surveillance

Debt Deflation Warnings, Shibarium Buzz Sees SHIB Rise, Former FTX US President Talks SBF, and More — Week in Review

January 22, 2023 Bitcoin.com

Are we still mad at MetaMask and ConsenSys for snooping on us?

January 18, 2023 Coin Telegraph

ConsenSys, the developer behind MetaMask, isn’t the only one snooping on our transactions, but they’ve taken the most heat for it.

The cryptocurrency community has a tendency to fixate on a new issue every few weeks and then promptly forget about it. The limited attention span of this community misses the ultimate resolution of important issues. Over the Thanksgiving holiday in November 2022, ConsenSys released a disclosure about a privacy policy affecting MetaMask users that sent “Crypto Twitter” into a firestorm. My first reaction was also negative.

That’s what a sly fox would say isn’t it? pic.twitter.com/PfKMTiNHoR
— J.W. Verret, JD, CPA/CVA (@JWVerret) November 25, 2022

The MetaMask browser extension wallet uses a node called Infura. That node is owned by ConsenSys, the same company that develops MetaMask. The press release reminded users that Infura collects the internet protocol (IP) addresses and wallet addresses of users who connect their MetaMask wallet to Infura. It also reminded them that MetaMask users don’t have to use Infura, which is only a default, and that MetaMask allows connection to other public node providers such as Alchemy or Ankr.

When you send or receive crypto, your wallet interacts with the blockchain. But wallets don’t download the blockchain; that’s too cumbersome for a wallet on your phone. Instead, when your crypto wallet sends a transaction, most wallets use a public node to request that new transactions be added to the blockchain via the mempool.

(You could set up your own node. In fact, for better privacy and speed, you probably should. More private nodes also mean a more decentralized network. But I’ve tried and I don’t have sufficient technical skills to do so. Maybe you will have better luck.)

Now, let’s remember that blockchains like Ethereum aren’t private. If you want privacy, you need to use a privacy coin like Monero (XMR), which leaks some information about the sender, or Zcash (ZEC)-shielded transactions, which leak no sender information. Or you need a privacy tool, but unfortunately, the feds sanctioned Tornado Cash, which was the most reliable privacy tool on Ethereum.

Regardless, if you are using a public node or any other central service to transact in crypto, you need to use a virtual private network (VPN) or Tor (easy to use with the Tor browser) to mask your internet service provider (ISP) address. Is anyone out there using Ledger Live to transact in crypto using your Ledger hardware device? Ledger Live tracks ISPs too, and apparently keeps that information for up to five years.

Privacy is a personal responsibility. No one will protect it for you. Crypto users need to learn to use privacy tools like VPNs, Tor, privacy coins, etc. The day will soon come when governments send blanket “John Doe summonses” to public node providers to get those ISPs, just like the Internal Revenue Service did to central crypto exchanges in the early days of crypto. And those intermediaries will undoubtedly comply.

There are legitimate reasons remote procedure call providers may want to retain ISP information. Some node users who are Infura clients may want ISPs tracked because it could help to hunt down hackers.

So, back to the question: Are we still mad at MetaMask? Foxes are known for being clever. However, less known is that they’re also loyal, as both males and females care for a tight-knit family unit. Was the MetaMask fox too clever, or was he loyal to core blockchain principles?

What sparked the outrage was public disclosure about changes to their privacy policy. Transparency is a good thing — or should be unless Crypto Twitter erupts violently in response to those disclosures. And they further refined their privacy policy in response to the criticism. Read the new Infura privacy policy for yourself here. It seems straightforward and attempts limited privacy protection.

Para los que se preocupan por su IP en MM recuerden que pueden cambiar el RPC de Infura en 4 pasos de la siguiente manera:
— . | (@ancestral_alien) November 25, 2022

Except you do, you have, you will always bc there is no way not to. Dont disrespect your users like that.

You send every users various onchain addreses, IPs, info to mewapi (you), blockchain info, moonbeam network, on and on.

The ONLY diff is that YOU blatantly lie abt it.
— Tay (@tayvano_) November 24, 2022

Infura competitors like Alchemy and MyEtherWallet took this opportunity to throw shade Infura’s way. One MetaMask developer hit back. Read Alchemy’s privacy policy, which uses legalese to reserve the right to collect and use data however Alchemy chooses. Alchemy’s privacy policy gets a negative recommendation from Chainlist for its poor privacy practices. Not cool.

