(LOS ANGELES) Justice Dept Court Report: A San Bernardino County man was sentenced today to 36 months in federal prison for operating an unlicensed business that exchanged at least $13 million in Bitcoin and cash, often for drug traffickers #AceNewsDesk report

#AceNewsReport – Nov.22: As the result of an investigation by Homeland Security Investigations (HSI) Los Angeles and IRS Criminal Investigation, Hugo Sergio Mejia, 50, of Ontario, was sentenced by U.S. District Judge Cormac J. Carney. Mejia pleaded guilty on July 1 to one count of operating an unlicensed money transmitting business and one count of money laundering.

#AceDailyNews DOJ Court Report: Los Angeles-area man who ran multimillion-dollar unlicensed Bitcoin exchange business sentenced to 3 years in federal prison….

During the nearly 2½-year period, according to the plea agreement, Mejia exchanged at least $13 million.

From May 2018 to September 2020, Mejia operated a virtual currency business that exchanged Bitcoin for cash, and vice versa, charging commissions for these transactions. Mejia never registered his business with the Financial Crimes Enforcement Network, a bureau with the U.S. Department of the Treasury that collects and analyzes information to combat financial crimes, including money laundering.

Mejia also established companies to mask his true activity, including Worldwide Secure Communications LLC, World Secure Data, and The HODL Group LLC. Mejia advertised his business online and was referred to customers by word of mouth, communicating with them via encrypted messaging services and meeting them in person at coffee shops.

On several occasions between May 2019 and March 2020, Mejia met with a client, who was working with law enforcement, to exchange Bitcoin for tens of thousands of dollars in cash. On March 12, 2020, Mejia met with the client at a coffee shop in Irvine and facilitated the exchange of 14.273 Bitcoin for $82,150 in cash plus fees. During this meeting, the client informed Mejia that his primary customer was a methamphetamine buyer in Australia who purchased methamphetamine every four to six weeks and sold it in Australia for five times more than the average price in the United States.

Mejia and the client who was working with law enforcement conducted five Bitcoin-cash transactions that cumulatively exceeded $250,000.

“[Mejia] knew about the applicable regulations governing his money exchange business and purposefully flouted them,” prosecutors wrote in a sentencing memorandum. “That is because [Mejia] structured his money exchange business with the intent to establish an anonymous conduit for money laundering of drug trafficking proceeds.”

As part of his plea agreement with the government, Mejia agreed to forfeit all assets derived from the illegal conduct, including $233,987 in cash seized from residences in Santa Ana and Ontario, silver coins and bars, and approximately $95,587 in various cryptocurrency seized.

This case received assistance from the Costa Mesa Police Department and was prosecuted by the U.S. Attorney for the Central District of California’s International Narcotics, Money Laundering and Racketeering and Asset Forfeiture Sections.

HSI is the principal investigative arm of the U.S. Department of Homeland Security (DHS), responsible for investigating transnational crime and threats, specifically those criminal organizations that exploit the global infrastructure through which international trade, travel and finance move.

HSI’s workforce of over 10,400 employees consists of more than 7,100 Special Agents assigned to 220 cities throughout the United States, and 80 overseas locations in 53 countries. HSI’s international presence represents DHS’s largest investigative law enforcement presence abroad and one of the largest international footprints in U.S. law enforcement.

#AceNewsDesk report ………….Published: Nov.22: 2021:

Editor says …Sterling Publishing & Media Service Agency is not responsible for the content of external site or from any reports, posts or links, and can also be found here on Telegram: https://t.me/acenewsdaily all of our posts fromTwitter can be found here: https://acetwitternews.wordpress.com/ and all wordpress and live posts and links here: https://acenewsroom.wordpress.com/and thanks for following as always appreciate every like, reblog or retweet and free help and guidance tips on your PC software or need help & guidance from our experts AcePCHelp.WordPress.Com

#bitcoin, #california, #cryptocurrency, #doj, #jailed, #los-angeles

(LONDON) SCAM ALERT: Bitcoin Report: Naveed Saghir is a 44-year-old graduate who runs his own successful home cinema business in the north west of England and then he was targeted by Bitcoin Fraudsters #AceNewsDesk report

#AceNewsReport – Sept.05: After a lifetime of hard work, regular saving and shrewd investments, earlier this year he had nearly £500,000 saved in Bitcoin.

#AceDailyNews says that a ‘Bitcoin Fraud’ has cost me £500,000′ as a host of charities have been calling for scam adverts to be included in the government’s Online Safety Bill, which will soon be scrutinised by MPs and Lords….

Naveed Saghir
Dan Whitworth: Money Box reporter, BBC Radio 4

Then, this summer, he was targeted by online fraudsters who stole everything.

“I’ve destroyed my life, changed my life so much for the worse and need to warn people – if it can happen to me it can happen to anyone,” he says.

Naveed is now on a mission. Struggling to get over the mental and emotional damage of seeing his future plans disappear, leaving his financial future wrecked, he wants to share his story to try to stop other people from becoming victims.

“I studied chemical engineering at university and then did a masters in computer science. I’ve been running my business for the last 20 plus years and have always been so careful with money,” he says.

“Whether it’s related to my business or my life I’ve made every penny count. But I made one bad judgement and it’s caught me out”.

Investment scam

Naveed was the victim of a type of fraud known as an investment scam. It’s when victims are conned into handing over money to people offering fake, but often very convincing, investments with the promise of big returns.

“I was watching videos on YouTube, saw an advert offering the chance to invest in stocks and shares and filled in a form requesting more information.

“The next day I got a call from someone who called themselves a customer service agent and paid £250 to start trading. The day after I was called again, this time by someone who described themselves as my account manager and given a username and password for an extremely convincing trading website.”

Naveed made his first payment in late May and as soon as he made that first terrible step the fraudsters had him.

Then it was a case of them engaging Naveed with more deceit, more lies, promises of bigger returns – which soon turned to promises of getting his growing losses back, and each time tricking him into transferring them more and more money.

By the end of August he’d been tricked into paying £18,000 sterling and 14.25 bitcoins – worth more than £500,000 at today’s exchange rate.

“I still can’t mentally recall how I’ve been suckered in,” Naveed said. “I just don’t know.”

Naveed SaghirNaveed still struggles to understand how criminals were able to make him a victim

One of those, the Money and Mental Health Policy Institute, said that millions of internet users, particularly those with mental health problems, were in danger of losing money or sensitive personal information to scammers.

No justice

Lisa Forte works for Red Goat Cyber Security and says not only is Naveed unlikely to get any of his money back but he’s also unlikely to get any justice.

