How Prosecutors Might Nail Ross Ulbricht Using The Supposedly Anonymous Bitcoin

Post written by Nicholas Weaver

Nicholas Weaver is computersecurity researcherat theInternational Computer Science Institute in Berkeley

Many have quipped that the cryptocurrency known as bitcoin are really prosecution futures, because rather than being anonymous, bitcoins can be remarkably easyto trace since every transaction between pseudonymous addresses ispublicly recorded. With the ongoing trial of Ross Ulbrichtoverallegations that he was the kingpin known as the Dread Pirate Roberts behind the Silk Road onlinedrug marketplace, this may be put to the test.

When the FBI arrested Ulbricht, they also captured his bitcoin stash.For the moment, let us assume that Ulbricht is (or at least asignificant version of) the Dread Pirate Roberts. How can the prosecution seek touse these bitcoin to prove that Ulbricht was the brains behind theSilk Road?

When the FBI seized the Silk Road server and the associated bitcoinwallets, they didnt just gain the ability to movethe bitcoins, they also gained an index into history. The privatekeys contained in this file can generate a near infinite universe ofdistinct public addresses, but capturing the private key enablescomputing all these addresses.This acts as an index into the blockchain, the public ledger whichrecords every bitcoin transaction. By seizing the wallet, the FBInow knows every bitcoin transaction involving the Silk Road wallets:payments sent, payments received, and even internaltransactions designed to confuse outside analysis.

The same applies to Ross Ulbrichts bitcoins. The wallets seized fromUlbrichts laptop not only allowed the FBI to capture 144,000bitcoinsfrom Mr. Ulbricht, but also provides an index to every bitcoin transaction he made, both legitimate and potentially illegal.The final piece of the puzzle is redandwhite, the allegedhitman/scammer who was supposedly hired by the Dread Pirate fora considerable sum.

The first step in tying Ulbricht to either Silk Road or redandwhiteis to search for any direct transactions. Having identified everyaddress belonging to either Ulbricht or Silk Road with the seized wallets, the FBIsimply has to look for all direct payments in the blockchain. If so, the prosecution torpedoes the Good Ship Revengethen and there: Ulbricht has already claimed the bitcoins are his.

Yet for the moment assume that Ulbricht was also careful, and used abitcoin tumbler, also known as a bitcoin money laundering service.Tumblers promise some anonymity: a user deposits a given amount intoone address and a few hours later a supposedly unrelated address thencreates a final payment, deducting the tumblers fee.

Such tumblers do a very poor job of hiding transactions,especially when dealing with a thousand or a hundred thousand bitcoins. The simplest approach is to simply lookfor common flow patterns. If 1.2 bitcoin left Silk Road to anunknown address, and Ulbricht received 1.1752157 bitcoin five hours later, this is suggestive. Add in thousands of such coincidentaltransactions and a pattern will emerge.

Evenmore sophisticated analysesare possible. These tumblers formclusters,a group of independent addresses that are identifiable with a singleowner. Even if a tumbler uses multiple independent pools of bitcoin,each pool can be identified.

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How Prosecutors Might Nail Ross Ulbricht Using The Supposedly Anonymous Bitcoin

Wikileaks 2012, NSA 2013, NTIA Mishaps & Global Cyber Crime 2014: U.S. Exceptionalism over IG 2015?

The internet has become almost part of our daily involvement and reality is that it affects every facet of our modern lives. We are increasingly becoming dependent on the Internet, for which reason its availability, functionality, safety, stability and security are now of great and continuing concern to all of us and most importantly to US Congress, who so far has maintained stewardship over these key functions.

As the internet gets new updates, services apps and new technologies, so is the increased threats to the very resource we would like to use and trust. Several issues have become evident and have hit the headlines and drawn us to concerns we must boldly address. In my previous article, "From Wikileaks of 2012 to Snowden's NSA Leaks of 2013: Implications for Global Internet Governance, I covered the trending issue that came to the fore, that whilst Wiki leaks was about US diplomatic cables, the Edward Snowden disclosure of classified NSA information to private media organizations such as the UK Guardian newspaper has had graver implications for global Internet privacy. The NSA leak presented the United States of America as a country that practically spies on everybody in a most indiscriminate manner, including its own allies.

