Cyber Law Insights: How Does Blockchain Technology Influence Illegal Activities?

Cyber Law Insights: How Does Blockchain Technology Influence Illegal Activities? image

Blockchain Technology has been helpful to almost everyone for years now. From keeping your personal information secure to keeping your identity safe to helping you own your money and to the endless possibilities that blockchain technology has in the future- it is undeniably true that blockchain technology revolutionizes the digital world.


As good as it may seem, this technology has its own dark side and could be called the “digital underground”. Blockchain technology could also be used to influence illegal activities such as money laundering, phishing and hacking to name a few.


Why Blockchain Technology?

Data retention.

One of the things that make crimes unresolved is the lack of evidence like records that could testify that a crime had happened during that time. Cybercrime is a crime where law enforcement agencies take time to find decent evidence as they have to check every record, trace every ISP provider, and go through multiple providers which sometimes is located in different countries until such time they identify the valid, accurate data needed. But with Blockchain Technology, data can easily be traced and retrieved anytime.

Third-party Doctrine Issues. 

Blockchain Technology does not support third-party doctrine. Law enforcement can access the blockchain and trace every transaction that occurs even without securing a subpoena, as data can be accessed by anyone publicly.


Imagine securing evidence that has transpired on the different side of the world. It would take much of your time, money, effort, countless law regulation reviews and etc. Blockchain knows no borders and can be accessed wherever you are in the globe.


Blockchain and Illegal Activities

As it is already known by many, the key feature of blockchain technology is that it enables participants to engage in recording and transactions either without trusting a third party or by trusting multiple parties that guarantee the authenticity of the transaction. But this new financial technology may alter the structure of financial transactions. And because of few investigations made by the Financial Action Task Force, an intergovernmental organization in charge of anti-money laundering and counter-terrorist financing regulations, they discovered that blockchain technology carries certain vulnerabilities to criminal activities, particularly to money laundering which is an act of concealing the origin of profits from illegal activities.

Because of this, the Financial Action Task Force issue some guidelines and regulations on virtual assets. The core of the anti-money laundering regulations are the requirements that states must criminalize money laundering, monitor suspicious transactions, and cooperate with other states, particularly on information exchange. Besides, a lot of other standards have been implemented by FATF and that they should comply. The existing regulations are applicable when an offender uses blockchain networks to conceal the origin of illegal profits. However, certain rules do not function effectively when blockchain technology is used.


Another thing that could be happening in the digital underground is cryptophising.


Cryptophishing is the creation of fake sites and wrong addresses to steal credentials from the unwary users by the use of spam mailing and even using Twitter to spread misinformation.


These only prove that anything as seemingly as good as blockchain technology, the “bad guys” have their own way to make something out of it for their benefits.


Solving Illegal Activities through Blockchain Technology

But looking on the brighter side, while other identities are using blockchain technology for the wrong reasons, it could also be used for good and take those “bad guys” down.


In this age and time,  law enforcement agents would work tirelessly to solve and overcome problems of figuring out the IP addresses or email addresses of a particular person. It is also somewhat impossible to know who owns a particular mobile number and because of this, it’s hard to solve a specific crime committed by an anonymous person.


Blockchain Technology has contributed much in tracing transactions made illegally through the bitcoin address. Law enforcement agents can track the address where a transaction is processed from the start to the end. This is one of the advantages of using cryptocurrency in any transaction as compared to cash or fiat currency.


Blockchain technology also helps in data retention that would really benefit the law enforcement as they will need records to identify a “suspect”. It also does not raise “third party doctrine” issues and it is borderless. All these could really help to analyze and trace transactions to solve a specific problem or crime.


It could be overwhelming to know all the things that blockchain could do in our lives. But since we are living in a world where technology rules, we are expecting more from this kind of technology.


There might be a lot of people who use technology as a platform for their crimes. But we could create and innovate something that would make blockchain a safe place for those who use it. As technology rises, the advancement of our law enforcement should also rise.


Final Thoughts

We will never be able to fully eliminate and eradicate criminals off the blockchain but we could prevent them from coming back and using it to harm others. We can create innovative regulations that will address issues inseparable to the blockchain technology. And for this purpose, it requires the collaborative effort between legal practitioners, academics, and those who are experts in Blockchain and technology, as a whole.

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