In crypto, as with life, privacy is a personal right and responsibility. Energy spent on momentary outbursts is better spent learning about privacy technology to protect yourself.

J.W. Verret is an associate professor at the Antonin Scalia Law School at George Mason University. He is a practicing crypto forensic accountant and also practices securities law at Lawrence Law LLC. He is a member of the Financial Accounting Standards Board’s Advisory Council and a former SEC Investor Advisory Committee member. He also leads the Crypto Freedom Lab — a think tank fighting for policy change to preserve freedom and privacy for crypto developers and users.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Blockchain is the only viable path to privacy and censorship resistance in the 21st century

December 7, 2022 Coin Telegraph

Coin Telegraph

Decentralized file-sharing services that Big Tech companies can’t control are the only way internet users will be able to maintain their freedom in the years ahead.

While censorship resistance and privacy are not the same thing, they are closely intertwined. When the government or another entity, such as an advertiser, can track everything you do, they can also sanction you for bad behavior.

Instead of working backward to try and cover up seismic cracks in Web2 with duct tape, it may be time to move full speed ahead on ensuring these same mistakes don’t happen in Web3. By being proactive, the purported internet of the future could actually protect our private information and prevent overzealous or oppressive censorship before these issues become unmanageable.

Using crypto to deliver the message

In countries fighting for human rights and civil liberties, suppressing free speech and outward communication complicates the struggle against oppressive regimes. This is where the encryption and transparency of blockchain technology can prove to be useful in protecting sensitive information. Web3-based email extensions (such as ShelterZoom’s Document GPS) and file-sharing services (such as the InterPlanetary File System) have the potential to help activists and citizens in human rights hotbeds circumvent censorship and unwarranted surveillance.

By placing documents on a ledger, the sender can control all aspects of visibility and permissions while simultaneously having access to a time-stamped log of every action taken with the file. Think of it like DocuSign or Google Docs on steroids.

In a regime with stringent practices on surveillance and censorship, it’s easy to see how these blockchain-based tools are invaluable. But these kinds of solutions also use blockchain to address crypto's censorship blind spots. It’s a common misconception that crypto is inherently private when the opposite is actually true, as transactions are stored on an open and transparent distributed ledger. This is why they are traceable in an even more effective fashion than traditional financial transactions.

This lesson was learned the hard way by the truck convoy blockade in Canada, which received donations in Bitcoin (BTC) which were easily traced and sanctioned. In the words of Michael Gronager, CEO of blockchain data firm Chainalysis, “Crypto is far more transparent than traditional finance. [...] We follow the funds.”

So, how did crypto earn a reputation as censorship-resistant? Part of the answer lies in decentralized ledger control, making it extremely difficult to take over and immutable once a transaction is recorded in the ledger.

One network working to offer complete anonymity is Tomi, a developer of Web3-based decentralized solutions and assisted-computing hardware. Led by eight anonymous senior crypto veterans working with 72 developers, Tomi is building TomiNet to empower the free flow of information between journalists, activists, and generally law-abiding people without government or corporate interference. While TomiNet has similar anonymity functions to the dark web, the network is governed by Tomi's community through a decentralized autonomous organization (DAO) to prevent unsavory or pernicious activities.

The idea behind DAO governance is simple: Keep governments and corporations out, but still offer a mechanism for striking down violence.

The need for decentralization is more than theoretical

Another notable example of gatekeeping in Big Tech can be seen in the controversial, right-wing social network Parler getting kicked off cloud-based web hosting services such as Amazon Web Services. Cloud technology is hailed as a truly beneficial technology in internet infrastructure. But the issue is that there are a handful of cloud companies that provide virtually all essential infrastructure, empowering them to act as gatekeepers.

Whether you agree with the politics of Parler being banned, the event illustrates how a company is effectively blocked from operating on the internet because a cloud service wouldn’t serve them.

Decentralized web hosting could step in as a much-needed solution. Companies like Akash and Flux offer a wide range of cloud services imperative for the internet age, but by leveraging decentralization, they remove the cloud service’s ability to exert control over users.

The examples of governments and private entities with too much power stifling speech and communications are growing by the day. Web3 needs to step up to the plate, but in a more forceful and demonstrative way than it has before. Censorship resistance and privacy live in a symbiotic relationship, and neither means anything without the other. The crypto world needs to remember this if it is to fulfill the space’s tall order of promises.

