After September 11, Congress passed the Patriot Act with minimal resistance. Lawmakers designed the law as a temporary shield against terrorism. Each renewal drew little debate. Since then, federal ag
After September 11, Congress passed the Patriot Act with minimal resistance. Lawmakers designed the law as a temporary shield against terrorism. Each renewal drew little debate. Since then, federal agencies have applied the tools to regular criminals, protest organizers, and ordinary Americans never accused of anything. This expansion doesn't stop at terrorism. Congress passed the RICO statute in the 1970s when organized crime families were moving money through restaurants and nightclubs. Lawmakers intended it to stop money laundering that buried criminal activity inside legitimate business. Today asset forfeiture under RICO drains bank accounts and car trunks of people never convicted of a crime. Police stop a driver, find cash, call it suspicious, and take it. The charges get dropped, but the driver must sue to recover their own property. Few can afford the lawsuit, so the police department gets a new revenue stream from stolen assets. A law built to catch John Gotti now takes money from innocent people. That's legal creep.
Yesterday the Treasury Department froze two bitcoin addresses belonging to Iranian nationals. Federal prosecutors say the two men converted ransomware profits, including payments from the SamSam gang.
"Treasury is targeting digital currency exchangers who have enabled Iranian cyber actors to profit from extorting digital ransom payments from their victims," said Sigal Mandelker, Treasury's under secretary for terrorism and financial intelligence. "As Iran becomes increasingly isolated and desperate for access to U.S. dollars, it is vital that virtual currency exchanges, peer-to-peer exchangers, and other providers of digital currency services harden their networks against these illicit schemes. We are publishing digital currency addresses to identify illicit actors operating in the digital currency space. Treasury will aggressively pursue Iran and other rogue regimes attempting to exploit digital currencies and weaknesses in cyber and AML/CFT safeguards to further their nefarious objectives."
The two accounts moved 6,000 bitcoins across 40 different exchanges through more than 7,000 transactions since 2013, according to Treasury records.
Ransomware operators belong in prison. The malware seals files on computers and networks, then demands payment to unlock them. Hospitals lose access to patient records. Schools lose access to student data. Companies cannot operate without their customer information and financial records. Criminals set deadlines and promise to destroy decryption keys if victims don't pay on time. Some attacks hide decryption servers on legitimate websites whose owners don't know they're hosting criminal infrastructure. Even victims who pay may never recover their files.
My first take on the Treasury's action was support. Nothing does worse damage to the crypto industry's reputation than ransomware. Scam ICOs steal from people who voluntarily send them money. Ransomware victims are people who'd never heard of bitcoin until a criminal demanded they send some. The fact that federal agencies tracked down these operators and acted seemed like progress.
But consider what the government is actually trying to do. They've made it illegal for exchanges, banks, and individuals to transact with these addresses. Few would argue against stopping ransomware. The question is what comes next.
How long until this same tactic targets WikiLeaks? Palestinian organizations? Environmental groups? Edward Snowden? Anyone writing privacy software? Iran already lives under comprehensive sanctions. How long before the Treasury adds all Iranian-linked addresses to a blacklist?
All these groups have been accused of supporting terrorism, formally or informally. Social media platforms now move fast to ban anyone even slightly controversial. Millions of people would cheer if the government added those organizations to its hit list.
Bitcoin was built to send money without permission. When WikiLeaks lost access to traditional payment systems in 2010, supporters suggested bitcoin as a workaround. Satoshi Nakamoto refused because the network couldn't survive a government assault. Today it can.
Bitcoin's computing power was below 0.1 terahashes per second through 2010. Today it ranges between 40 and 50 exahashes per second. The network could withstand a direct attack from the federal government in ways that were impossible then. About 10 million people knew bitcoin existed in 2010. The U.S. Treasury could have destroyed it before most Americans had heard the name. That option no longer exists. An assault would cost enormous resources, fail publicly, and alert millions of people worldwide.
Once you accept government-controlled blacklists, you lose any position from which to argue where they stop. You have power to resist this now. Don't let them start with someone clearly guilty and expand from there.
Some bitcoin users have sent coins to the banned addresses to mock the Treasury. I'd advise against it. The address owners are criminals who hurt innocent people. Sending money to them, even as protest, still ends up supporting their criminal enterprise.
But exchanges that blacklist these addresses owe clarity about why. They're making a business choice to avoid association with ransomware. They're not following government orders. That distinction matters. Many exchanges already block wallets tied to major hacks. That's self-policing grounded in values. What troubles me is an exchange that complies with every Treasury command without question, especially one based outside U.S. jurisdiction that could afford to say no.
The government selected these addresses because the operators are obviously guilty. That's always how it starts. The next batch of addresses won't be so clear. Resist this now, before it becomes precedent.
