The US Department of Justice (DOJ) convened a first-of-its-kind conference on digital currency and the blockchain in San Francisco today.
According to the agency, the goal of the event was to unite the private and public sector in discussions centered on strategies for limiting cybercrime perpetrated with the emerging technologies.
The unpublicized event, organized by the DOJ’s Digital Currency Task Force and held at the Federal Reserve Bank in San Francisco, saw 175 industry participants engage in panel discussions that sought to emphasize its core theme from the point of view of entrepreneurs, law enforcement officials and regulators.
Though no participants were named in formal release, Twitter images from the event show speakers included Xapo[1] CEO Wences Casares, Coinbase[2] founder Fred Ehrsam and Ripple[3] CEO Chris Larsen, among others.
In remarks, US Attorney Brian J Stretch positioned the event as one that sought to forge a common ground between representatives of the government and the distributed financial technology sector:
“As emerging technologies such as digital currency and blockchains expand into new and legitimate applications, it becomes all the more critical for industry leaders and government agencies to share insights and perspectives in order to combat the illicit use of these technologies.”
Further addressing the need for dialogue was FinCEN Director Jennifer Shasky Calvery, who noted that despite her department’s early efforts to understand the industry, continued discussions are needed due to the evolving nature of the technology.
“We only opened the door for the hundreds of other questions beyond our anti-money laundering perspective,” Calvery said.
The event was previously hinted at by DOJ Digital Currency Crimes Coordinator Kathryn Haun in an interview with CoinDesk[4] in September in which she spoke at length about the multi-agency task force and its goals.
At the time, Haun sought to stress that the US government was broadly seeking to engage the digital currency and blockchain industry in discussions that would provide clarity on key issues for all ecosystem participants.
The Financial Crimes Enforcement Network (FinCEN) has issued a new ruling applicable to US businesses seeking to tokenize commodities for blockchain-based trading.
Despite being a response to a specific inquiry by an unnamed company, the letter[1] could be read as broadly applicable to startups seeking to both custody physical assets and issue a digital asset for use in trading. Under such business models, FinCEN[2] suggests startups would need to be licensed in all 50 states.
The letter describes the company behind the submission as one that provides an “Internet-based brokerage service” that connects buyers and sellers of precious metals; buys and sells precious metals on its own account; holds precious metals for clients and issues “digital proof of custody” in the form of a token on the bitcoin blockchain.
In this specific instance, FinCEN argues the company in question does not fall under an electronic currency or commodities trading exemption as it allows “unrestricted transfer of value from a customer’s commodity position to the position of another customer or a third-party”.
The ruling reads:
“FinCEN finds that, as the company is going beyond the activities of a broker or dealer in commodities and is acting as a convertible virtual currency administrator (with the freely transferable digital certificates being the commodity-backed virtual currency), the company falls under the definition of money transmitter.”
The statement is the latest from FinCEN to clarify which types of US bitcoin services it considers money transmitters following similar declarations for bitcoin processors[3], escrow services[4] and miners[5], among other groups.
Exceptions
Notably, FinCEN did offer guidance as to how such business models could be crafted should the company in question want to avoid the requirements associated with being categorized as a money transmitter in the US.
In particular, FinCEN referenced a 2011 decision in which it carved out an exemption to entities that only provide “the delivery, communication, or network data access services used by a money transmitter to supply money transmission services”.
The letter reads:
“To the extent the only type of brokerage services offered by the company are those in which the buyer makes payment directly to the seller, the company would meet this exemption and FinCEN would not deem the company a money transmitter.”
FinCEN further called back to 2008 guidance in which it stated that broker-dealers in commodities or currencies are money transmitters if they transfer funds between a customer and a third party that is not part of the transactions.
“Such transmission of funds is no longer a fundamental element of the actual transaction necessary to execute the contract for the purchase or sale of the currency or the other commodity,” it said.
The agency also nodded to its past rulings on virtual currencies to suggest such a definition could be used to capture tokens meant to represent items with a real-world value.
“This type of virtual currency either has an equivalent value in real currency, or acts as a substitute for real currency,” it said.
Interpretations
Risk and compliance specialist Juan Llanos, who has formerly worked with such firms as Bitcoin Foundation[6] and Bitreserve[7], suggested the ruling should be read as broadly applicable to businesses seeking to issue blockchain-based assets.
