Bitcoin: FBI Admits To Engaging In Infiltration, Disruption and Dismantling of Competing Currencies

In a March 18, 2011 press release regarding the Liberty Dollar case, the FBI admitted to waging a secret war against any private currency system that competes against the US Dollar.  In the press release, the FBI equates the use of sound money to an act of domestic terrorism.  The FBI states that it uses methods of infiltration and disruption against private citizens engaged in the use of voluntary currencies.

The FBI writes:

“Attempts to undermine the legitimate currency of this country [ie. unconstitutional Federal Reserve notes] are simply a unique form of domestic terrorism,” U.S. Attorney Tompkins said in announcing the verdict. “While these forms of anti-government activities do not involve violence [ie. they are voluntary systems with no victim], they are every bit as insidious and represent a clear and present danger to the economic stability of this country [ie. their widespread adoption may collapse the corrupt banking system],” she added. “We are determined to meet these threats through infiltration, disruption, and dismantling of organizations which seek to challenge the legitimacy of our democratic form of government.” [ie. we will engage in acts of domestic terrorism to prevent the voluntary trade of private property.]

I think this open admission by the FBI that it engages in acts of domestic terrorism against private currency systems bears a particular importance for users of the Bitcoin monetary system.  If we look at the history of Bitcoin since it gained notoriety, we see a slew of hacking attacks against major exchanges that have indeed disrupted and undermined the currency system.

Of course, no matter what the FBI does, short of breaking the underlying Bitcoin encryption (which is impossible even for them), the monetary system will continue to function.   However, this message should put users of the monetary system on notice.

Any major exchange or retailer that comes online in the future should be treated as either a potential victim of FBI hacking attacks or as an FBI run operation that will be used to disrupt the Bitcoin market at some future date.   This means that people should be especially leery of using new exchanges or wallet sites without having an extremely thorough knowledge of who is involved and how their systems are administered.

Given the above admission by the FBI that it engages in acts of domestic terrorism to disrupt the trade of private property, we should expect any Bitcoin exchange or major retailer to have security systems strong enough to withstand a domestic terrorist attack by a US Federal agency.   If they don’t, it is highly likely that they will suffer a crippling domestic terrorist attack perpetrated by our own government.

For end users, this means you should not entrust the bulk of your coins to anyone but yourself.  You should operate your own Bitcoin client and keep any major holdings of coins off line in a file that is replicated and backed up on an encrypted drive.  All exchanges, wallet sites, and retail outlets should be presumed to be compromised.

That is not to say people should stop using the currency… far from it.  It is simply a warning that people should note when doing business in Bitcoins.   The reality is that the Federal government is waging a war of infiltration and disruption against systems like Bitcoin, so we should expect to see more highly sophisticated attacks like the one which was perpetrated against Mt. Gox recently.

 

  • Michael McLees

    So in other words, they’ll be waging the same sort of war they’ve been waging on music pirates?

    • http://www.libertariannews.org/ Michael Suede

      Yeah that’s actually a fair analogy.

      A war that is ineffective in achieving its goals, yet highly damaging to private citizens.

    • http://stephenvandyke.com Stephen VanDyke

      Bwahaha… network > hierarchy every time.

  • Guest

    You’re a conspiracy nut. the FBI doesn’t care about a 70m dollar market.

    • http://www.libertariannews.org/ Michael Suede

      Sooooo…. how much was NotHaus’s gold worth at the time of his bust?

      “Liberty Dollar coins and precious metals, currently valued at nearly $7 million.”

      Bitcoin is worth 10 times the amount NotHaus’s gold was worth, so I’m sure it is receiving 10 times the destructive attention from our glorious overlords.

    • Ohgr4213

      You are being too shortsighted, every expanding market must be 70m sometime. Do you think they truly discount it becoming vastly larger especially if the alternative dollar economy was hyper inflating in the moderate future?

    • Ohgr4213

      You are being too shortsighted, every expanding market must be 70m sometime. Do you think they truly discount it becoming vastly larger especially if the alternative dollar economy was hyper inflating in the moderate future?