Maintaining privacy in this day and age is nearly impossible. From data theft incidents to governments tracking citizens, every person is susceptible to unwanted exposure. TikTok recently updated its privacy policy for the European Economic Area to confirm that personnel, including China-based employees, can access user data. Meanwhile, the Iranian regime continues to crack down on protesters, leaving the citizens afraid to speak out against the leadership.

Ariel Shapira is a father, entrepreneur, speaker and cyclist and serves as the founder and CEO of Social-Wisdom, a consulting agency working with Israeli startups and helping them to establish connections with international markets.

Don’t Forget the Importance of Censorship Resistance

November 29, 2022 Bitcoin.com

Cryptocurrency is picking up as an instrument for tyranny

September 12, 2022 Coin Telegraph

CBDC

From ubiquitous surveillance to negative interest rates, crypto is giving dictators and global corporate leaders new ways to intimidate, oppress and subjugate humanity.

Proponents paint Bitcoin (BTC) and other cryptocurrencies as antidotes to totalitarian governments and central banks. Simultaneously, international corporations and startups alike have designed blockchain platforms and products that could be used on behalf of totalitarian governments and central banks.

Microsoft body activity data

One example is Microsoft, which applied for a patent for a cryptocurrency system using body activity data. As part of the cryptocurrency mining process, the cryptocurrency system gives a task to your device, instructing you to complete a “human body activity.”

A sensor in the user’s device registers the body activity, and then the cryptocurrency system rewards the user. “The sensed body activity is associated with the received task and transmits the generated body activity data to a system or network, which verifies the body activity data to award cryptocurrency.”

It’s reminiscent of the Justin Timberlake movie In Time, where a future society uses time from one’s lifespan as its primary currency, with each individual possessing a clock on their arm that counts down how long they have to live. When the clock hits zero, they’re dead.

SmartKey

Olsztyn, Poland leveraged the Ethereum blockchain to run a trial of SmartKey, a bridging technology that connects blockchain technology to the lock to your home, for example.

They say it’s to “aid in police, fire, and ambulance services” (read: for your safety). SmartKey allows emergency crews to enter any building in the city without needing to find the keyholder or wait for permission.

“The need for our rescue services to perform their duties without obstruction is a delicate one. The use of blockchain and SmartKey technology seems to be like the perfect solution, giving reassurance to building owners and inhabitants, but also freedom for our emergency services,” according to Gustaw Marek Brzezin, the marshall of the Warmińsko-Mazurskie Voivodeship in which Olsztyn is located.

As any student of political science knows, the bedrock of any constitution is the freedom for our emergency services!

Central bank digital currency (CBDC)

The European Central Bank (ECB) noted in a white paper that it would be possible to track every single CBDC transaction in a nation. All transactions under such a regime would be known to the central bank and anyone with whom the bank chooses to share information.

With a digital currency, central banks can impose restrictions on the holding of money. The ECB has discussed capping the amount a person can hold, limiting the time a person can hold an amount of money, and imposing negative interest rates on amounts that the bank deems excessive. Similar functionality is present in the Bank of China’s CBDC. Dystopian policies can be implemented more easily with a digital currency — including negative interest rates and more.

Mass surveillance

Ledger founder Pascal Gauthier sees the European Union’s Transfer of Funds Regulation bill as little more than mass surveillance.

“Imagine you have a wallet, your leather wallet, and you’ve got cash in it. Now every time that you’re going to pay in cash somewhere, you’re going to have to flash your ID… and they’re going to note your name,” Gauthier said. “This is not the world I want to live in.”

He added, “Some groups in the European Parliament have some very specific and dogmatic agenda ... [and are] using excuses to ban Bitcoin and cryptocurrencies as much as possible. Rumors they’ve heard. Like, oh, I heard it’s for money launderers…”

World Economic Forum (WEF)

The Davos-based WEF, which is best known perhaps for bringing humanity “The Great Reset,” notes in a blog post on its website that blockchain is capable of bringing about an industrial revolution in which the biological, technological and physical worlds. It’s going to do that by enabling the tracking of almost anything, including food and medical supplies, such as vaccines.