Llanos told CoinDesk:
“The broader statement is that issuing a certificate of ownership (whether paper, digital or even a statement) and allowing the unrestricted transfer of value is what makes a broker or dealer (or any other company, for that matter) a money transmitter.”
Llanos suggested the interpretation could extend to many parts of the bitcoin ecosystem, even services like bitcoin wallet provider Blockchain, which has argued that it provides only the software necessary for users to hold bitcoin.
“The government could argue that a wallet service, by providing an ‘account’ or a representation of value via the software, is in fact ‘issuing’ a certificate of ownership or representing the ownership of value electronically,” he suggested.
Ultimately, Llanos inferred that the ruling would increase the number of companies in the space that fall under the definition of money transmission and would thus be governed by Bank Secrecy Act regulations.
Jared Marx is an attorney at Washington, DC law firm Harris, Wiltshire & Grannis[1]. He advises companies about bitcoin-related regulatory law and represents companies and individuals in civil and criminal proceedings.
Here, he discusses what cryptocurrency businesses should consider if they find themselves face-to-face with a US government subpoena, interview or search warrant.
Cryptocurrency businesspeople are a hearty bunch. They deal not only with the ordinary anxieties of running a startup, but also with a lack of clarity on a whole range of fundamental legal issues. (Remember when people were still asking whether bitcoin was even legal?)
One upshot of this is that a number of companies – including many who have tried hard to comply with applicable laws – have found themselves either receiving investigative subpoenas or subject to civil or criminal enforcement action.
Since regulatory uncertainty is likely to persist for some time, here’s a primer on things to consider when the US government knocks at your door (either figuratively or literally).
1. Subpoenas
Virtually every US government agency has the power to demand documents from businesses that operate under its regulatory supervision. Generally speaking, the way that the government does this is by issuing a subpoena (sometimes styled as the essentially-identical ‘civil investigative demand’).
Importantly, while the government doesn’t need to go to a judge (or anyone else) to issue a subpoena, an agency must go to a judge to enforce a subpoena. That means that when a party doesn’t respond to a subpoena, the agency must first convince a judge that it issued a valid subpoena before anyone will compel the target to produce documents or items.
However, when a party ignores a subpoena, the agency likely will go to a judge, and that will almost certainly make things worse. An agency who asks a judge to enforce a subpoena because it has received no response usually gets what it wants, even if the subpoena was overly broad.
“US regulatory law is stunningly broad, and the consequences of an investigation gone wrong can be crippling.”
Indeed, if there’s a criminal investigation in play, the agency may change its mind and seek a search warrant rather than a subpoena, and raid the offices where it’s looking for files. That’s definitely worse.
On the other hand, the fact that subpoenas aren’t self-enforcing also means that they’re negotiable.
Most agencies issue cookie-cutter subpoenas, asking for broad and often burdensome productions of documents. Truth be told, those agencies would rather not try to justify an overbroad subpoena to a judge. Just as often, they only issued a broad subpoena because they weren’t sure what they wanted in the first place.
The first step that experienced companies usually take after receiving a subpoena is to have their lawyer call the agency to ask what they’re really after. Especially in the cryptocurrency space, where government actors may or may not fully understand the technology, there’s a good chance of getting the government to agree to a ‘narrowing letter’, which limits what’s being asked for in the subpoena.
Only very seldom can lawyers convince the government to simply go away, but a narrowing letter often saves a lot of time and money by significantly limiting the subpoena’s reach.
When a subpoena is truly out of line, parties can also go to court to ‘quash’ (or cancel) the subpoena as improper or overly broad. But that’s a lot easier to do when the challenging party is the first one to the judge, and the agency hasn’t already been there complaining about how the target thumbed its nose at them.
2. Interviews
US federal law makes it a felony to intentionally lie to government agents. It’s like being under oath any time you talk to a government agent – except that it’s actually worse: if you testify in a courtroom, a stenographer records your testimony in open court. But when you talk to an FBI agent, the only record of your conversation are the notes that the agent writes up back in their office.
So the first problem is obvious: the agent conducting the interview may hear only what they wants to hear, or they may simply make honest – but ultimately harmful – mistakes in recording the interview.
Moreover, federal agents are permitted to, and regularly do, lie to suspects or witnesses when conducting an investigation. So the mere act of engaging in conversation with an agent can be treacherous.