“Even if the police start an investigation, which is unlikely, even if they find the criminals responsible, which is very unlikely, what are they supposed to do when the criminals are almost certainly in a foreign country where British police have no jurisdiction?

“There is pretty much zero recourse in regards to the Bitcoin. It’s a form of currency that operates outside of regulation compared to ‘normal’ money and because of this, because it’s not regulated – consumer protection is just not there.”

As for her advice, there are three main things people can do to try to help themselves, or pass on to family and friends, to stop them from becoming victims.

“One, do your research into anything you’re going to put your assets into and there are lots of reliable sources out there.

“Two, understand what Bitcoin is, like you should do with any investment, know how it works and know the pros and cons.

“Three, if someone is saying they’ll be able to use your investment to get your big returns in a short period of time that’s when alarm bells should be ringing. Genuine investment platforms don’t say this and there’s a reason for that.”

You can hear more on BBC Radio 4’s Money Box programme on Saturday at 12pm on Radio 4 or by listening again here shortly after broadcast

#AceNewsDesk report ………Published: Sept.05: 2021:

Editor says …Sterling Publishing & Media Service Agency is not responsible for the content of external site or from any reports, posts or links, and can also be found here on Telegram: https://t.me/acenewsdaily all of our posts fromTwitter can be found here: https://acetwitternews.wordpress.com/ and all wordpress and live posts and links here: https://acenewsroom.wordpress.com/and thanks for following as always appreciate every like, reblog or retweet and free help and guidance tips on your PC software or need help & guidance from our experts AcePCHelp.WordPress.Com

#bitcoin, #london, #scam-alert

(OHIO) Justice Dept Court Report: Resident Pleads Guilty to Operating Darknet-Based Bitcoin ‘Mixer’ That Laundered Over $300 Million #AceNewsDesk report

#AceNewsReport – Aug.20: According to court documents, Larry Dean Harmon, 38, of Akron, admitted that he operated Helix from 2014 to 2017. Helix functioned as a bitcoin “mixer” or “tumbler,” allowing customers, for a fee, to send bitcoin to designated recipients in a manner that was designed to conceal the source or owner of the bitcoin. Helix was linked to and associated with “Grams,” a Darknet search engine also run by Harmon. Harmon advertised Helix to customers on the Darknet to conceal transactions from law enforcement.

#AceDailyNews report that an Ohio man pleaded guilty today to a money laundering conspiracy arising from his operation of Helix, a Darknet-based cryptocurrency laundering service that was linked to and associated with “Grams,” a search engine also run by Harmon. Harmon advertised Helix to customers on the Darknet to conceal transactions from law enforcement……

“By holding Harmon accountable, the department has disrupted the unlawful money laundering practices of these dangerous criminal enterprises,” said Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division. “The Justice Department, together with our law enforcement and regulatory partners, will continue to take enforcement actions to identify and impede those who use illicit means for financial gain, as well as those who use the Darknet to facilitate and obscure their criminal conduct.”

“Darknet markets and the dealers who sell opioids and other illegal drugs on them are a growing scourge,” said Acting U.S. Attorney Channing D. Phillips for the District of Columbia. “They may try to hide their identities and launder millions in sales behind technologies like Helix. But the department and its law enforcement partners will shine a light on their activities, dismantle the infrastructure such criminal marketplaces depend on, and prosecute and convict those responsible.”

“Criminals may think they can mask financial transactions by using services like Helix to conceal the source of illicit funds,” said Assistant Director Calvin A. Shivers of the FBI’s Criminal Investigative Division. “The FBI and our state, local, federal and international law enforcement partners are working together every day in a complex and ever-changing digital environment to protect the American people from sophisticated money launderers and financiers.”

“The Darknet is driven in part by the criminal marketplaces which peddle their nefarious goods and services,” said Chief James C. Lee of the IRS Criminal Investigation. “But these marketplaces thrive in large measure because of the infrastructure that supports them. Harmon profited by facilitating the back-channel support of these marketplaces and helped criminals launder money they received via illicit activities. He then hid those funds from the government. He admitted his role today in these activities and will now be held accountable.”

“Harmon admitted that he conspired with Darknet vendors to launder bitcoin generated through drug trafficking and other illegal activities,” said Assistant Director in Charge Steven M. D’Antuono of the FBI’s Washington Field Office. “Today’s guilty plea demonstrates the FBI’s commitment to infiltrate and shut down the cryptocurrency money-laundering networks that support cyber-criminal enterprises.”

Harmon admitted that Helix partnered with several Darknet markets, including AlphaBay, Evolution, Cloud 9 and others, to provide bitcoin money laundering services for market customers. In total, Helix moved over 350,000 bitcoin – valued at over $300 million at the time of the transactions – on behalf of customers, with the largest volume coming from Darknet markets. Harmon further admitted that he conspired with Darknet vendors and marketplace administrators to launder such bitcoins generated through illegal drug trafficking offenses on those Darknet marketplaces.

As part of his plea, Harmon also agreed to the forfeiture of more than 4,400 bitcoin, valued at more than $200 million at today’s prices, and other seized properties that were involved in the money laundering conspiracy. Harmon will be sentenced at a date to be determined and faces a maximum penalty of 20 years in prison, a fine of $500,000 or twice the value of the property involved in the transaction, a term of supervised release of not more than three years, and mandatory restitution. Chief Judge Beryl Howell of the U.S. District Court for the District of Columbia accepted Harmon’s guilty plea and will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The IRS-CI Cyber Crimes Unit and the FBI’s Washington Field Office investigated the case, with valuable assistance provided by the Criminal Division’s Office of International Affairs, the U.S. Attorney’s Office for the Northern District of Ohio, the IRS’s Washington, Cincinnati and Oakland Field Offices, the FBI’s Criminal Investigative Division and Cleveland, Newark and San Francisco Field Offices, and the State Department’s Diplomatic Security Service.

The Belize Ministry of the Attorney General and the Belize National Police Department provided essential support for the investigation, coordinated through U.S. Embassy Belmopan. The investigation was coordinated with the Financial Crimes Enforcement Network, which assessed a $60 million civil monetary penalty against Harmon in a parallel action.

Trial Attorneys S. Riane Harper and C. Alden Pelker of the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS) and Assistant U.S. Attorney Christopher B. Brown of the U.S. Attorney’s Office for the District of Columbia prosecuted the case. Additional assistance was provided by Trial Attorneys Emily Siedell and Brian Nicholson of the Criminal Division’s Office of International Affairs, former CCIPS Trial Attorney W. Joss Nichols and Assistant U.S. Attorney Daniel Riedl of the Northern District of Ohio.