It’s “a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network,” the WEF notes, citing an IBM assessment of blockchain tech. “An asset can be tangible (a house, car, cash, land) or intangible (intellectual property, patents, copyrights, branding). Virtually anything of value can be tracked and traded on a blockchain network, reducing risk and cutting costs for all involved.”

As the WEF and IBM note, blockchain makes a world of ubiquitous surveillance possible.

Justin O'Connel is the founder of Narracomm, GoldSilverBitcoin, Cryptographic Asset and THCist. He has been a Bitcoin-focused entrepreneur since 2012.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

ICYMI: Crypto Surveillance…

September 14, 2021 Coinbase

coinbase

ICYMI is an ongoing series of blog posts memorializing important Twitter threads from thought leaders at Coinbase and beyond. In this thread from 08/2/2021, Coinbase CLO (and ex-federal magistrate judge) Paul Grewal gives his thoughts on the surveillance provision in the infra bill.

@iampaulgrewal

When I was a federal magistrate judge, one of my most important jobs was to act as a check on government overreach. Especially when it came to surveillance. This new crypto surveillance provision brings back a lot of bad memories.

The Fourth Amendment applies to state action, not private action. But provisions like this allow the government to circumvent that pesky limitation, by putting the onus on private actors to collect data on the government’s behalf.

When that happens, and it happens in too much legislation, the liberties of the innocent are sacrificed at the alter of going after cheats, scoundrels, etc. It’s a massive cost, but a diffuse one, and so too often we all accept it in quiet as a cost of doing business.

We can do better than this. Yes, let’s get solid reporting requirements in place that flesh out tax cheats. But let’s not casually compel production of data on millions of innocent Americans when a more tailored solution is just as effective.

*We’ve added links where appropriate. You can see original thread here.

ICYMI: Crypto Surveillance… was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.

Whistleblower Edward Snowden Says $6 Trillion in Stimulus Is ‘Good for Bitcoin’

May 28, 2021 Bitcoin.com

US sanctions agency OFAC to rely more heavily on Chainalysis

May 28, 2021 Coin Telegraph

chainalysis

Govt agencies want more tools to trace suspect crypto transactions.

The U.S. Office of Foreign Assets Control has requested another subscription to Chainalysis analytics software in order to step up its blockchain transaction surveillance efforts.

In a public notice sent out on May 26, the agency confirmed its intention to subscribe to Chainalysis’s Rumker Training and Support Packages for what it deems as “mission-critical research”, further expanding its arsenal of surveillance tools.

This week’s public notice marks the second such request that the agency has made this month, having made a prior request for Chainalysis blockchain surveillance tools on May 4.

The latest notice stated the Department of Treasury’s Office of Foreign Assets Control requires a commercial online blockchain tracing web-based application tool to equip investigators in its Office of Global Targeting (OGT).

OFAC is a financial intelligence and enforcement agency of the U.S. Treasury Department that administers and enforces economic and trade sanctions in support of U.S. national security and foreign policy objectives.

The primary purpose of the software acquisition is for the U.S. government and foreign partners to collaborate in investigations into money laundering and terrorist financing.

The software would be used to analyze and track virtual currency transactions to harvest information on involved parties that OGT may put on the “Specially Designated Nationals And Blocked Persons List” (SDN) list.

The Chainalysis Rumker software suite includes Observations and Nodes, which help locate where server nodes are running. It also comes with Wasabi Demixing tools which allow the agency to access cryptographic information on previously obfuscated transactions. The notice stated:

“Chainalysis meets OFAC’s requirements by effectively providing the following capabilities: address clustering, transaction flow mapping and graphing, wallet explorer, analysis of user behavior, exchange rate, trade, and market data,”

A report by blockchain analysis firm Elliptic on May 27 has revealed that financial criminals have stepped up their efforts to circumvent state tracking by using mixing services, which let users mix their coins with others in a pool of funds to add a layer of anonymity to transactions.

Other methods include the use of privacy coins such as Monero and privacy wallets, in addition to using unregulated exchanges to avoid know-your-customer requirements.

In March, U.S. crypto exchange Coinbase reported that a number of its transactions were under review by the OFAC for potential violations of U.S. sanctions laws. There were no apparent violations at the time, it added.

In February, Cointelegraph reported that BitPay faced a half a million dollar fine from the OFAC for providing crypto services to sanctioned regions.