Even if – and maybe especially if – a person has “nothing to hide”, most defense lawyers will agree that the safest bet when an agent asks for an interview is to treat the agent respectfully and politely, but to decline an interview at that time.
A lawyer can then follow up with the agent, and if an interview truly is in the person’s best interest, the lawyer will also arrange to be present for it.
3. Search warrants
Finally, in criminal matters, the government sometimes skips subpoenas and gets a search warrant from a court.
Unlike a subpoena, a search warrant gives the government the power to search a party’s premises itself and remove items (including computers) listed on the warrant.
At the moment agents show up with a search warrant, the target can’t do much to stop the ensuing search. But many parties (and their lawyers) nevertheless stay for the whole search, because staying can help set the stage for what comes next. This is primarily because there are many laws about what constitutes a proper search, and sometimes a party’s eyewitness testimony describing a search can be helpful if the government does something wrong.
One risk of staying for the search is that this puts important players in the presence of government agents for a long time, which means that there’s more opportunity for agents to try to engage targets in conversation.
The challenge here is not only remaining disciplined about not engaging, but also continuing to be polite to the agents conducting the search. However, this is not an insurmountable task.
Another risk of staying for the search is that the government can ask a party who is present for permission to conduct searches beyond what’s in the search warrant. Consenting to that kind of enlargement is not required, and doing so is very seldom worth the associated risk of unintended consequences. Simply knowing this, however, reduces the risk that a party will thoughtlessly consent.
With some luck and ingenuity, most cryptocurrency businesses may hope to avoid unwanted government scrutiny. However US regulatory law (and, even more so, criminal law) is stunningly broad, and the consequences of an investigation gone wrong can be crippling.
So when luck’s not enough, smart lawyering and some preparation can make the difference between a government investigation that is a mild headache and one that is a train wreck.
Disclosure: This is not legal advice, and is not intended to establish an attorney-client relationship. You can reach Jared at [email protected][4]
Disclaimer: The views expressed in this article are those of the author and do not necessarily represent the views of, and should not be attributed to, CoinDesk.
US Financial Crimes Enforcement Network (FinCEN) director Jennifer Shasky Calvery said during a speech today that her agency is in the process of investigating businesses in the digital currency ecosystem.
Calvery gave the keynote address during the first day[1] of the 2015 West Coast Anti-Money Laundering Forum[2] in San Francisco. FinCEN later published the text[3] of her speech, which acknowledged that “a series of supervisory examinations of businesses in the virtual currency industry” had begun.
The announcement comes a day after FinCEN, in conjunction with the US Attorney’s Office in the Northern District of California, announced that it had reached a settlement with Ripple Labs over violations of the Bank Secrecy Act[4]. As part of the agreement, Ripple Labs and a subsidiary agreed to pay $700,000 and facilitate more stringent oversight of the Ripple network.
In her remarks, Calvery suggested that the process could result in future enforcement actions, noting:
“Working closely with our delegated BSA examiners at the Internal Revenue Service (IRS), FinCEN recently launched a series of supervisory examinations of businesses in the virtual currency industry.”
Calvery said this supervision will help FinCEN determine that “virtual currency exchangers” are meeting compliance obligations.
“Where we identify problems, we will use our supervisory and enforcement authorities to appropriately penalize non-compliance and drive compliance improvements,” she continued.
The FinCEN director also touched on the settlement with Ripple, with some of the remarks echoing comment offered by the agency when it announced yesterday’s agreement.
At the time, she said that “innovation is laudable” but noted how digital currency businesses in the US must comply with federal statutes.
UPDATE 6th May 1:30 UTC: Ripple Labs’ official response to the FinCEN settlement has been added below.
The Financial Crimes Enforcement Network (FinCEN) has fined Ripple Labs and its subsidiary XRP II a combined $700,000 for “willful violations” of the Bank Secrecy Act (BSA).
According to a 5th May[1] press release by the US regulator, Ripple Labs[2] failed to register as a money services business (MSB) with FinCEN prior to selling XRP, a digital token used to settle payments on the Ripple network. Additionally, the company is said to have failed to implement appropriate anti-money laundering (AML) procedures concurrent with its responsibilities as an MSB.
Similarly, its subsidiary, XRP II, is said to have acted unlawfully as an MSB without an effective AML program, failing to report “several” transactions said to be suspicious in nature.
The bulk of the violations against both companies appear to have taken place between 2013 and early 2014, according to a more detailed addendum[3] to the release.