#AceNewsDesk report ……Published: Aug.20: 2021:

Editor says …Sterling Publishing & Media Service Agency is not responsible for the content of external site or from any reports, posts or links, and can also be found here on Telegram: https://t.me/acenewsdaily all of our posts fromTwitter can be found here: https://acetwitternews.wordpress.com/ and all wordpress and live posts and links here: https://acenewsroom.wordpress.com/and thanks for following as always appreciate every like, reblog or retweet and free help and guidance tips on your PC software or need help & guidance from our experts AcePCHelp.WordPress.Com

#bitcoin, #crypotcurrency, #darknet, #doj, #grams, #helix, #ohio

(WASHINGTON) Justice Dept Report: Today announced that it has seized 63.7 bitcoins currently valued at approximately $2.3 million that were the proceeds of Ransomeware paid to a group called Darkside who targeted Colonial Pipeline in May:2021: #AceNewsDesk report

#AceNewsReport – June.08: The seizure warrant was authorized earlier today by the Honorable Laurel Beeler, U.S. Magistrate Judge for the Northern District of California.

Department of Justice Seizes $2.3 Million in Cryptocurrency Paid to the Ransomware Extortionists Darkside and these funds allegedly represent the proceeds of a May 8, ransom payment to individuals in a group known as DarkSide, which had targeted Colonial Pipeline, resulting in critical infrastructure being taken out of operation.

Remarks as Prepared: DOJ: DAG Monaco Delivers Remarks at Press Conference on Darkside Attack on Colonial Pipeline Today, the Department of Justice is announcing a significant development in the ransomware attack on the Colonial Pipeline………Thank you all for being here.

Following the money remains one of the most basic, yet powerful tools we have,” said Deputy Attorney General Lisa O. Monaco for the U.S. Department of Justice. “Ransom payments are the fuel that propels the digital extortion engine, and today’s announcement demonstrates that the United States will use all available tools to make these attacks more costly and less profitable for criminal enterprises. We will continue to target the entire ransomware ecosystem to disrupt and deter these attacks. Today’s announcements also demonstrate the value of early notification to law enforcement; we thank Colonial Pipeline for quickly notifying the FBI when they learned that they were targeted by DarkSide.”

“There is no place beyond the reach of the FBI to conceal illicit funds that will prevent us from imposing risk and consequences upon malicious cyber actors,” said FBI Deputy Director Paul Abbate. “We will continue to use all of our available resources and leverage our domestic and international partnerships to disrupt ransomware attacks and protect our private sector partners and the American public.” 

“Cyber criminals are employing ever more elaborate schemes to convert technology into tools of digital extortion,” said Acting U.S. Attorney for the Northern District of California Stephanie Hinds. “We need to continue improving the cyber resiliency of our critical infrastructure across the nation, including in the Northern District of California. We will also continue developing advanced methods to improve our ability to track and recover digital ransom payments.”

On or about May 7, Colonial Pipeline was the victim of a highly publicized ransomware attack resulting in the company taking portions of its infrastructure out of operation. Colonial Pipeline reported to the FBI that its computer network was accessed by an organization named DarkSide and that it had received and paid a ransom demand for approximately 75 bitcoins.

As alleged in the supporting affidavit, by reviewing the Bitcoin public ledger, law enforcement was able to track multiple transfers of bitcoin and identify that approximately 63.7 bitcoins, representing the proceeds of the victim’s ransom payment, had been transferred to a specific address, for which the FBI has the “private key,” or the rough equivalent of a password needed to access assets accessible from the specific Bitcoin address. This bitcoin represents proceeds traceable to a computer intrusion and property involved in money laundering and may be seized pursuant to criminal and civil forfeiture statutes. 

The Special Prosecutions Section and Asset Forfeiture Unit of the U.S. Attorney’s Office for the Northern District of California is handling the seizure, with significant assistance from the Department of Justice Criminal Division’s Money Laundering and Asset Recovery Section and Computer Crime and Intellectual Property Section, and the National Security Division’s Counterintelligence and Export Control Section. The Department components who worked on this seizure coordinated their efforts through the Department’s Ransomware and Digital Extortion Task Force, which was created to combat the growing number of ransomware and digital extortion attacks.

The Task Force prioritizes the disruption, investigation, and prosecution of ransomware and digital extortion activity by tracking and dismantling the development and deployment of malware, identifying the cybercriminals responsible, and holding those individuals accountable for their crimes. The Task Force also strategically targets the ransomware criminal ecosystem as a whole and collaborates with domestic and foreign government agencies as well as private sector partners to combat this significant criminal threat.

#AceNewsDesk report ……….Published: Jun.09: 2021:

Editor says #AceNewsDesk reports by https://t.me/acenewsdaily and all our posts, also links can be found at here for Twitter and Live Feeds https://acenewsroom.wordpress.com/ and thanks for following as always appreciate every like, reblog or retweet and free help and guidance tips on your PC software or need help & guidance from our experts AcePCHelp.WordPress.Com

#bitcoin, #cryptocurrency, #darkside, #ransomware, #washington

(BIRMINGHAM, U.K.) WM POLICE REPORT: Officers have executed a warrant at a ‘Black Country Industrail Unit and uncovered a cryptocurrency ‘mine’ that was stealing thousands of pounds worth of electricity from the mains supply #AceNewsDesk report

#AceNewsReport – May.30: Officers heard how lots of people were visiting the unit at different times of day, lots of wiring and ventilation ducts were visible, and a police drone picked up a considerable heat source from above:

WM Police Officers have uncovered a Bitcoin ‘mine’ during industrial unit raid: Officers forced entry to the premises in Great Bridge Industrial Estate, Sandwell, on 18 May on the back of intelligence suggesting it was being used as a cannabis farm.

27th May 2021

Crypto

They are all classic cannabis factory signs – but when officers gained entry they found a huge bank of around 100 computer units as part of what’s understood to be a Bitcoin mining operation.

Crypto mine


The IT equipment was seized and enquiries with Western Power revealed the electric supply had been bypassed and thousands of pounds worth had been stolen to power the ‘mine’.

Sandwell Police Sergeant Jennifer Griffin, said: “It’s certainly not what we were expecting! It had all the hallmarks of a cannabis cultivation set-up and I believe it’s only the second such crypto mine we’ve encountered in the West Midlands.

“My understanding is that mining for cryptocurrency is not itself illegal but clearly abstracting electricity from the mains supply to power it is.

“We’ve seized the equipment and will be looking into permanently seizing it under the Proceeds of Crime Act. No-one was at the unit at the time of the warrant and no arrests have been made – but we’ll be making enquiries with the unit’s owner.”

The warrant was one of almost 50 executed as part of County Lines Intensification Week (17-23 May) which led to 84 arrests, significant drug seizures and the recovery of weapons including a sawn-off shotgun and a blank firing pistol converted to discharge live rounds.

