Senator calls on agencies to take action to prevent criminal cryptocurrency use

Senator calls on agencies to take action to prevent criminal cryptocurrency use
© Greg Nash

Sen. Maggie HassanMargaret (Maggie) HassanPoll: New Hampshire Senate race tight Progressives push back on decision to shrink Biden's paid family leave program Democratic incumbents bolster fundraising advantage in key Senate races MORE (D-N.H.) on Thursday raised concerns around the use of cryptocurrency for criminal means, pressing key federal agencies to take action.

The senator’s concerns were raised after escalating ransomware and other cyberattacks over the past year in which hackers used cryptocurrency markets to obtain payments from victims looking to regain access to their networks. 

Hassan, a member of the Senate Homeland Security and Governmental Affairs Committee, sent a letter detailing her concerns to the leaders of the Justice Department, the Department of Homeland Security, the Internal Revenue Service, the Securities and Exchange Commission, and the Treasury Department’s Financial Crimes Enforcement Network. 

ADVERTISEMENT

Hassan pointed to a recent incident in her home state of New Hampshire in which $2.3 million was stolen from the city of Peterborough, with the funds unable to be recovered after they were converted by the attackers into cryptocurrency.

“The anonymity provided by cryptocurrency has helped facilitate its use by criminals in a myriad of ways,” she warned. “These uses include drug sales over the dark web, payments for ransomware attacks, tax evasion, financing for terrorism and organized crime, money laundering, and more.”

The senator asked for details around what authorities the agencies had over regulating U.S.-based cryptocurrency exchanges, what more authorities they need, and whether cryptocurrency exchanges should be required to reimburse those subject to fraud due to the use of the exchange.

None of the agencies Hassan sent letters to responded to The Hill’s request for comment.

The potential increased regulation of cryptocurrency has come under the microscope on Capitol Hill in recent months, with debate over amendments on this topic delaying the Senate’s $1 trillion infrastructure package in August. Lawmakers on both sides of the aisle are likely to continue fighting for issues around regulating cryptocurrency this month.

The efforts have become increasingly consequential after mounting cyberattacks, including separate ransomware attacks in May on Colonial Pipeline and meat producer JBS USA, temporarily threatening key supply chains. 

Both companies chose to pay the ransoms demanded by the hackers in order to quickly ramp up to full production again, with Colonial Pipeline paying the equivalent of $4.4 million in bitcoin, and JBS paying the equivalent of $11 million in bitcoin. The Justice Department later recovered just over half of the ransom paid by Colonial Pipeline.

The Justice Department released a framework last year warning of increasing security concerns around the use of cryptocurrency, with the framework noting that “few technologies are more potentially transformative and disruptive—and more potentially susceptible to abuse.”