Notably, the agreement between Ripple Labs, its subsidiary and FinCEN has also taken place at the same time as a settlement between the companies and the US Attorney’s Office in the Northern District of California. The Internal Revenue Service’s Criminal Investigation Division also contributed to the investigation.
Ripple and XRP II agreed to pay $450,000 and settle “possible criminal charges” in connection with that investigation, with those funds being credited to the fine imposed by FinCEN.
FinCEN Director Jennifer Shasky Calvery said in a statement that the event should serve as a reminder to all US companies that facilitate the exchange digital currencies that they must ensure their products comply with AML law.
Calvery continued:
“Innovation is laudable but only as long as it does not unreasonably expose our financial system to tech-smart criminals eager to abuse the latest and most complex products.”
Ripple Labs and XRP II have agreed to a number of conditions to settle with both FinCEN and the US Attorney’s Office, including “enhanced remedial measures” aimed at beefing up its monitoring programs.
The settlements dictate that “certain enhancements” to the Ripple Protocol need to take place “to appropriately monitor all future transactions”.
The company further agreed to biannual compliance audits through 2020.
Ripple responds
When reached for comment, a spokesperson for the company sought to frame the decision as one that showcased the tribulations that can come with building a company in an emerging field.
“Ripple Labs was one of the first to proactively build out a compliance and risk program,” Ripple Labs spokesperson Monica Long told CoinDesk. “We’ve been consistent in our message of supporting a compliant and healthy Ripple ecosystem.”
Long went on to stress that Ripple Labs does not believe it “willfully engaged” in criminal activity, adding that has the company has not been prosecuted for any of its actions.
Using the opportunity to assure its target customer base, Long added:
“Ripple is infrastructure technology for banks to build compliant payment networks. The settlement announced today does not impede our ability to execute on those bank integrations.”
Government cooperation
Settlement documents provided by the Department of Justice (DOJ) go on to detail the considerations made during the settlement process with Ripple Labs and the factors that led it to drop its criminal charges.
Among the factors cited by the DOJ were what the agency called Ripple’s “extensive cooperation” with the government, its commitment to enhancing internal controls and its promise that it would continue to cooperate on matters of future concern.
Further, the company agreed to certain measures for a three-year term, including that it would disclose “any document, record or other tangible evidence” relating to BSA violations; designate employees to provide the government requested materials; and ensure the government has access to current executives, and to the extent possible, former company directors.
Should Ripple Labs be found in violation of the agreement, it will be provided with 30 days to respond to the accusations levied by the DOJ before action is taken.
Subsidiary issues
The involvement of Ripple Labs subsidiary XRP II is largely due to its use as a mechanism for the company to sell XRP “to various third parties on a wholesale basis”. The company undertook sales of XRP prior to registering as an MSB, which took place on 4th September, 2013.
The company also failed to develop and implement a written AML policy until 26th September of that year, while operating without a compliance officer until “late January 2014”. According to FinCEN, XRP II had “inadequate internal controls” to ensure BSA compliance and did not conduct an AML risk assessment prior to March 2014.
The documents suggest Ripple Labs has been aware of a federal investigation into compliance violations during the period in which XRP II was noncompliant.
“XRP II did not conduct training on its AML program until nearly a year after beginning to engage in sales of virtual currency, by which time Ripple Labs was aware of a federal criminal investigation,” the document states, suggesting that the company failed to conduct an independent review of its AML program during the same period.
The FinCEN document outlined three transactions showing how XRP II failed to file suspicious activity reports (SARs) despite being required to do so.
The most notable transaction of the three took place on 30th September, when the company sold $250,000 in XRP by email to Ripple Labs investor Roger Ver without requiring a know-your-customer form to be filled out.
XRP II is said to have failed to file two additional reports for attempted XRP purchases that took place in November 2013 and January 2014. In both cases, XRP II did not actually conduct a transaction but also failed to file SARs.
The official settlement agreement can be found below:
The Financial Crimes Enforcement Network (FinCEN) has been to date one of the most active – and more controversial – US federal agencies to address the bitcoin ecosystem, doing so through a number of published rulings aiming to provide clarity to the industry.
Founded in 1990, the US agency[1] is responsible for collecting information about financial transactions that may be used to support money laundering, terrorist financing and financial crimes. FinCEN first addressed emerging virtual currencies in 2008 and has been simultaneously praised for[2] engaging with the bitcoin ecosystem, while facing criticism from those who say its efforts have sometimes stifled innovation[3].
