in order to make sure criminals do not use virtual currencies such as Bitcoin to secretly move funds, Attorney General Eric Holder said on Tuesday.

The scrutiny at the highest levels of the Justice Department comes at a time when investors have flocked to the currencies but recent incidents have called into question their long-term viability.

Enthusiasts point to the ability to move funds cheaply, but the recent failure of Mt. Gox, a Tokyo-based exchange that filed for bankruptcy after losing an estimated $650 million worth of customer bitcoins, has raised doubts about their use.

"The department is committed to innovating alongside this new technology in order to ensure our investigations are not impeded by any improvement in criminals' ability to move funds anonymously," Holder told the House Judiciary Committee.

The use of electronic currencies has captured the attention of regulators who have been unsure how to react to their growing use instead of government-issued money.

Federal prosecutors have warned that the currencies are vulnerable to use for money laundering, and have charged the operators of several Bitcoin exchanges over their alleged roles in helping drug traffickers and other criminals move funds.

Agencies ranging from the New York bank regulator to the Commodity Futures Trading Commission have been studying electronic currencies to determine whether and how they should be regulated. Holder said the Justice Department is working with regulators on the issue.

"Virtual currencies can pose challenges for law enforcement given the appeal they have among those seeking to conceal illegal activity," Holder told the House panel. "This potential must be closely considered."

(Reporting by Aruna Viswanatha; Editing by Phil Berlowitz)

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Comments (2)
Dafawx wrote:
Mt Gox lost 850,000 bitcoins and found 200,000. At the current market rate 650,000 bitcoins is less than 325 million dollars. No where near the 650 million dollars stated in the article.

Apr 09, 2014 7:00am EDT  --  Report as abuse
NealPalmquist wrote:
The Bitcoins in Mt. Gox crashed down to $91 apiece before traders jumped on a false double bottom confirmation and drove the price back up. Before that episode is finally settled, Bitcoin will probably drop even lower than that Mt. Gox price.

Nobody knew the Bitcoins were stolen yet as all other exchanges crashed in sympathy to Mt. Gox and that fact flies in the face of limited issuance propaganda that is taught to be conventional wisdom in the Bitcoin community. All other exchanged should have gone up in competition to Mt. Gox, not crash in sympathy. So finding 200,000 of the 850,000 Bitcoins does not help Bitcoiners to show any credibility in the pricing and valuation model.

Everybody thinks they will get rich with million dollar Bitcoins. But bad people will do bad things for million dollar Bitcoins. When other nations show President Obama evidence that Bitcoin is turning the United States Dollar into the global currency for rewarding slavery operations that begin to pop up in the world, America will be united to absolutely ban USD to be traded for any crypto currency.

America already has limited issuance, confederate, diminishing available currency that has no government control. That currency is currency printed by the South during the Civil War. Bitcoin is nothing new. Not really.

Bitcoin is obviously a scam and it also concerns me greatly why California is so very anxious and determined to get everybody else to believe that this new confederate currency is not a scam. Bitcoin should show Americans that something is very wrong in that state. Any state that tries so very hard to establish a new confederate currency should be a red flag to everybody else in the country.

Apr 09, 2014 8:58pm EDT  --  Report as abuse
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