#AceNewsDesk report ….Published: May.30: 2021:

Editor says #AceNewsDesk reports by https://t.me/acenewsdaily and all our posts, also links can be found at here for Twitter and Live Feeds https://acenewsroom.wordpress.com/ and thanks for following as always appreciate every like, reblog or retweet and free help and guidance tips on your PC software or need help & guidance from our experts AcePCHelp.WordPress.Com

#birmingham, #bitcoin, #u-k, #wmp

(WASHINGTON) Justice Dept Report: A citizen of Sweden pleaded guilty to securities fraud, wire fraud, and money laundering charges that defrauded more than 3,500 victims of more than $16 million #AceNewsDesk report

#AceNewsReport – Mar.05: The indictment and a factual basis filed by the government describe a long-running scheme by which Karlsson and EMS used a website to commit wire fraud against thousands of victims. Specifically, the indictment explains that from Nov. 27, 2012, through June 19, 2019, Karlsson and EMS used www.easternmetalsecurities.com to make fraudulent representations and convince victims to send funds using a virtual currency exchange. During the same period, Karlsson and EMS used deceptive “devices and contrivances” to sell securities and then tried to conceal the proceeds of the wire fraud and securities fraud.

Cryptocurrency Fraudster Pleads Guilty to Securities Fraud and Money Laundering Charges in Multi-Million Dollar Investment Scheme: ‘Roger Nils-Jonas Karlsson, 47, and his company, Eastern Metal Securities (EMS), was charged in a criminal complaint filed March 4, 2019, with crimes involving a scheme to defraud victims of more than $16 million. Karlsson, also known by several aliases including Steve Heyden, Euclid Deodoris, Joshua Millard, Lars Georgsson, Paramon Larasoft, and Kenth Westerberg, was arrested on June 17, 2019, in Thailand and was extradited to the United States to face the charges. A federal grand jury indicted Karlsson and EMS on July 25, 2019. Karlsson pleaded guilty to all the charges pending against him. EMS has ceased to exist’

During the proceedings, Karlsson admitted that he used the website to invite potential investors to purchase shares of the plan for less than $100 per share, promising an eventual payout of 1.15 kilograms of gold per share, an amount of gold which as of Jan. 2, 2019,  was worth more than $45,000. Karlsson advised investors that, in the unlikely event that the gold payout did not happen, he guaranteed to them 97% of the amount they invested. Karlsson admitted he had no way to pay off the investors. Instead, the funds provided by victims were transferred to Karlsson’s personal bank accounts and he then used proceeds to purchase expensive homes and a resort in Thailand.

As the government has alleged, Karlsson also used a second website, www.hci25.com, to make multiple false communications to potential investors. Karlsson brought the investors in HCI25 together with the investors in the “Pre Funded Reversed Pension Plan” (PFRPP) and posted multiple communications to delay the moment investors would realize there would be no payout.  For example, on one occasion, Karlsson explained that a payout had not occurred because releasing so much money all at once could cause a negative effect on financial systems throughout the world.  Karlsson also falsely represented that EMS was working with the U.S. Securities and Exchange Commission to prepare the way for a payout.

Karlsson directed his victims to make investments using virtual currencies, such as Bitcoin.  Karlsson admitted he defrauded no less than 3,575 victims of more than $16 million. 

Karlsson faces a maximum sentence of 20 years in prison and a maximum $250,000 fine for the wire fraud and securities fraud charges, and 20 years in prison and a $500,000 maximum fine for the money laundering charge. In addition, the court also may order an additional term of supervised release, fines or other assessments, and restitution, if appropriate. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence.

Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division; Acting U.S. Attorney Stephanie Hinds of the Northern District of California; and Special Agent in Charge Kelly R. Jackson of the IRS Criminal Investigation (IRS-CI) Washington, D.C. Field Office made the announcement.  

Trial Attorney Catherine Alden Pelker of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney William Frentzen are prosecuting this case.  Assistant U.S. Attorney Karen Beausey of the Asset Forfeiture Unit of the U.S. Attorney’s Office is prosecuting the forfeiture proceedings. 

IRS-CI Washington, D.C. Cyber Crimes Unit investigated the case. The Justice Department’s Office of International Affairs, the FBI Legal Attaché Office in Thailand, the IRS-CI Attaché Office in Hong Kong and the Royal Thai Police Crime Suppression Division provided significant assistance.

#AceNewsDesk report ……….Published: Mar.05: 2021:

Editor says #AceNewsDesk reports by https://t.me/acenewsdaily and all our posts, also links can be found at here for Twitter and Live Feeds https://acenewsroom.wordpress.com/ and thanks for following as always appreciate every like, reblog or retweet and free help and guidance tips on your PC software or need help & guidance from our experts AcePCHelp.WordPress.Com

#bitcoin, #cyptocurrency, #doj

` How the FBI became the Wealthiest ` Bitcoin ‘ Operator in the World just by shutting down Silk Road ‘

#AceNewsServices – UNITED STATES – April 14 – When the FBI shut down the Silk Road, an internet black market, in October it also seized the accused owner’s assets and inadvertently became one of the wealthiest bitcoin operators in the world.

When the FBI shut down the notorious online marketplace it made international headlines and began a worldwide discussion about how stable the future of bitcoin really is. Investigators have admitted that they seized hundreds of thousands of bitcoins from the Silk Road and its operator Dread Pirate Roberts, allegedly the on-line persona of one Ross Ulbricht.

A new report from Wired magazine indicates that the FBI is now in control of two addresses, or wallets, holding bitcoin worth as much as $120 million. That total would make the law enforcement agency the second-largest bitcoin holder in the world behind only Satoshi Nakamoto, the currency’s inventor, who is thought to have mined one million bitcoin in the technology’s earliest days.

There is a total of 12 million bitcoins in circulation and the FBI’s haul from the Silk Road raid means the bureau has more than even Cameron and Tyler Winklevoss. The Winklevoss twins, who became famous when they sued Mark Zuckerberg for allegedly stealing their idea for Facebook, said in July of this year that they had taken control of roughly one percent of all bitcoins.

As of October, the FBI owned 1.5 percent of all the world’s bitcoin, Forbes reported. Less than a quarter-million people own a single bitcoin, although the number of accounts holding one bitcoin has grown from 159,916 to 246,377.

#ANS2014

#bitcoin, #fbi, #silk-road, #united-states

` Nakamoto denies he is the creator of `Bitcoin ‘ despite earlier reports ‘

#AceFinanceNews says that Dorian Prentice Satoshi Nakamoto has denied that he is the creator of Bitcoin, despite an earlier report.