In a new interview with CoinDesk, FinCEN Director Jennifer Shasky Calvery[4] has moved to counter this narrative, reitterating that while her agency’s foremost goal is to protect domestic businesses and citizens, FinCEN remains committed to minimizing the burden of bitcoin and digital currency startups that are making good-faith efforts to comply with regulation.
Calvery told CoinDesk:
“We don’t start at a product and villainize a product, we villainize the bad actors and find out what they’re doing with their money.”
Further, Calvery said that FinCEN is more broadly seeking to gain the support of the domestic bitcoin ecosystem, suggesting that the industry should seek to demonstrate how the technology could possibly be an aid to law enforcement agencies and organisations such as FinCEN:
“I would try to put the challenge out to the industry itself. […] We ask that you think about it from an anti-money laundering (AML) perspective, what could you build in [to the technology]? […] I would challenge your readers to think about it from our perspective and see if they can’t come up with some ideas.”
The comments come as part of wide-ranging interview with CoinDesk in which Calvery discussed developments in the field of digital currency, New York’s BitLicense proposal[5] and what FinCEN expects from bitcoin businesses seeking to serve to the US public.
Bitcoin steps up to crime concerns
Throughout the interview, Calvery sought to make clear her belief that bitcoin as a technology is not more susceptible to criminal misuse than other financial services.
Rather, Calvery said that bitcoin’s status as a newcomer to the financial ecosystem has made it the target of bad actors.
She suggested that FinCEN believes the bitcoin community is taking steps to combat the technology’s use in dark markets and illicit commerce, but that some businesses are actively making it difficult for her agency. Overall, however, her tone was arguably softer than in interviews earlier this year[6], when Silk Road and its related law enforcement cases dominated headlines[7].
Calvery said:
“You see industry responding and trying to put controls on this. So you see industry springing up around some of these things, but at the same time, you also see businesses springing up trying to make it more difficult for law enforcement.”
Calvery indicated that FinCEN is currently researching ring signatures[8], a cryptographic signature in which an action is attributed only to a group, and tumblers[9], a type of mixing service meant to hide where transactions originate.
Informal bitcoin dealers on radar
Consistent with its mandate as chief AML regulator for the US, Calvery asserted that all members of the bitcoin ecosystem that fall under FinCEN’s guidance should follow its directives.
Of particular concern, Calvery said, are informal bitcoin dealers who may think they can operate outside of the agency’s oversight.
“I hear reports that there are folks who say that they’ll wait and see if there’s any enforcement behind our requirements before they take it too seriously, so that’s unfortunate. I have to hear that folks want to see folks do wrong, and take action before they’re willing to comply, but we’re willing to do that if we need to,” she said.
As for how many bitcoin businesses may be following its guidance, Calvery said she can only speculate, given that money services businesses (MSBs) do not need to register as a bitcoin business:
“Sometimes you can tell from the name or we know who it is, and other times it’s not clear, so I can’t give you perfect stats on how many have registered.”
However, Calvery aimed to characterize her agency as one that is open to engaging with bitcoin businesses, and said that she has been encouraged by bitcoin startups that have hired experienced AML compliance professionals.
To those without such experienced personnel, Calvery said that the FinCEN Resource Center[10] is available to provide answers within 24 hours. More specific questions, she indicated, will receive written responses to be published on FinCEN’s website.
One slice of the pie
Calvery also commented on how FinCEN fits into the broader framework of US regulatory organisations, cautioning that the agency is just one “slice of a pie” that includes agencies dedicated to capital markets, consumer protection and safety and soundness.
Calvery suggested that while FinCEN has been a first-mover, other agencies are now beginning to assess how bitcoin and digital currency fall under their mandates, saying:
“We don’t have those slices of the pie at all and certainly a good financial control should include all of those things. Of course, we’d be looking for all the other agencies responsible for those types of concerns to be focused on them and I think we’re seeing that grow.”
For its part, Calvery indicated that FinCEN is trying to create a consistent framework across the entire financial ecosystem, one that covers everything from cash to credit cards to bitcoin.
“I guess we’re agnostic in terms of how we think of any industry or product. For us, every industry and product through which value flows provides an opportunity for criminals and bad actors to take advantage of it,” Calvery added.
