Dear Bank of England: Go Home, You’re Drunk. 

Programming money to only be spendable on "essential" or "sensible" things? "Jolly good idea."

Dear Bank of England: Go Home, You’re Drunk. 

American readers can take a moment to rest because it’s England’s turn to bring the crazy.

Remember how aghast we were a few months ago when China was exploring the “programmability” of a central bank digital currencies? Remember how Orwellian it seemed that they wanted to be able to program money to “expire” if not spent fast enough, freeze money at will, determine who could spend money and who couldn’t?

It seems that the UK heard of these plans, and said “jolly good idea”.

The Bank of England apparently told UK ministers to intervene with “programming” CBDCs, which would give the issuer control over how these digital currencies could be spent.

“There could be some socially beneficial outcomes from that, preventing activity which is seen to be socially harmful in some way,” said Bank of England director, Tom Mutton. If the Bank of England gets its way then the UK government might be put in charge of dictating which purchases are deemed “essential” or “sensible”.

Comments were also made earlier this month by a deputy Governor at the Bank, Sir Jon Cunliffe, who mentioned all kinds of uses this programmability could have in commercial or social contexts, right down to how children spend pocket money:

“You could think of giving your children pocket money, but programming the money so that it couldn’t be used for sweets.”

It’s certainly an interesting horizon for individuals to explore. It’s far less exciting for this power to be in the hands of governments, especially if they start to see their citizens as inept children who are not capable of making their own self-guided decisions.

War is Peace. Ignorance is Strength. And Freedom is the right to spend your own money within a confined set of “acceptable purchases.”

Luckily governments no longer have a monopoly on money, and people have a choice of which cryptocurrencies they can use.

SEC Serves It Up Hot

The SEC made waves at the 2021 Mainnet Conference in NYC on Monday — several attendees claimed to have witnessed an SEC representative serving a federal subpoena to one of the panelists right before he took the stage for a presentation. Ryan Selkis, founder of Messari which hosted the event, wasn’t impressed, and responded in a tweet:

“If you’re wondering when I actually decided to run for Senate, it was when these f***ers came to my event, didn’t buy a ticket, and served one of the speakers a subpoena.

Enough talk.

More war on our out of control regulatory state.”

Although the actual recipient and contents of the subpoena have yet to be disclosed, it is another example that the SEC is becoming increasingly aggressive in its war against crypto.

Ryan Taylor of Dash Core similarly announced that he just responded to a subpoena from the FBI, who apparently didn’t quite understand how decentralized currencies work:

“Had to explain to the agent - and their phd crypto “expert” - why DCG didn’t have records on the tx’s of specific individuals.”

Tie that with the recently passed Infrastructure Bill which Coincenter says is unconstitutional, and SEC Chairman Gary Gensler’s very vocal belief that crypto needs to be heavily regulated in order to succeed, and you have a very unappetizing dish that none of us is willing to consume without a fight.

Coinbase Forfeits The Round But Not The Fight…

Coinbase seemed poised for a lengthy battle when they publicly asked the SEC a couple of weeks ago about why they were being threatened with a lawsuit. Coinbase had received a Wells Notice that threatened legal action if they continued with plans to release their upcoming Lend app — which would have allowed users to borrow USDC stablecoins and earn 4% interest for lending them.

Instead of a battle, Coinbase announced this week that they will heed the SEC’s warnings and temporarily cease plans to move forward with Lend.

Thank goodness for the SEC, fighting their gallant battle against 4% interest on our behalf.

Coinbase are now in the process of developing a pitch for federal regulators on how to create a regulatory framework for crypto. Whilst many are naturally wary of the rent seeking and regulatory capture that can come from such proposals, Coinbase seems focused right now on making sure that their industry is not regulated out of existence and that US consumers can get access to products that they want rather than companies driving innovation offshore.

SEC Chairman Gary Gensler could definitely use some guidance, after telling The Washington Post this week that he doesn’t think technology lasts long “outside of a social and public policy framework."

Happily, monetary historian George Selgin offered to debate that point with Mr. Gensler, using the long history of private money issuance as evidence that heavy handed regulation in crypto is unnecessary.

Chainalysis Honeypot

It was revealed that blockchain forensics company Chainalysis owns and operates the blockchain explorer, walletexplorer.com, and that the site is a honeypot for tracking crypto and IP addresses. While many people might use IP obfuscation when moving money to and from exchanges, Chainalysis bet that far fewer would resort to such measures if simply querying an address, and it turns out they were correct. Chainalysis has been scraping the IP addresses of visitors and using that data to target people of interest for law enforcement.

Some slides were leaked that stated:

“Using this dataset we were able to provide law enforcement with meaningful leads related to the IP data associated with an address... It is also possible to conduct a reverse lookup on any known IP address to identify other BTC addresses”.

The documents also stated that Chainalysis believes it can trace Monero transactions:

“Of the cases that Chainalysis worked on in collaboration with law enforcement, we were able to provide usable leads in approximately 65% of cases involving Monero,”

Justin Ehrenhofer reminded those conscious about privacy that they “should always use Monero using their own node. While there are some remote Monero nodes available over Tor, it is still best to run your own.”

Some great privacy tips there.

Entire Exchange Blacklisted in First for OFAC

Russia-based Suex.io has officially been sanctioned by the US government and US citizens are now banned from using the exchange or risk fines or prison. The US Treasury Office of Foreign Assets Control (OFAC) announced the blacklisting of the relatively obscure exchange on Tuesday, highlighting its role in global ransomware attacks and that they helped facilitate transactions from “at least eight ransomware variants.” It is the first time that OFAC has blacklisted an entire exchange.

A report by Chainalysis reported that Suex.io received “over $480 million in bitcoin transactions since February 2018,” and that they were able to, “tie at least $160 million to illicit activities”. OFAC also said that as much as “40% their transaction volume was associated with known malicious actors”. 

Deputy Treasury Secretary Adewale Adeyemo said in a press call that, “Exchanges like Suex are critical to attackers’ ability to extract profits from ransomware attacks. Today’s action is a signal of our intention to expose and disrupt the illicit infrastructure used in these attacks”.

The question is, if the Treasury knew of this 40% of illicit activity, why didn’t they target the addresses associated with that illicit activity directly? Indeed, going after infrastructure instead, and blacklisting an entire exchange does set a dangerous precedent.

By Will Sandoval, NBTV Associate Producer, and Naomi Brockwell.


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