Newsweek claimed Nakamoto is the person who wrote the computer code underpinning Bitcoin.

However, he denied in an interview with AP that he had anything to do with the digital currency. Nakamoto, 64, said he had never heard of Bitcoin until his son told him he had been contacted by a reporter three weeks ago.

Bitcoin has become increasingly popular because it allows people to make one-to-one transactions, buy goods and exchange money without involving banks, credit card issuers or other third parties.

#AFN2014

#ap, #bitcoin, #nakamoto

` Bitcoin storage site `Flexcoin ' is closed after hackers robbed it of `$600.000 ' from its Hot Wallet '

#AceFinanceNews says that Bitcoin storage site Flexcoin announced Tuesday that it has closed after hackers robbed it of some $600,000 worth of digital currency.

“On March 2nd 2014 Flexcoin was attacked and robbed of all coins in the hot wallet.

The attacker made off with 896 BTC,” the bitcoin bank said on its website.

“As Flexcoin does not have the resources, assets, or otherwise to come back from this loss, we are closing our doors immediately.”

The stolen 896 bitcoins come to a loss of around US$600,000, depending on current bitcoin trading value. Bitcoin is not backed by deposit insurance since it is a crypto-currency.

Flexcoin kept bitcoins offline, or in “cold storage,” to remain secure.

Cold storage is separate from a hot wallet, or a bitcoin wallet which is on-line and connected to the internet.

RT News and #AFN2014

#bitcoin, #crypto-currency, #digital-currency, #flexcoin, #rt-news

` First there was a `New Currency ‘ called `Bitcoin’ then came `Greed ‘ now comes Taxation ‘ allowing `Greed ‘ to have its own Reward’s

#AceFinanceNews says according to latest news Japan is looking at ways to tax Bitcoin transactions, a report said Tuesday, in the wake of the spectacular failure of the Tokyo-based MtGox exchange after a half-billion-dollar theft.

The finance ministry and the national tax agency are studying possible rules that could govern transactions using the digital currency, the Yomiuri Shimbun newspaper said.

Authorities believe purchases made with Bitcoin can be subject to consumption and corporate taxes, even though the unit is not a legal currency, the Yomiuri said without citing sources.

This latest case of irregularities that has lead to an the recent investigation as cites by Reuters in saying Mt Gox, once the world’s largest bitcoin exchange, filed for bankruptcy in a Tokyo district court on Friday, the company’s lawyer citing ‘outstanding debts of $63.2 million, after mysteriously going offline on Monday.
Investors may have lost all of their virtual coins, as the exchange’s computer system was exposed to fraudulent transactions and technical failures. More on this story at http://wp.me/pzTwj-2tk

Has allowed a way for countries to tax Bitcoin transactions and bring them in line with many other the Monetary Systems controls, as was always wanted by the a number of countries.

This latest round of investigations, has only added fuel to the fire.

#AFN2014

#afp, #bitcoin, #finance, #japan, #mt-gox, #reuters, #taxation

` Mt Gox the largest ` Bitcoin Exchange ‘ files for ` Bankruptcy ‘ amid rumours of Hacking ‘

#AFN2014

#acefinancenews, #bitcoin, #mt-gox

#Silk-Road : “US `Federal Charges’ were made `Public Monday’ against `Two Men Accused’ of `Bitcoin’ Exchange Business `Bitinstant’

#AceFinanceNews says `Bitcoin Exchange Operators’ arrested in connection to Silk Road case. 

Published time: January 27, 2014 16:26
Reuters / Pawel Kopczynski Reuters / Pawel Kopczynski
 Federal charges were made public early Monday against two men accused of operating a Bitcoin exchange business in connection to the ongoing investigation involving the Silk Road on-line marketplace.

The United States Justice Department published a statement on their website Monday morning confirming that the two men, Robert Faiella and Charlie Shrem, had been arrested within hours of each other and charged with one count of conspiracy to commit money laundering and one count of operating an unlicensed money transmitting business apiece. If convicted, the men would face a maximum of 25 years in prison.

“As alleged, Robert Faiella and Charlie Shrem schemed to sell over $1 million in Bitcoins to criminals bent on trafficking narcotics on the dark web drug site, Silk Road,” Preet Bharara, the US Attorney for the Southern District of New York, said in Monday’s statement. “Truly innovative business models don’t need to resort to old-fashioned law-breaking, and when Bitcoins, like any traditional currency, are laundered and used to fuel criminal activity, law enforcement has no choice but to act. We will aggressively pursue those who would co-opt new forms of currency for illicit purposes.”

Shrem, the CEO of the Bitcoin exchange service BitInstant, was also charged with one count of willful failure to file a suspicious activity report, which carries a maximum sentence of five years.

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“Creation of Money into Wealth Using Cap-It-All-ism as their First Watchword”

USA Financial Crisis 1914 -2#AceDebtNews says the simple act of creating wealth has long been disputed in the world of borrowing and lending ,many economists have argued over who is right or wrong about the next federal reserve move, or what should be done to balance the economy. Though one blatant thing stands out above all else, and that is without money or the use of the wealth ,we could not survive!

Or could we?

Grover Cleveland - Series of 1914 $20 bill

Grover Cleveland – Series of 1914 $20 bill (Photo credit: Wikipedia)

For a long time now and having tried and failed at setting in motion every conceivable system, of monetary control, from QE to the recent debacle of “Debt Ceiling” nothing ever works!

Unless people spend money!

Over many years of providing “Other Peoples Money” , that l simple shall term as “OPM” for this post, the simple fact was, as more people borrowed to get richer, they actually got poorer, Oh not in the pocket but simply in their heart!

The  richer they got ,the more they wanted and the More they wanted, the worst the economy became!

It was just like that drug called  “OPIUM” and they could not stop!

The Great Financial Crisis of 1914:

What Can We Learn from Aldrich-Vreeland Emergency Currency? 

William L. Silber*

USA Financial Crisis 1914At the outbreak of World War I, the biggest gold outflow in a generation posed a double-barrelled threat to American finance: An internal drain of currency from the banking system and an external drain of gold to Europe. The Federal Reserve System, newly authorized by Congress on December 23, 1913, remained on the sidelines during the summer of 1914, a  victim of political and administrative delays. The absence of an operational central bank encouraged Treasury Secretary William G. McAdoo to improvise the modern principle of aiming an independent weapon at each policy target. He employed a form of capital controls to deal with the external threat, shutting the New York Stock Exchange (NYSE) for more than four months to prevent Europeans from selling their American securities and demanding gold in return. And he invoked the emergency currency provisions of the Aldrich-Vreeland Act to deal with the internal threat, allowing banks to issue national bank notes, an important form of currency in pre-Federal Reserve days, without the normal requirement that the currency be secured by U.S. Government bonds.