BitLicense not technology-specific
Calvery also weighed in on the debate surrounding New York’s BitLicense proposal, suggesting that she doesn’t believe it to be technology-specific, as some in the industry have alleged.
“When I looked through it, I saw a lot of concepts that I was already familiar with from New York and other places,” Calvery said.
Though she commended Ben Lawsky for playing a leadership role on the project, Calvery indicated her belief that the New York regulator, like her own organisation, also needs the support of some other federal agencies.
Calvery told CoinDesk:
“I would say that we just do the AML here and that there’s all these other aspects, whether it’s safety and soundness or consumer protection that need to be thought about. Ben Lawsky, from where he sits, is someone who needs to think about several of these other things.”
Cash-like controls on the table
More broadly, Calvery suggested that FinCEN believes that it may need to alter its approach to bitcoin and digital currency should the technology be adopted more widely. Calvery first proposed a similar path forward for the agency at the US Senate hearings on bitcoin last November[11].
However, her comments suggest that this scenario may still be far into the future, when it becomes possible for larger numbers of individuals to conduct their finances solely in the bitcoin ecosystem.
Calvery said:
“We might need to start thinking about a different approach, whether that’s a more cash-like approach or something else, but it’s certainly something we’re keeping our eye and trying to keep ahead of it.”
The US Financial Crimes Enforcement Network (FinCEN) has published a new Suspicious Activity Report (SAR) analysis and, notably, the bulletin covers bitcoin.
FinCEN is tasked with policing financial transactions in the US and all money transmitters are expected to register with the bureau. This issue has hampered the development of several bitcoin initiatives and businesses in the US, as many bitcoin-related businesses had to register as money transmitters and meet the exacting standards[4] required for FinCEN registration.
Suspicious bitcoin activity
In its latest technical bulletin[5] FinCEN outlines the potential benefits offered by digital currencies, but also warns that the same attributes that make them attractive to lawful users also happen to attract illicit actors.
FinCEN explains why it has started covering digital currencies in its bulletins:
“FinCEN is observing a rise in the number of SARs flagging virtual currencies as a component of suspicious activity. Like all emerging payment methods, understanding virtual currencies is key to insightful SAR preparation and filing, and for that reason we explore virtual currencies, and Bitcoin in particular, in this Industry Snapshot.”
FinCEN goes on to explain how different components of the bitcoin network can unintentionally become involved in suspicious transactions.
“Each institution has a unique vantage point from which to observe these transactions and identify suspicious activity. FinCEN encourages the use of information sharing under 314(b) in this context,” said FinCEN.
FinCEN points out different financial institutions are likely to see different elements of the same suspicious activity due to their different roles in the system. Therefore it is vital to share information, it says.
Tracking down suspects
FinCEN says that provided information on users is “very useful” for the analysis of suspicious activity involving digital currencies. Some of these users can be engaged in illicit marketplace activity and the wire data that can trace them back to digital currency exchanges used is important.
Although bitcoin speculation is not illegal, FinCEN warns that speculation can share a transaction footprint with other suspicious activities, such as High Yield Investment Programmes (HYIP) or Ponzi schemes involving bitcoin. Depository institutions, brokers and dealers are the most likely participants to notice such activity. Dealers can be traced by using information from depository institutions, helping uncover unregistered businesses.
Banks hold vital information on market participants and FinCEN says those institutions have a “unique vantage point” as they are able to see aggregate fund transfers to and from foreign-based exchanges. Money transmitters and intermediaries have a similar vantage point, as they accept various payment mechanisms that can be used to identify customers and dealers in the US and abroad.
Bitcoin exchanges can help
The use of digital currencies by hackers and other cyber criminals involved in account hijacking is another concern. FinCEN says money service businesses (MSBs) are uniquely placed to help in such investigations, as they can track where the money from compromised bank accounts was channelled and where it was converted into digital currency. Digital currency exchanges and other operators in the space offer the other piece of the puzzle, as they conduct transactions within the crypto economy.
“For example, exchangers may know when users send Bitcoin to other users who are customers of that same exchange or may be able to compare Bitcoin addresses associated with illicit activity against the activity of addresses they have issued to their customers,” FinCEN explained.
FinCEN concludes that SAR reports filed by various entities can provide valuable information related to accounts, ownership and other identifying information, including bitcoin addresses associated with suspicious activity.
