Surprising Facts about the Role of Cryptocurrency in Elections Interference – by Yakubu Usman
The use of cryptocurrency has increased steadily in recent years. Although it retains some mainstream reputation as a safe haven for criminals, most uses of virtual currency, and most virtual asset service providers (VASPs), are legitimate.
Major retailers and financial institutions have incorporated cryptocurrency for payments and investing. However, it is true that criminals remain drawn to this developing domain by the features of anonymity or pseudonymity offered by many virtual currencies and the uneven regulatory implementation and compliance of VASPs in many jurisdictions.
Such criminals use virtual currency to assist with money laundering and to obscure the audit trail for other criminal activity, such as the financing of terrorism, nuclear proliferation, and election interference.
Role of Cryptocurrency in Elections Interference
VASPs also can be vulnerable to cyberattacks that allow easy theft of large amounts of virtual assets to fund such activities. The 2019 “Report on the Investigation into Russian Interference in the 2016 Presidential Election,” popularly known as the Mueller report, revealed a wealth of information about how Russian officials exploited cryptocurrency and virtual asset service providers to meddle in the 2016 U.S. presidential election.
Russian state operatives were able to use the most common cryptocurrency, bitcoin, and the most mainstream and best-regulated cryptocurrency exchanges in the United States to engage in this criminal activity.
At the time, Russia was steps ahead of financial investigators and law enforcement officials who track proliferators of weapons of mass destruction, terrorists, and human traffickers on the blockchain. At the time of the last U.S. presidential election, social media websites and the public policy community were increasingly aware of election interference, specifically by Russia.
However, very few analysts were following the money trail. As the United States nears its 2020 presidential election, the intelligence community is providing official warnings that Russia and others are once again interfering. Blockchain analysis and early law enforcement investigations also reveal that Russia is again exploiting virtual currency to support misinformation and an assault on democratic processes.
In September 2020, the U.S. Department of the Treasury’s Office of Foreign Assets Control sanctioned three Russian nationals working for the Internet Research Agency, and their associated cryptocurrency accounts, for election interference and engaging in influence operations.
While this is a rather limited response to foreign interference in a U.S. election, it acknowledges that Russian actors are using cryptocurrency in their interference efforts, and signals that U.S. government officials are concerned with such activity.
Russian operatives may have a greater incentive this time around to seek out virtual currencies that offer more anonymity and VASPs with less oversight, ability, or inclination to detect suspicious activity.
Russian operatives are likely to use the darknet, or other anonymous means, to make purchases of ads or services. And as a more general matter, others that might seek to interfere with the U.S. electoral process are also taking note.