    • Ohgr4213

      You are being too shortsighted, every expanding market must be 70m sometime. Do you think they truly discount it becoming vastly larger especially if the alternative dollar economy was hyper inflating in the moderate future?

    • http://twitter.com/El__Jefe Jeffrey ten G.

      “Attempts to undermine the legitimate currency of this country [ie. unconstitutional Federal Reserve notes] are simply a unique form of domestic terrorism.” You don’t see that as a dangerous statement?

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  • Joe

    anyone who has frequented the Bitcoin Forums can tell you its been infiltrated by operatives with an agenda to destroy Bitcoin.  the anger and vociferousness of these trolls is way out of proportion for any average citizen who is skeptical about a new technology.  my bet these are paid trolls.

  • Hadenuff

    This is outrageous. Since its inception, the Federal Reserve has presided over the loss of 98% of the value of the dollar. If the FBI wants to persecute people for trumped up domestic terrorism, they need look no further than the Fed.
    It is not illegal to mint your own money. Whoever in the FBI is responsible for this needs to have their heads handed to them.  

  • http://twitter.com/AminCad AminCad

    The Liberty Dollar’s creators were charged with trying to pass off their currency as official US currency:

    “Federal prosecutors successfully argued that von NotHaus was, in fact, trying to pass off the silver coins as U.S. currency. Coming in denominations of 5, 10, 20, and 50, the Liberty Dollars also featured a dollar sign, the word “dollar” and the motto “Trust in God,” similar to the “In God We Trust” that appears on U.S. coins”

    I don’t know if that case applies to Bitcoin.

    • AJy

      So they will trump up some other charges just like they trumped up these.

    • AJy

      So they will trump up some other charges just like they trumped up these.

      • http://www.libertariannews.org/ Michael Suede

        That’s right AJy.

        Reading the press release it is clear that the FBI doesn’t care how much a currency “looks” like US legal tender, they only care that it is not legal tender.

        The FBI writes:

        “Along with the power to coin money, Congress has the concurrent power to restrain the circulation of money which is not issued under its own authority in order to protect and preserve the constitutional currency for the benefit of all citizens of the nation. It is a violation of federal law for individuals, such as von NotHaus, or organizations, such as NORFED, to create private coin or currency systems to compete with the official coinage and currency of the United States.”

        The FBI could give a crap what his currency looks like.  That was simply a selling point to the jury. He could have been using silver and gold blanks to back his notes and they still would have come after him.

  • Tbudha

    So I’m not just paranoid – they really are out to get me!

    I’ve been a Liberty Dollar RCO, Marketplace Director for the AOCS, and a bitcoin merchant!

    • http://www.libertariannews.org/ Michael Suede

      Jesus Christ Tbudha, you’re lucky to still be breathing at this point.

      I’m surprised a gang of Stoßtruppen hasn’t broken down your door and blown your head off yet.

      • Joe

        you know, this sort of attitude by the FBI will only serve to drive Bitcoin deeper under the radar as devs worldwide reinforce the network in anticipation of some sort of helpless raid by TPTB.  their actions WON’T work.  Bitcoin is solid as a rock and all this schadenfreude misdirection by the trolls on the Forum and in the mainstream news will slowly be silenced as Bitcoin emerges and strengthens to crush all fiat.

        • http://www.libertariannews.org/ Michael Suede

          The more oppressive the regime becomes, the more it will drive consumers into the use of Bitcoin.

          Bitcoin doesn’t need to do anything except exist.

          • Source Better

            …and become useful on a day to day basis.  A currency that fluctuates price like a commodity isn’t extremely useful. Perhaps some value stabilization like what happened with the Brazilian real?  Until people think in Bitcoin value, and that value remains relatively stable there’s not a huge incentive to pick it up.

          • Joe

            this is what investing is; buying low and selling high.  we’re low right now on Bitcoin.

          • Jdat747

            Hey, email me if you got some to sell … jdat747 {at} yah00 {dot} com

          • Jdat747

            haha, you’re a clueless one no?