So how did we get into this situation in the first place ,well everything has to have a beginning and will l am sorry to say have an end, but not an end in this case anyone will expect.

According to Friedman and Schwartz (1963, p.196), by November 1914 “the country had recovered from … the declaration of war in Europe, thanks in no small part to the availability of Aldrich-Vreeland emergency currency.” Friedman and Schwartz (1963, p. 172) also suggest that emergency currency “would have been equally effective on the occasion of the next threat of an inter-convertibility [sic] crisis which arose in late 1930.”

Robert Schwartz

Robert Schwartz (Photo credit: mlzafron)

This paper tests Friedman and Schwartz’s conjecture about the power of Aldrich-Vreeland emergency currency and draws lessons for monetary policy. Proof of the potency of the Aldrich-Vreeland Act, passed in 1908 to avoid a replay of the Panic of 1907, comes from a little-known experiment conducted by William McAdoo in1913. Friedman and Schwartz’s suggestion that the1930 banking crisis might have been nipped in the bud with an operational Aldrich-Vreeland Act gains credibility from a key characteristic of crisis control under the Act: liquidity flowed automatically to where it was needed most.

It was him that recommended that the Federal Reserve adopt the principles of the Aldrich-Vreeland Act in its administration of the discount window. This will help preserve the integrity of the banking system, especially under wartime conditions with impaired communications.

I. What happened in 1914?
Foreigners owned more than $4 billion U.S. rail-road stocks and bonds at the outbreak of the Great War, with $3 billion of that in British hands. These securities were liquid assets and could be sold quickly on the NYSE. Under the gold standard, foreign investors could then use their cash proceeds to acquire the precious metal from the American banking system. Fear that the United States would abandon the gold standard pushed the value of the dollar to unprecedented depths on world markets. The magnitude of the problem forced America to defend itself: At the outbreak of the war, reserves at New York banks would have been cut in half if the British sold only five percent of their holdings (see Noyes, 1916, p.94). People knew that the banks had tried to conserve reserves in 1907 by suspending the convertibility of deposits into currency. In 1914, the bankers worried that the gold outflow to Europe would “inspire fear” and trigger an added rush into cash before suspensions took effect. Without an operational Federal Reserve Systemthe currency shortage would spawn bank runs like “those experienced in the fall of 1907” — only worse.

English: The floor of the New York Stock Excha...

English: The floor of the New York Stock Exchange published in 1908. (Photo credit: Wikipedia)

The crisis began on July 27, 1914. The sale of dollars for pounds sterling in the foreign exchange market, and the increase in the exchange rate to $4.92 per pound, four cents above the gold export point, provoked gold shipments. On July 31, 1914, after the price of sterling failed to decline in response to record gold exports, Treasury Secretary McAdoo asked the NYSE to close. If foreigners could not sell their U.S. stocks, they could not raise dollars and demand gold in exchange. McAdoo had rejected the direct approach, suspending the gold standard, as too costly to American credibility. The NYSE remained shut through December 12, 1914, mitigating sales of American securities by foreigners and hampering their demand for gold.

Seal of the United States Office of the Comptr...

Seal of the United States Office of the Comptroller of the Currency, part of the Department of the Treasury. The design is the same as the Treasury seal with a Comptroller of the Currency inscription. (Photo credit: Wikipedia)

But the threat of a run on America’s bank reserves did not disappear. American debts denominated in British pounds matured during this period, and U.S. borrowers would need sterling or gold to meet their obligations. Moreover, precautionary withdrawals of currency from the banks threatened to exacerbate the loss in reserves from the gold outflow. Under the National Banking laws then in existence, commercial banks could create additional currency only by depositing U.S. Government bonds with the Office of the Comptroller of the Currency in the U.S. Treasury. The Treasury’s Bureau of Engraving and Printing would then ship newly printed national bank notes to the banks to meet depositor withdrawals. In the summer of 1914, national bank notes outstanding had already reached its maximum based on the outstanding supply of government securities.

Beginning August 4, 1914, after McAdoo invoked the Aldrich-Vreeland Act, banks could create currency, either by depositing municipal bonds directly with the Office of the Comptroller of the Currency or by depositing other securities or commercial paper with a local group of banks that had formed a National Currency Association under the Act. Thus a bank facing a sudden withdrawal of currency could create national bank notes to meet the demand, thanks to the emergency currency provisions of the “Aldrich-Vreeland Act”.

English: A crowd forms on Wall Street during t...

English: A crowd forms on Wall Street during the Bankers Panic of 1907.http://www.frbatlanta.org/invoke.cfm?objectid=83FD4128-9AF0-11D5-898400508BB89A83&method=display_body From the New York Public Library’s Digital Gallery, in the Irma and Paul Milstein Division of United States History, Local History and Genealogy Français : La foule se presse sur Wall Street pendant la panique causée par la crise bancaire d’octobre 1907. (Photo credit: Wikipedia)

McAdoo recognized the potential danger of his policies – closing the stock exchange left the capital markets without a rudder and flooding the country with emergency currency tempted inflation. McAdoo’s recipe for smothering the crisis included an exit strategy. He organized the Bureau of War Risk Insurance on September 3, 1914 to promote exports of cotton and wheat to Europe. Exports would generate gold inflows in payment for American goods, which could then settle foreign obligations. McAdoo’s policies prevented a panic. Banks never suspended their promise to convert deposits into currency and the U.S. Treasury never left the gold standard during the summer and fall of 1914. On November 11, 1914, less than four months after the onset of the crisis, and four days before the opening of the Federal Reserve Banks, the exchange rate of the dollar relative to the pound sterling fell below the gold export point, and gold exports ceased.

The threat to the American financial system disappeared!
Friedman and Schwartz (1963, p.196) are reasonably accurate in saying “by November 1914 the country had recovered from the immediate shock of the declaration of war in Europe,” but with so many components to McAdoo’s plan, perhaps they overreached when adding, “thanks in no small part to the availability of Aldrich-Vreeland emergency currency.”

Knickerbocker Trust CompanyThe contrast between 1914 and 1907 supports Friedman and Schwartz’s interpretation. The growth in emergency currency between August 1, 1914 and its peak at the end of October 1914, produced a seven percent increase in the monetary base. The money supply grew at an annual rate of 9.8 percent over the same period. By way of contrast, in 1907 the public’s obsession with currency beginning the week of October 22, 1907, when the “Knickerbocker  Trust Company” suspended payments, triggered a decline in the money supply at an annual rate of 11.6 percent during the final three months of the year. Additional evidence of the power of Aldrich-Vreeland emergency currency comes from a little-known experiment that McAdoo conducted a year before the European war erupted.