In an interview with CIO East Africa, I gave the African continent's perspective as to why the "The AUCC debate on Cyber Security needs to involve all stakeholders" concerning the NSA issue and that "African governments are still a long way in accepting such technologies as open data African governments can prepare proper legislations and strategize on how to handle private data in a manner that is not intrusive to rights of its citizens. The backlash of the NSA revelations wouldn't be a good experience for any government". Therefore "this emphasizes that internet governance should be a matter that is handled by many stakeholders to avoid giving the governments a monopoly of leadership in policy development"

From a private sector perspective , I wrote a piece on the reality of Emerging Cyber-Security Threats and Implications for the Private Sector, including a case for New gTLDs & Security where I highlighted that "cyber-warfare will be conducted against computers and network resources owned and operated by the private sector who own the utilities, financial corporations, and a lot of intellectual property." As such "The cost of Internet Security protection is bound to sky-rocket in the coming years." As "Private sector organizations that have their information resources compromised as a result of cyber-security attacks will not only suffer huge financial losses, and loss of business good-will, but their stock value could be affected and plummet and suffer degradation of overall market value. Investors stand the risk of losing their money invested in such companies." A case and point that soon exasperated was when Target, a US National Retailer was attacked by hackers who gained access to as many as 40 million credit and debit cards used by customers of Target during the height of the holiday shopping season.

Only at the end of 2014, did we come across deafening noise on the famous Sony Pictures Entertainment cyber hack, as it also took interest of the US political scene. Here there was a release of confidential data belonging to Sony Pictures Entertainment, the hackers who also called themselves the "Guardians of Peace" or "GOP" demanded the cancellation of the planned release of the film "The Interview", a comedy about a plot to assassinate North Korean leader Kim Jong-un. The US leadership saw it as un-American to recoil to such threat and also an attack on free speech.

As a result of such global cyber crime matters, President Obama Obama signed an order to protect consumers from identity theft by strengthening security features in credit cards and the terminals that process them and also plans to announce legislation that would shield companies from lawsuits for sharing computer threat data with the government in an effort to prevent cyberattacks.

Most recently ICANN the internet gatekeeper announced that it was "investigating a recent intrusion into our systems. We believe a "spear phishing" attack was initiated in late November 2014. It involved email messages that were crafted to appear to come from our own domain being sent to members of our staff. The attack resulted in the compromise of the email credentials of several ICANN staff members". Whilst, this goes to show that no one is safe from these targeted attacks. ICANN's mission is tied to being the gatekeeper over the availability, functionality, safety, stability and security of the global internet, which directly impact Cyber Security. ICANN itself is embroiled in a bid to sever its ties with the US government; therefore, aside from the mainstream accountability concerns, governance of the cyber security has and will form a major part of discussions on designing a new model to oversight ICANN. From the statements and activities, the US congress is not keen to let this separation happen soon, with the budgetary interventions, the IANA transition may just be but a dream.

From an individual perspective, a recent case was reported by Addis Fortune Newspaper where "The Court passed a guilty verdict against Yonas, a member of the Ethiopian diaspora from Germany, and sentenced him to two years in prison (although reversal was made afterwards by a higher court to a 6 months only imprisonment by suspension, based on lack of reasonable prove on aggravating circumstances to delete data from the computer of the victim) and a 5,000-Br fine for the cyber crime he was said to have committed against his business partner lady Akiko Seyoum". This is among the rare cases of prosecution for cyber crime, and a signal that Africa is becoming aware of the need to mitigate the increase of cyber crime and money laundering schemes.

In conclusion, the need to protect the global internet from such implications above as to its availability, functionality, safety, stability and security and using it also as a diplomacy tool to ensure the same, would definitely give a justification by a wide margin to the US status quo over the internet. Whilst, the US would not allow itself to be liable as exemplified during the global financial crisis of 2009 and the 1930, for blowing out its house of cards over its American Exceptionalism, a concept that has its roots from the principle of a country organized around an ideology that includes a set of dogmas about the nature of a good society, especially the one that tied it to a future mission of bringing liberty and democracy to the world.

Therefore, expect nothing less but 2015 to be a year of American Excepionalism over Internet Governance!

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Wikileaks 2012, NSA 2013, NTIA Mishaps & Global Cyber Crime 2014: U.S. Exceptionalism over IG 2015?

Edward Snowden; Edward Snowden what to do with remaining NSA secrets – Video


Edward Snowden; Edward Snowden what to do with remaining NSA secrets
Edward Snowden Whistle blower or Patriot : What to do with the remaining NSA secrets. As Edward Snowden ponders on how to unload the remaining Government secrets he has. The value maybe ...

By: BSTV - News Brief

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Edward Snowden; Edward Snowden what to do with remaining NSA secrets - Video

Edward Snowden to speak to Hawaii conference

Brush fire sparked by Puna lava flow breakout has jumped the fire break Brush fire sparked by Puna lava flow breakout has jumped the fire break

Updated: Thursday, January 15 2015 10:40 PM EST2015-01-16 03:40:11 GMT

Updated: Thursday, January 15 2015 10:35 PM EST2015-01-16 03:35:07 GMT

Updated: Thursday, January 15 2015 9:56 PM EST2015-01-16 02:56:32 GMT

Updated: Friday, December 19 2014 2:44 AM EST2014-12-19 07:44:58 GMT

However, Snowden will not make an appearance in person and will speak through a video link from Moscow, Russia.

