Senator Schumer Says Bitcoin Is Money Laundering

On June 6, 2011 by stratagem

A few months back, we explored Bitcoin, and the growing attention it was receiving. The distributed currency has certainly been getting a lot of attention lately (causing the exchange rate to skyrocket). Of course, as with any such thing, there was bound to be some sort of backlash from political circles, and this one was extremely predictable. Last week, Gawker wrote a story about Silk Road, the online drug marketplace that users can only access via TOR and where the only currency accepted is Bitcoin. To be honest, the story sounds a little too good, and too “Hollywood” to be real, but perhaps it is real. I find it a little difficult to believe that it has all that many users, given the complex nature of getting it to work.

Either way, Senator Chuck Schumer, who can grandstand with the best of them, apparently got handed that article and saw an opportunity to publicly demand that something must be done about Silk Road. It seems clear from his remarks that Senator Schumer has never heard of TOR:

“Literally, it allows buyers and users to sell illegal drugs online, including heroin, cocaine, and meth, and users do sell by hiding their identities through a program that makes them virtually untraceable,” Schumer said at a news conference Sunday. “It’s a certifiable one-stop shop for illegal drugs that represents the most brazen attempt to peddle drugs online that we have ever seen. It’s more brazen than anything else by lightyears.”

Lightyears? Really? In another report he claims that Silk Road and other drug sites are “flooding our streets” with drugs. Except… they’re not. There are probably a small handful of people using things like Silk Road today, and they’re almost certainly doing it for home use, rather than to “flood the streets.” But, that doesn’t make for as good a form of grandstanding.

As for “the program that makes them virtually untraceable,” he seems to ignore the fact that Hillary Clinton (his former co-Senator from the state of New York) has talked up the value of software like TOR, which makes identities untraceable, as an important tool for freedom of expression around the world. Thankfully, Schumer doesn’t seem to go quite as far as directly blaming TOR, though he doesn’t appear to separate TOR from Silk Road, despite them being two different things. Also, lightyears? Really?

What he does go after, however, is Bitcoin:

“It’s an online form of money laundering used to disguise the source of money, and to disguise who’s both selling and buying the drug,” said Schumer.

>> Tech DIrt

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