II. The Lesson of 1913: 

Description: Newspaper clipping USA, Woodrow W...

Description: Newspaper clipping USA, Woodrow Wilson signs creation of the Federal Reserve. Source: Date: 24 December 1913 (Photo credit: Wikipedia)

McAdoo flirted with Aldrich-Vreeland currency during the spring of 1913. The newly elected “President, Woodrow Wilson”, had proposed tariff reduction legislation that provoked considerable opposition in the business community. Wilson pushed for prompt passage of the “Federal Reserve Act”, in part because he expected that the new currency system could supply easy money during the first few months of reduced protection from foreign competition. When Wilson suspected that Republican Senators wanted to block currency revision to precipitate a financial panic and blame the Administration’s new tariff policies, he turned to McAdoo. In the evening of June 11, 1913, McAdoo announced (Washington Post, June 12, 1913) that “he would not hesitate to issue emergency currency to any banks making application and qualifying under the [Aldrich-Vreeland] Act.” When McAdoo was asked whether any applications had been made he simply said: “No.” The press noted that: “The only explanation obtainable as to Mr. McAdoo’s purpose…is that it is intended to give assurance…that the Wilson Administration will do its utmost to overcome any financial embarrassment that may come.”

 Would Aldrich-Vreeland currency succeed in calming the business community?

Opponents of the original legislation had argued that, instead of preventing a panic, the provision of emergency currency might backfire and provoke one. The then Comptroller of the Currency, William Ridgely, said (Comptroller of the Currency, 1907, p.74): “The issue of so-called emergency notes…would at once be a confession of weakness and a danger signal that no bank would dare make until in desperate condition.” Perhaps that is why no emergency currency had ever been requested since the Aldrich-Vreeland Act had been passed in May 1908. How did the business world respond to McAdoo’s June 11, 1913 invitation?

McAdoo released his statement invoking the Aldrich-Vreeland Act on the evening of June 11, after the stock market had closed. Thus, if McAdoo’s announcement had a material impact, for better or worse, it should have been reflected in stock price movements on June 12. The return of more than 2.5 percent in the index of railroad stocks (currently called the Dow Jones Transportation Average), and over 3 percent in the index of industrial stocks (currently called the Dow Jones Industrial Average), on June 12, 1913, are the largest statistically significant positive daily price movements during the first six months of 1913. Wall Street’s vote of confidence on June 12, 1913 demonstrated the potential power of the Aldrich-Vreeland Act. The record during the summer of 1914 confirmed it.

III. Liquidity in Wartime:
An important characteristic of the Aldrich-Vreeland Act was that once the Treasury Secretary declared a financial crisis under the Act, a bank could decide the timing and magnitude of securities to deposit as collateral for additional currency. Thus high-powered money expanded endogenously to meet a shortage of liquidity. According to Sprague (1915, p.517) this feature of the Aldrich-Vreeland Act accounted for its success: “For the first time since the establishment of the national banking system the banks exercising the powers conferred upon them by the Aldrich Vreeland Act of 1908 were able to issue bank notes freely in coping with a crisis.”

Direct aid to individual banks needing liquidity may be the best way to combat a panic under wartime conditions. Interruptions in communications facilities, caused by total war or by terrorist attacks, can precipitate liquidity shortages at specific financial institutions. McAndrews and Potter (2002, p.72) cite the importance of the Federal Reserve’s lending at the discount window to individual banks as the key to mitigating the financial consequences of the terrorist attacks of September 11, 2001. Open market operations, the preferred method of injecting funds in the modern banking system, may not have accomplished its objective. Impaired funds transfer prevented some banks that needed cash from borrowing it in the inter-bank market.

In 1914, the threat of an external drain of gold forced McAdoo to close the NYSE. Call loans secured by stock exchange collateral, which normally would have been the primary source of liquidity to an individual bank, disappeared. Under the Aldrich-Vreeland Act banks turned their assets into emergency national bank notes. Like Federal Reserve lending at the discount window during the September 11, 2001 crisis, Aldrich-Vreeland currency provided a universally accepted domestic medium of exchange directly to the banks needing it.

IV. 1930:
The two key characteristics of currency creation under the Aldrich-Vreeland Act — (1) direct aid to an individual bank, and (2) at the discretion of the bank — support Friedman and Schwartz’s (1963, p. 172) conjecture that emergency currency “would have been equally effective on …the next threat of an inter-convertibility [sic] crisis which arose in late 1930.” During the Great Depression the Federal Reserve knew of Bagehot’s principle of lending freely to stem an internal drain of currency, but did not implement it consistently (see Meltzer [2003, p.282]). The Aldrich-Vreeland Act would have eliminated discretionary delays, by allowing banks under liquidity pressure to exchange assets for currency automatically, had the Act not expired by Congressional design on June 30, 1915 (as part of the Federal Reserve Act of December 23, 1913). Although banks that were members of the Federal Reserve System could initiate a demand for reserves at the discount window in 1930, the Federal Reserve banks exercised considerable discretion (see Chandler, 1971, pp. 225-239).

Open market operations suffered from discretionary delays plus the potential for reserves to accumulate in banks that did not need funds. Unwarranted mistrust of otherwise sound institutions during the 1930’s (some mistrust was warranted, but some was not), meant that open market purchases might not channel the funds to banks under depositor attack, similar to the breakdown of communications on September 11, 2001 described by McAndrews’ and Potter (2002, p.72). The mechanism for currency creation under the Aldrich-Vreeland Act would have provided credit at the bank’s initiative directly to banks needing it most. V. A Concluding Recommendation for Current Federal Reserve Policy
The Aldrich Vreeland Act helped William G. McAdoo triumph over the financial crisis during the summer of 1914. Two key characteristics of the process — direct aid to an individual bank, at the initiative of the bank — suggest that the Aldrich Vreeland mechanism would be especially appropriate in avoiding discretionary delays in liquidity provision and in circumventing problems associated with funds transfers among financial institutions. The Federal Reserve’s revised guidelines for extending primary credit at the discount window moved in the direction of the Aldrich-Vreeland Act by limiting discretionary delays, but still falls short.

The Federal Reserve should complete the progress it has made towards incorporating the 1908 emergency currency legislation in its operating procedures.

VI. References:
Chandler, Lester V., 1971, American Monetary Policy: 1928-1941, Harper & Row publishers, New York.

Comptroller of the Currency, 1907, Annual Report, Government Printing Office, Washington, D.C.

Friedman, Milton, and Anna J. Schwartz, 1963, A Monetary History of the United States, Princeton University Press.

