Bitcoin: The Most Law-Abiding System Ever Created.
16 Pages Posted: 14 Oct 2021 Last revised: 3 Nov 2021
Date Written: October 13, 2021
It has been frequently argued that bitcoin is a “censorship resistant” immutable ledger that precludes law enforcement or government from acting against illicit actors in the system and precludes the freezing or seizing of assets. However, in this paper, it will be demonstrated that contrary to popular mythology, bitcoin can be easily frozen and seized under proceeds of crime legislation or even under the civil forfeiture rules. Furthermore, through the ability to enact punitive restraints against organizations that facilitate the operation of illicit transactions, law enforcement can ensure that the necessary controls that are designed to implement methodologies to ensure that financial crime using digital cash fails and that where criminal activity has been associated with digital currency or digital cash that the proceeds of crime can be removed from the benefit of the criminal actors. Importantly, as the bitcoin whitepaper notes, nodes enforce rules. Therefore, “any needed rules and incentives can be enforced with this consensus mechanism” (Wright, 2008b, p. 8).
Keywords: bitcoin, Cryptocurrency, tracing, proceeds of crime, enforcement against intermediaries.
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