Greenwald Publishes Article on Crypto Crimes

Michael B. Greenwald (Pardee ’07), Lecturer at the Frederick S. Pardee School of Global Studies at Boston University, published a recent article exploring how sanctions can impact cryptocurrency crimes.

Greenwald’s article, entitled “Can Sanctions Put a Dent in Crypto Crime?” was published by the Atlantic Council on December 5, 2018.

From the text of the article:

On November 28, the US Treasury Department took an important step in responding to theSamSam ransomware cyberattacks, which occurred earlier this year. Considered one of the most effective cyberattacks in US history, the hackers behind SamSam since 2015 have targeted institutions ranging from companies to hospitals to schools, demanding payments in Bitcoin as ransom. After being paid, the hackers laundered these funds through online cryptocurrency exchanges into Iranian riyals, reaping the rewards of their malicious behavior. As part of their designation,the US TreasuryDepartment’s Office of Foreign Assets Control (OFAC) included the Bitcoin addresses of Iran-based Ali Khorashadizadeh and Mohammed Ghorbaniyan, who are accused of assisting the hackers in laundering payments through online cryptocurrency exchanges.

Normally, OFAC sanctions designations include the name and other personal information of the target, but this is the first time that a Bitcoin address has been included. This is far from the first step that the United States has taken against actors in the cryptocurrency markets, but it is definitely one of the most powerful messages that Washington can send. These designations are a significant move and shatter the narrative that cryptocurrencies are invulnerable to US policy makers and designation authority.

This move, however, is not the first and will almost certainly not be the last one undertaken by the US Treasury to stem the emergence of illicit actors within cryptocurrency markets. In July 2017, US Treasury’s Financial Crimes Enforcement Network (FinCEN) pursued charges againstAlexander Vinnik, a Russian national, and the Bulgariancryptocurrency exchange, BTC-e, for allegedly laundering international payments, including ransomware proceeds from thelandmark 2014 hacking of Mt. Gox. Prior to the designation, BTC-e had maintained a low profile relative to other Bitcoin exchanges, receiving more than $4 billion for its central role in criminal schemes ranging from drug trafficking to computer hacking and identity theft.

The crypto markets have already been preparing for these regulatory shifts. Though Bitcoin has dominated the popular narrative, so-called privacy coins offer significantly more anonymity. One of these coins, ZCash, features “Zero-Knowledge Succinct Non-Interactive Argument of Knowledge” (zkSNARKS). While Bitcoin’s transactions link senders to receivers on a public blockchain, ZCash uses zkSNARKS to prove the validity of transactions, independent of addresses or other public information.

Michael B. Greenwald is currently a Senior Vice President of Tiedemann Advisors and is responsible for working with clients and prospective clients and assisting with the Firm’s business development efforts. Michael is also the Senior Advisor to the President and CEO Fred Kempe of the Atlantic Council. Learn more about him here