McAndrews, James J. and Simon M. Potter, 2002, “Liquidity Effects of the Events of September 11, 2001,” Federal Reserve Bank of New York

Review, November Meltzer, Allan H., 2003, A History of the Federal Reserve, Volume I, 1913-1951, Chicago, University of Chicago Press

Noyes, Alexander D., 1916, Financial Chapters of the War, Charles Scribner’s and Sons, New York

Silber, William L., 2007, When Washington Shut Down Wall Street: The Great Financial Crisis of 1914 and the Origins of America’s Monetary Supremacy, Princeton University Press

Sprague, O. M. W., 1915, “The Crisis of 1914 in the United States,” American Economic Review, Volume 5, No. 3, pp. 499-513

Conclusion: 

If the creation of wealth for the reason outlined had not been so manipulated as to eventually allow the use of “The Albert Vreeland Act” to be use in such a way, as to give rise to the eventually creation of “The Federal Reserve” allowing currency to become controlled under the “The Office of the Comptroller of the Currency in the offices of the US Treasury ” we would not be in the position we are today.

The blatant misuse of the certain acts, enabled a misdirection to take place, allowing the then “Treasury Secretary ” William McAdoo to as it was put – McAdoo flirted with Aldrich-Vreeland currency during the spring of 1913 allowing him to eventually both manipulate and control the price of gold and the eventual allowing banks to issue national bank notes, an important form of currency in pre-Federal Reserve days, without the normal requirement that the currency be secured by U.S. Government bonds.

The overall plan being to put in place a way of “Printing Currency at Times of Financial Crisis” or at such time of needing to raise “The Debt Ceiling” levels above their norm ,even when the amount owed in “Debt Repayments” exceeds the GDP of the country.

The fact that simply by “Creation of Currency Legislation” allowing control of “Peoples Spending” by valuation and devaluation of their effective currency, they could use the “Federal Reserve” as a tool for currency manipulation, and create what has become simply known as “Quantitative Easing” to borrow more against the book debt, by simply revaluing the book debt by how much you owe in debts.                   

This eventually led to what is now termed as inter-bank lending that was started here – “Open market operations, the preferred method of injecting funds in the modern banking system, may not have accomplished its objective. Impaired funds transfer prevented some banks that needed cash from borrowing it in the inter-bank market”. This was cited as ” Direct aid to individual banks needing liquidity may be the best way to combat a panic under wartime conditions”. Interruptions in communications facilities, caused by total war or by terrorist attacks, can precipitate liquidity shortages at specific financial institutions. McAndrews and Potter (2002, p.72) cite the importance of the Federal Reserve’s lending at the discount window to individual banks as the key to mitigating the financial consequences of the terrorist attacks of September 11, 2001.

Finally this led to the single currency of US of A and the creation of more of the same leading to the eventual “Financial Crash of 2008”

But of course the real reason was Money!

The route or root of all evil – but not so, as the real saying is ” The Love of Money is the of All Evil” and it is that word “Love” that makes all the difference, between “Good and Evil” as it measures the person as either “Wanting or Lacking” as so many a person now destitute or alone or having taken their own life, all for the “Want” of money!

The Bible steps up to the plate so many times as a way to change but simply put ” Change Or Be Damned” seems to fit the bill in this case, as chasing the ” Dollar a Day” as a way to build you future is gradually dying a death, as the new kid on the block “China” says no longer are you our ” “Preferred Reserve Currency” the question in the future will not be, is it the Chinese, Hungary, Russia, India, Syria or Turkey [C.H.R.I.S.T] that is in charge ,but simply –

“The Word of God ”

Amen.    

 

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Edward Snowden Revelation’s Has Caused the #NSA to Erode Our Security Foundation’s

National Security Agency Seal

National Security Agency Seal (Photo credit: DonkeyHotey)

Threatpost’s Dennis Fisher It’s no fun being a cynic, thinking that everything is bad and getting worse. It’s easy–especially in the security community–but it’s not fun. But, in light of the latest in the interminable string of revelations about the NSA’s efforts to eat away at the foundation of the security industry, the only alternative available is the equivalent of believing in unicorn-riding leprechauns.

The security community did not invent the concept of fear, uncertainty and doubt, but it has perfected it and raised it to the level of religion. It’s the way that security products are marketed and sold, but it’s also the way that the intelligence community justifies its extra-legal and, sometimes, unconstitutional, data-gathering practices. Just as vendors use the specter of catastrophic hacks, data loss and public embarrassment to push their wares, the NSA and its allies have used the dark shadow of 9/11 and global terrorism to justify their increasingly aggressive practices, some of which have now been shown to have deliberately weakened some of the fundamental building blocks of security.

The most damning bit of string in this ball is the news that the NSA likely inserted a back door into a key cryptographic algorithm known as DUAL EC DRBG. That’s bad. What’s worse is that RSA on Thursday sent a warning to its developer customers warning them to immediately stop using the random number generator and select a new one when using the company’s BSAFE crypto libraries.

While this is the most recent, and probably the worst, piece in all of this, the steady accumulation of evidence over the last three months makes it difficult to come to any conclusion other than this: nothing can be trusted.

More to the point, we don’t know whether anything can be trusted. And that’s actually far worse than knowing that products X, Y and Z are compromised. If you know that, you can avoid those products. But now that we have direct evidence that the NSA is in fact actively working to undermine certain cryptographic protocols and partnering with technology vendors to produce certified pre-owned software and hardware, the big question is, what’s not broken?

Unfortunately, the answer is, we just don’t know.

Image representing Edward Snowden as depicted ...

Image by None via CrunchBase

In a much simpler and less cynical time–say, May–we thought that our intelligence agencies were in the business of spying on our enemies. Then came the first Edward Snowden leaks, and we discovered that the NSA was collecting all of our phone records. You know, just in case. Then we hear that the agency also vacuuming up much of the Internet traffic flowing through U.S. pipes because BOO! terrorism. But we still have encryption. As long as we can encrypt our email and Internet traffic, we’re safe from snooping, right? Oops. Turns out the NSA is in that henhouse too, working to weaken standards and crypto algorithms and also has some capabilities to circumvent things such as SSL.

And now, into this environment of accusation and innuendo comes the news that theattack on Belgian telco Belgacom revealed earlier this week reportedly was the work of the British spy agency GCHQ. The connection to NSA? GCHQ apparently used exploit technology developed by the NSA.

And on and on and on.

So we’ve come to the point now where the most paranoid and conspiracy minded among us are the reasonable ones. Now the crazy ones are the people saying that it’s not as bad as you think, calm down, the sky isn’t falling. In one sense, they’re right. The sky isn’t falling. It’s already fallen.

Courtesy: Threatpost  

Image from Flickr photos of David Sedlmayer

 

 

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