Debunked: Bitcoin Facilitates Crime
There is a very real question that needs desperate attention. And the question is: Is Bitcoin really a criminal's dream?
There is a very real question that needs desperate attention. When the Silk Road was taken down last year the media talked for weeks about how easy it was for criminals to use cryptocurrencies either when they are buying illegal drugs online or when they need to launder ill-gotten gains. The reports are usually full of doom and gloom that predict the end of civilization as we know it unless we can get control of this currency. The question is: Is Bitcoin really a criminal's dream?
Where do the criminals really go?
The fact is however that the most misused currency in the world is the US $100 bill. This one bank note accounts for 80% of all the US currency in the world (about $1 trillion USD).
In 2012, one of the largest banks in the world, HSBC, was caught by US law enforcement laundering money for drug cartels in Latin America and terrorist groups in the Middle East. The bank was so bold that it had special deposit windows made large enough for the cartels to fit in large bags of $100 bills.
- Stuart Gulliver, the HSBC's chief executive at the moment of the scandal
The bank laundered hundreds of billions of dollars for criminals over a period of several years and not one bank employee went to jail or even had to face trial. The bank was allowed to pay a nominal fine that amounted to just a small fraction of the profits it generated. This incident alone dwarfs the amount of cryptocurrencies used in criminal activities. The largest seizure so far of cryptocurrencies has been the Silk Road bust which only amounted to US$25 million. HSBC Board members probably spent that much on lunch.
There is a reason that drug dealers and other criminals do not accept credit cards. Electronic charges can be traced and no one wants a charge for the local hooker or pot dealer on their bank statement. Criminals take cash simply because a $100 bill is untraceable in almost all but the most unusual circumstances. This can be best explained by David Cohen, undersecretary for terrorism and financial intelligence at the U.S. Treasury Department. Cohen states:
“Terrorists generally need ‘real’ currency, not virtual currency, to pay their expenses -– such as salaries, bribes, weapons, travel, and safe houses. The same is true for those seeking to evade sanctions.’’