Anonymous Bitcoin v enforcement law

ABSTRACT

Bitcoin is the most prominent cryptocurrency that is frequently debated nowadays, basically defined as decentralised ‘currency’, ‘payment system’ and ‘investment tool’ which is an opportunity offered by today's digital age. In this article, we aim to fulfil the analysis of the legal basis of the matter from both technical and legal point of view. Despite there are many legal issues related to Bitcoin, we will particularly draw attention to some of the fundamental legal problems caused by the anonymity feature of the Bitcoin. Among these problems that may arise, only the disputes that may fall within the scope of the cases relating to debt and asset which have an impact on enforcement law will be examined. We will discuss the anonymity feature, considering the possibility of accessing an anonymous Bitcoin wallet. The article examines the situation where a debtor or one of the parties in a lawsuit may conceal their assets unfairly via Bitcoin (with the anonymity feature) in civil disputes relating to debt and assets. Has Bitcoin turned into a tool that malevolent debtors can hide their wealth while at the same time, a secret place where they can invest their money? In this study, we will offer solutions on overcoming the anonymity feature in practice and how to reveal and reach the wealth that are stored via Bitcoin wallet. Likewise, it will be underlined what malevolent debtors or parties in a lawsuit who want to obscure their wealth via Bitcoin wallet can do to strengthen their anonymity. Finally, we provide a specific and practical guideline for judges and especially creditor's lawyers in order to reduce the potential adverse situation that Bitcoin's anonymity feature can cause.

KEYWORDS:

• Bitcoin
• anonymity
• enforcement law

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. They are all based on the Bitcoin with some distinctions, Tara Mandjee, Bitcoin, Its Legal Classification and Its Regulatory Framework, 15 J. Bus.& SEC. L. 157 (2016), p. 162.

2. Mandjee, supra note 4, p. 160; Mining Digital Gold, Economist (April 13, 2013), https://www.economist.com/news/finance-and-economics/21576149-even-if-it-crashes-bitcoin-may-make-dent-financial-world-mining-digital.

3. Mining Digital Gold, Economist (April 13, 2013), https://www.economist.com/news/finance-and-economics/21576149-even-if-it-crashes-bitcoin-may-make-dent-financial-world-mining-digital.

4. A&M Records v. Napster, Inc., 239 F 3d. 1004, 1010-12 (9th Cir. 2001).

5. Id.; For a comprehensive examination of the effects of Napster, Inc's working procedure, see GartnerG2 and The Berkman Center for Internet & Society at Harvard Law School, Copyright and Digital Media in a Post-Napster World, https://cyber.harvard.edu/wg_home/uploads/254/2003-05.pdf.

6. A&M Records v. Napster, Inc., 239 F. 3d 1004, 1010, 1011, 1027 (9th Cir. 2001).

7. Id., p. 1004, just as the FBI did by seizing the Silk Road Bitcoins, United States v. Ulbricht, 31 F. Supp. 3d 540 (S.D.N.Y. 2014).

8. Blockchain Size, https://blockchain.info/charts/blocks-size.

9. In re Boucher (No. 2:06-mJ-91, 2009 WL 424718), is a federal criminal case in Vermont, which was the first to directly address the question of whether investigators can ‘compel a suspect to reveal their encryption passphrase or password’, despite the U.S. Constitution's Fifth Amendment protection against self-incrimination. A magistrate judge held that producing the passphrase would constitute self-incrimination. Boucher's motion to quash the subpoena was denied. He was ordered to provide an unencrypted version of the hard drive in question. Some more examples that the court compels individuals to unencrypt hard-drive: United States v. Fricosu, 841 F. Supp. 2d 1232, 1236 (D. Colo. 2012) or divulging the password: United States v. Kirschner, 823 F. Supp. 2d 665, 669 (E.D. Mich 2010).

10. FED. R. CIV. P: 45(g).

11. For more information about multisignature technology see Gregory Maxwell/ Andrew Poelstra/ Yannick Seurin/ Pieter Wuille, Simple Schnorr Multi-Signatures with Applications to Bitcoin, (January 15, 2018), https://eprint.iacr.org/2018/068.pdf.

12. CPR Part 71.

13. For individuals: Form EX140, https://formfinder.hmctsformfinder.justice.gov.uk/ex140-eng.pdf and for officer of company or corporation https://formfinder.hmctsformfinder.justice.gov.uk/ex141-eng.pdf.

14. CPR Rule 71.

15. CPR Rule 71.2(7).

16. CPR 31.16 and 31.17 (3) a-b.

17. CPR 31.17.

18. Norwich Pharmacal Co. Customs and Excise Commissioners, [1974] A.C. 130 (H.L).

19. Bankers Trust Co v. Shapira [1980] 1 WLR 1274 CA.

20. Arbitration Act 1966, Section 44(1).

21. See Mareva Compenia Naviera SA v. International Bulk Carriers SA [1975] 2 Lloyds Rep 509.

22. Anton Piller KG v Manufacturing Processes [1976] Ch 55, CA.