Black money reborn as Crypto currency


  • The recent case of kidnapping using a voice-over-internet service running from a mobile phone and a string of digits in cyberspace highlights the danger of darknet where criminals are using digital crypto currency.

What are the major issues?

  • The absence of physical contact to exchange the ransom makes it impossible to use surveillance against the perpetratorsand only too easy for them to take the money, and kill their victim.
  • Major issue remains that there is no way to trace where the money goes.
  • India’s intelligence serviceshave warned the government that such kidnapping, India’s first for-cryptocurrency violent crime — could mark the birth of a new national security threat.
  • Rupees owned by criminal syndicates, drug traffickers, or tax-evaders, could now be turning digital.
  • Crypto currency is safe to store, can move anonymously, and is immune to control by a government or other any kind of central authority.
  • The ease with which cryptocurrency allows dirty money to be moved around raises hard questions of future ability to monitor funding for terrorism and organized crime
  • Law enforcement in India has had few encounters with cryptocurrency so far and bitcoin trade is currently in a legal grey zone, with no clear regulations governing it. But the signs are criminals have begun to understand the possibilities of the technology.
  • Recent incidents
  • In August, hackers held the data of a Mohali business hostage, demanding a five Bitcoin ransom.
  • Bengaluru-based information technology giant Wipro received hacking threats from criminals seeking protection money in Bitcoin.
  • The most serious event was a ransomware attack on AP Moller-Maersk, which operates the Gateway Terminals India at Jawaharlal Nehru Port Trust, by cyber-criminals.
  • Few details were made public, but a Ukrainian company targetted by the same criminal syndicate said they had sought $300 million in bitcoin.

How is Crypto currency becoming a convenient vehicle for crimes?

  • Although, Cryptocurrencies seem to be taking a special place in the minds of financial industry, they have been quite a debatable vehicle for payments due to the poor regulations and high attractiveness for international criminal activities.
  • Cryptocurrencies promise fast and anonymous fund transfers at a low cost.
  • All the possible risks that come with them are getting blurred by its convenience and cost-efficiency.
  • Cryptocurrencies is acting as a perfect tool for international criminals to launder funds, trade illegal substances and establish international trafficking.
  • One of the problems with cryptocurrencies is poorly developed regulation in a wide range of countries
  • The main problem governments have is the difficulty in tracking transactions.
  • A major disadvantage of cryptocurrencies that work great for fraudsters is the inability of the owner to restore the value in case the cryptocurrency is stolen or lost.
  • The absence of a central authority makes the general public using cryptocurrencies for transactions a great target for “online robbery.”
  • It also has a wonderful feature,if a criminal steal someone’s bitcoins, the victim wouldn’t even have anywhere to go to report the crime.
  • Another hallmark of cryptocurrencies that made criminals lay eyes on them as great tools for illegal activities isanonymity.
  • Another feature that makes cryptocurrencies a perfect facilitator for crime is that they have developed a vast international network. The scale provides an opportunity to reach almost any corner of the world, making it easy to do illegal businesses in countries with developing law enforcement systems and toothless regulatory authorities.
  • Since cryptocurrencies have reached a global scale, they provide a great opportunity for untraceable anonymous offshore transactions.
  • The inability to reverse a fund transfermade in cryptocurrency also goes into the bucket of features making it a perfect vehicle for crime.
  • Immediate and final settlement of the deal leaves less space for any back-and-forth actions, decreasing the risk of attracting third-parties and extra attention to the transaction.
  • Finally, last but not the least is the speed of transactions. In addition to irreversibility, the relatively high speed of performing transactions also leaves less space for any third party to intercept and create complications.
  • Excluded mediators (regulators, any other third-parties, other criminals, etc.) is one of the features making cryptocurrencies a great vehicle to move funds quickly, safely and anonymously with less chance for unpredictable situations.

Increasing demand of crypto currencies

  • High demand for bitcoin in India has driven its price in the country far higher, even, than global rates.
  • From the day India demonetized its Rs 500 and Rs 1,000 notes, the demand for bitcoin, the best-known kind of cryptocurrency, has surged from $731.84 to a staggering $8,155.83, according to CoinGecko — a rate of return that is unmatched.

Why is India using Crypto currency?

  • Indians is following the global cryptocurrency boom in part because of the profits, but also because of the loss of faith in cash, as well as the flatlining of property and gold prices, caused by demonetization.
  • Returns by Cryptocurrency is better compared to any other form of money and it’s a whole lot safer from tax raids.
  • India is a small market for cryptocurrency, ranking 19th worldwide according to monitoring service Cryptocompare, with trades valued at ₹139,467,052.15, or a mere 0.5% by global value over the 30 days to November 21.
  • ZebPay, India’s largest exchange, has reported its user-base has doubled in the last three months, while UnoCoin says its user-base has gone up from 100,000 to 500,000 this year.

What is crypto-currency?

  • Crypto currency, which planned to be brought under a regulatory regime, is a digital currency.
  • Bitcoins is one of the kinds of Crypto currency recently in news.
  • It allows transacting parties to remain anonymous while confirming that the transaction is a valid one.
  • It is not owned or controlled by any institution including both government institutions and private institutions.
  • Multiple numbers of such currencies are used globally such as Bitcoin, E thereum, and Ripple.
  • Crypto-currency can also be used for a lot of legal activities depending on which retailers accept such currency.

What is bitcoin?

  • Bitcoins are the virtual currencies used for various financial transactions.
  • They are backed by the diversified and decentralized system of Block Chain Technology.
  • In recent times, Bitcoins have become a topic of debate. Bitcoin prices in the past one year have only headed north. In the last five months since January 2017, the value of BTC has doubled in absolute value compared to the dollar.
  • Bitcoin is a digital currency system. Bitcoin transactions are sent from and to electronic bitcoin wallets, and are digitally signed for security. Everyone on the network knows about a transaction, and the history of a transaction can be traced back to the point where the bitcoins were produced.
  • It is an attempt by a firm, using blockchain technology, to create a set of shares in a trading entity that had an initial set value and fixed number (much like the face value and number of shares offered in an initial public offering), in the hope that these shares would become the medium of exchange through which people trade goods and services.

Way ahead

  • Anonymity isn’t all bad, of course. On the contrary, it’s a key ingredient of privacy-preserving systems, and necessary to prevent overreach and abuses by governments.
  • Cryptocurrency cannot thrive without privacy protections, what matters is finding a socially responsible blend of privacy and accountability.
  • Today, law enforcement authorities can exploit privacy weaknesses in systems like bitcoin to identify certain cryptocurrency as belonging to criminals and thus as “tainted.”
  • Scientists have for decades sought to design systems that balance law enforcement needs with individual privacy in digital currency. Most of these systems provide what is called “conditional anonymity,” allowing authorities to learn user identities selectively through a technical process that can involve courts or other overseers.
  • Crime-fighting tools require empowerment of authorities. Cryptocurrencies are innately anti-authority technologies. How this tension is resolved will determine the future of the world’s monetary systems. There is no simple answer.
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