BitcoinThe Federal Bureau of Investigation has become increasingly concerned over the usage of the mostly-anonymous payment network Bitcoin by hackers and cybercriminals, according to an unclassified report obtained by Wired this week.

The report, “Bitcoin Virtual Currency: Unique Features Present Distinct Challenges for Deterring Illicit Activity,” (.PDF) was published on April 24, but surfaced on the internet Wednesday.

In it, the FBI details how individuals use the service, stressing that its decentralized, peer-to-peer structure makes it an appealing payment option for criminals. The FBI also expresses concern that law enforcement could have a difficult time tracking user activity on the platform.

“Since Bitcoin does not have a centralized authority, law enforcement faces difficulties detecting suspicious activity, identifying users, and obtaining transaction records – problems that might attract malicious actors to Bitcoin,” the report reads.

The report cites several examples of such ‘malicious actors’, including a cyber criminal the FBI found last year who was selling a Zeus botnet Trojan and accepting Bitcoin as a payment and another incident in which a Lulzsec  member used Bitcoin to purchase a botnet.

The limitations of Bitcoin’s anonymity are covered as well, as a 2011 study by researchers from the University College of Dublin, Ireland is referenced that found that by examining transaction records and public-private keys, law enforcement could link some public information about actual Bitcoin users to their accounts.

This is the first time that the FBI has issued anything close to an assessment on the up and coming cash system that relies on users to exchange virtual ‘Bitcoins,’ along with digital signatures to conduct their transactions.

According to the website, one Bitcoin currently trades for $5.06.

The theft of Bitcoins from other users’ Bitcoin accounts continues to be a problem as well. A compromise at Linode, a Linux-based cloud provider late last year opened the Bitcoin wallets of eight customers, yielding upwards to $14,000 to hackers.

Categories: Cloud Security, Government, Hacks

Comments (4)

  1. neofutur

     so you guys are 100% sure this report is legit ?

     It seems legit, well documented, but can we be 100% sure it is ?



  2. Tinman57

      The gov’t wants to know every transaction you make, large or small.  It’s all about complete control of the citizens, like communist China…..

  3. Anonymous

    Safeguards should always be in place whenever money transactions are involved, but this is peanuts in comparison to the organized crime taking place in unregulated securities such as hedge funds and private equity funds which transfer huge sums, often in the millions, of money, often illicitly obtained or destined for illicit purposes.

  4. JackParsons

    No kidding. Drug money help keep Wall Street alive during the meltdown: it needs a lot of processing. This is the only way that High-Frequency Trading makes sense: it moves zillions of pennies between banks.

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