Snowden, who used to live in Hawaii, worked for consulting firm Booz Allen Hamilton and rented a home in Waipahu. Snowden is known for leaking classified information from the National Security Agency. He is currently living in Russia and faces felony charges in the US.

The Davis Levin First Amendment Conference will be held at the Hawaii Convention Center on Feb. 14.

The live conversation with Snowden will follow a screening of Snowden documentary Citizenfour, which was nominated for an Oscar on Thursday. "Citizenfour" was nominated in the Best Documentary category.

The theme of the conference is, "Can Democracy Survive Secrecy?"

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Edward Snowden to speak to Hawaii conference

Secret US cybersecurity report: encryption vital to protect private data

Official UK government security advice still recommends encryption to protect online data and networks. Photograph: Felix Clay for the Guardian

A secret US cybersecurity report warned that government and private computers were being left vulnerable to online attacks from Russia, China and criminal gangs because encryption technologies were not being implemented fast enough.

The advice, in a newly uncovered five-year forecast written in 2009, contrasts with the pledge made by David Cameron this week to crack down on encryption use by technology companies.

Related: David Cameron pledges anti-terror law for internet after Paris attacks

In the wake of the Paris terror attacks, the prime minister said there should be no safe spaces for terrorists to communicate or that British authorites could not access.

Cameron, who landed in the US on Thursday night, is expected to urge Barack Obama to apply more pressure to tech giants, such as Apple, Google and Facebook, which have been expanding encrypted messaging for their millions of users since the revelations of mass NSA surveillance by the whistleblower Edward Snowden.

Cameron said the companies need to work with us. They need also to demonstrate, which they do, that they have a social responsibility to fight the battle against terrorism. We shouldnt allow safe spaces for terrorists to communicate. Thats a huge challenge but thats certainly the right principle.

But the document from the US National Intelligence Council, which reports directly to the US director of national intelligence, made clear that encryption was the best defence for computer users to protect private data.

Part of the cache given to the Guardian by Snowden was published in 2009 and gives a five-year forecast on the global cyber threat to the US information infrastructure. It covers communications, commercial and financial networks, and government and critical infrastructure systems. It was shared with GCHQ and made available to the agencys staff through its intranet.

One of the biggest issues in protecting businesses and citizens from espionage, sabotage and crime hacking attacks are estimated to cost the global economy up to $400bn a year was a clear imbalance between the development of offensive versus defensive capabilities, due to the slower than expected adoption of encryption and other technologies, it said.

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Secret US cybersecurity report: encryption vital to protect private data

Obama, Cameron to discuss encryption of online services

British Prime Minister David Cameron, in Washington to meet with President Obama, is expected to raise the issue of widening government access to data from U.S. Internet companies a sensitive subject on both sides of the Atlantic in the aftermath of the attacks in Paris.

Last weeks attacks have renewed European concerns that intelligence officials lack the authority to obtain the communications of terrorism suspects who use encrypted online services. On Monday, Cameron suggested he would consider banning American messaging services like Snapchat or WhatsApp if intelligence agencies were not provided with the authority to intercept communications.

But in Britain, as in the United States, such calls have revived the debate over the proper scope of government surveillance and how to balance security interests against privacy concerns.

The prime ministers point is that we have to find a way of closing down the space where terrorists operate on the Internet, said one British official, who spoke on the condition of anonymity because he was not authorized to speak on the record. Hes asking, How do we work with tech companies to make this work?

We did this with child abuse and child pornography, added the official. When it comes to terrorism, we are not where we need to be.

Technology companies, however, are still smarting from revelations about U.S. and British surveillance from former intelligence contractor Edward Snowden. Seeking to restore consumer confidence, they have increasingly begun to encrypt communications and data stored on mobile devices.

That, in turn, has alarmed law enforcement and intelligence officials, who say the encryption prevents them from gaining access to suspects data even when they have court orders.

Although U.S. law enforcement officials, including FBI Director James B. Comey, have sharply criticized technology companies for developing new forms of encryption, Obama who unveiled a series of surveillance reforms a year ago this week has said little about the issue.

Cameron, by contrast, has been forceful in his arguments in favor of widening government authorities access to communications data, telling Parliament: If we want the police and the security services to protect the public and save lives, they need this capability.

White House press secretary Josh Earnest said Obama and Cameron will probably talk about cybersecurity during the prime ministers visit, but he declined to say whether the president shared Camerons concerns about the need for broader government access to online communications.

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Obama, Cameron to discuss encryption of online services