      • Tbudha

        Killing me or even prosecuting me will only draw attention to the matter and even martyr-ize me. Far better to keep doing what they have been doing – isolate, discredit, and disrupt.

        • http://twitter.com/El__Jefe Jeffrey ten G.

          Not necessarily true. They can kill you and make you look like you “deserved it” and just by naming you a terrorist, people won’t care about your death.

  • Source Better

    Just because it’s on the F.B.I.’s site doesn’t mean the F.B.I. as an institution said it.  Your quote is attributed in the actual article to “U.S. Attorney Tompkins”.  I liked the article, and I’m glad you posted it, but blanket statements like “The FBI admitted” is a fair bit biased.

    • http://www.libertariannews.org/ Michael Suede

      “Joining the U.S. Attorney Anne M. Tompkins in making today’s announcement are Edward J. Montooth, Acting Special Agent in Charge of the FBI, Charlotte Division; Russell F. Nelson, Special Agent in Charge of the United States Secret Service, Charlotte Division; and Sheriff Van Duncan of the Buncombe County Sheriff’s Office.”

      Given that it was an FBI press release, I think it is fair to attribute the claims made as being the official position on competing currencies.

      • Source Better

        Then it’d be along the lines of “the opinion of the FBI as stated by U.S. Attorney Anne M. Tompkins…”.  The State clearly doesn’t like competing currencies I’ll agree, and historically there was good reason not to with thirteen different currencies. 

    • Jffkl

       haha that’s like saying just because Michael posted this doesn’t mean his organization backs it.

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  • cryptozoologist

    this supports my theory that chuck e cheese has been infiltrated and coerced into making lousy pizza to undermine their token>ticket>tchotchke exchange

  • Nuscul

    That is ridiculous. They have no authority over Bitcoin, because of one of the first rules of the internet: it’s international, free of the jurisdiction of any one country. This is not a U.S. currency, it’s an internet currency, and thus as untouchable by Federal law as a bar of gold (though the way they get into your business when you try to move bars of gold around, you’d think they thought it was an American product).
    I can understand that the FG is leery of a new currency since it would circumvent sales tax in many instances, but that’s not our problem, it’s their job to make it work. They’re not supposed to dictate how things run around here, we are. 
    I wonder if they have laws restricting people from spending or accepting Canadian or Mexican money in border areas. I know they gobble up dollars down on the other side. 

  • Nuscul

    That is ridiculous. They have no authority over Bitcoin, because of one of the first rules of the internet: it’s international, free of the jurisdiction of any one country. This is not a U.S. currency, it’s an internet currency, and thus as untouchable by Federal law as a bar of gold (though the way they get into your business when you try to move bars of gold around, you’d think they thought it was an American product).
    I can understand that the FG is leery of a new currency since it would circumvent sales tax in many instances, but that’s not our problem, it’s their job to make it work. They’re not supposed to dictate how things run around here, we are. 
    I wonder if they have laws restricting people from spending or accepting Canadian or Mexican money in border areas. I know they gobble up dollars down on the other side. 

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  • http://twitter.com/El__Jefe Jeffrey ten G.

    All bitcoin users are probably on the terrorist watch list already

  • http://pulse.yahoo.com/_AIQTG3TRZUWR6IXTCAGDGUNXZY jdat747

    If the US govt. had any sense, they’d be working on Bitcoin 2.0 and design it so people can easily send USD worldwide in seconds and convert it to any currency of their choosing without any extraneous fees or delays.   Bitcoin fills a huge global need, and that need will not go unfilled for long.   It’s too good of an idea.  Eventually the USD is going to be in a “if you can’t beat ‘em, join ‘em” situation … and the sooner they join us, the better for everyone.

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  • Christopher Martin

    Land of the Free in name only… At the end of the day democracy has failed in the US and has been replaced by a Corporate Dictatorship/Plutocracy, what ever you want to call it. When the corps want cash eliminated so they can track your entire spending life it’ll be the FBI goosestepping any dissenters to jail.