Bitcoin A Terrorist Threat? Counterterrorism Program Names Virtual Currencies As Area Of Interest

Friday was the deadline for submissions to a counterterrorism program seeking vendors to help the military understand state-of-the-art technologies that may pose threats to national security, and bitcoin and virtual currencies are listed among them.

The program is being conducted by the Combating Terrorism Technical Support Office, a division of the Department of Defense that identifies and develops counterterrorism abilities and investigates irregular warfare and evolving threats.

An unclassified memo from January unearthed by Bitcoin Magazine detailed solicitations for CTTSO projects. The memo states that one of the mission requirements is for innovative...solutions to develop and/or enhance new concepts and constructs for understanding the role of virtual currencies in financing threats against the United States.

The memo said the blurring of national lines is facilitating the transfer of virtual currencies: The introduction of virtual currency will likely shape threat finance by increasing the opaqueness, transactional velocity, and overall efficiencies of terrorist attacks, it stated.

At the heart of the concern is the anonymity built into the bitcoin architecture. While every bitcoin transaction is public, the parties involved are kept anonymous. With bitcoins, illegal operations can be made with the speed and ease of the Internet and with the secrecy of cash.

Several recent high-profile cases have put bitcoin under greater scrutiny.

In October, the FBI closed down the Silk Road, a digital black market that allowed users to buy drugs, guns and even professional assassins. Silk Road accepted only bitcoin for payments, and the man arrested for running Silk Road was charged with narcotics trafficking and money

laundering, among other charges.

Charlie Shrem, chairman of the Bitcoin Foundation and the head of BitInstant, a defunct bitcoin exchange, was arrested in January on charges of money laundering with bitcoins.

In February, Mt. Gox, one of the largest bitcoin exchanges, filed for bankruptcy protection after hundreds of millions of dollars worth of bitcoins were stolen. No criminal charges have been filed yet, but many former Mt. Gox customers suspect that it was a scam.

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Bitcoin A Terrorist Threat? Counterterrorism Program Names Virtual Currencies As Area Of Interest