Babylon's Bankers


On of the things that has always concerned me about crypto-currencies and the almost religious faith that some have placed in them as a tool to "outflank" central banks and to ensure privacy in transactions, is that no cyber-system has, ultimately, any integrity. Inevitably, humans figure out a way through or around almost any system. The perfectly secure, invincible system - the impenetrable battleship, the "unrobbable " vault, the secure communications line, doesn't exist.

More recently, I've blogged about some groups - very nefarious groups - using cryptocurrencies speculation to finance their "activities." The relative anonymity of crypto-currencies makes this a surefire bet that they would be used for such purposes. This is not to speak against crypt0-currencies per se. After all, hard cash has been used by such groups for centuries for similar purposes, as its relative anonymity makes it easy for them do utilize it for such purposes.

But now there's a whooper doozie of a story which has emerged and which, if true, contains some sweeping implications. Here's the article from Zero Hedge shared by Mr. R.B.:

NSA Has Been Tracking Bitcoin Users Since 2013, New Snowden Documents Reveal

Here I want to cite several paragraphs, as they are germane to today's high octane speculation:

n a blockbuster report published Tuesday in the Intercept, reporter Sam Biddle cited several documents included in the massive cache of stolen NSA documents that showed that the agency has been tracking bitcoin users since 2013, and has potentially been funneling some of this information to other federal agencies. Or, as Biddle puts it, maybe the conspiracy theorists were right.

It turns out the conspiracy theorists were onto something. Classified documents provided by whistleblower Edward Snowden show that the National Security Agency indeed worked urgently to target Bitcoin users around the world - and wielded at least one mysterious source of information to "help track down senders and receivers of Bitcoins," according to a top-secret passage in an internal NSA report dating to March 2013. The data source appears to have leveraged the NSA’s ability to harvest and analyze raw, global internet traffic while also exploiting an unnamed software program that purported to offer anonymity to users, according to other documents.


The documents indicate that "tracking down" Bitcoin users went well beyond closely examining Bitcoin’s public transaction ledger, known as the Blockchain, where users are typically referred to through anonymous identifiers; the tracking may also have involved gathering intimate details of these users’ computers.

The NSA collected some Bitcoin users’ password information, internet activity, and a type of unique device identification number known as a MAC address, a March 29, 2013 NSA memo suggested. In the same document, analysts also discussed tracking internet users’ internet addresses, network ports, and timestamps to identify "BITCOIN Targets."


The NSA’s budding Bitcoin spy operation looks to have been enabled by its unparalleled ability to siphon traffic from the physical cable connections that form the internet and ferry its traffic around the planet. As of 2013, the NSA’s Bitcoin tracking was achieved through program code-named OAKSTAR, a collection of covert corporate partnerships enabling the agency to monitor communications, including by harvesting internet data as it traveled along fiber optic cables that undergird the internet.


Civil libertarians and security researchers have long been concerned that otherwise inadmissible intelligence from the agency is used to build cases against Americans though a process known as “parallel construction”: building a criminal case using admissible evidence obtained by first consulting other evidence, which is kept secret, out of courtrooms and the public eye. An earlier investigation by The Intercept, drawing on court records and documents from Snowden, found evidence the NSA’s most controversial forms of surveillance, which involve warrantless bulk monitoring of emails and fiber optic cables, may have been used in court via parallel construction. (Emphases in the original)

So herewith my high octane speculation. And it comes in two broad threads, or streams. The first is, that the extent of surveillance of Bitcoin appears to be quite sweeping and extensive. And while the focus of these revelations is on Bitcoin itself, by parity of reasoning one may rationally assume that other crypto-currencies are probably subject to the same type and extent of surveillance. In the rising tensions between the West and Russia, it would seem to hold especially for the Russian crypto-currency, Etherium. The focus of all of this is on the alleged privacy of crypto-currencies, which, given the revelations, are not private from the capabilities of the signals intelligence agencies:

Emin Gun Sirer, associate professor and co-director of the Initiative for Cryptocurrencies and Contracts at Cornell University, told The Intercept that financial privacy “is something that matters incredibly” to the Bitcoin community, and expects that “people who are privacy conscious will switch to privacy-oriented coins” after learning of the NSA’s work here. Despite Bitcoin’s reputation for privacy, Sirer added, “when the adversary model involves the NSA, the pseudonymity disappears. … You should really lower your expectations of privacy on this network.”

Green, who co-founded and currently advises a privacy-focused Bitcoin competitor named Zcash, echoed those sentiments, saying that the NSA’s techniques make privacy features in any digital currencies like Ethereum or Ripple “totally worthless” for those targeted.(Emphases in the original)

What concerns me here is that these revelations ought at the minimum to change the narrative that emerged along with crypto-currencies, the narrative that this (at last) was a technological end-run around the power of central banks and a restoration of privacy. If anything, the implication would seem to be that a meme was created to stampede some people into the use of cyrpto-currencies precisely to eliminate cash, and the last vestiges of financial privacy.

But my high octane speculations have a second stream, and this stream is much more speculative than the first. The article hints at broad and deep capabilities of signals intelligence to monitor and track such transactions as may interest them, and, through a process of "parallel construction," construct cases against those they are monitoring. The role being envisioned for such agencies in the revelations is thus a passive one. But given the capabilities revealed, I strongly suspect that the capability exists to capture or reconstruct the passwords that enable the whole blockchain "ledger in the cloud," and thus, I strongly suspect that an active capability exists to concoct evidence against individuals for whatever reason through the creation of entirely fake, and criminal, transactions. Extending this principle, one has a perfect new vehicle for theft - literally laundering money by stealing it from money launderers - and for the manipulation of crypto-currencies themselves.

In other words, what this article suggests to me is that the relationship between the rise of crypto-currencies as systems of finance and the intelligence agencies was there ab initio, and that the relationship is direct and immediate.

I remain skeptical, and that skepticism has increased.

See you on the flip side...


  1. Bitcoin belongs with credit-debit cards use at your own risk. Other than cash you have to assume you are being tracked by our overseers everytime we use bitcoin.

  2. Finally, we get down to Quis Custodiet Ipsos Custodes? (Who Guards the Guardians?). In a perfect world, information-collection would only be used for the benefit and protection of an enlightened society. In our world, the potential for abuse of this ‘power’ is staggering. Even Nixon had his political opponents being bugged for his purposes.

    Now, step up a level. Charles Fort stated, “The Earth is a farm. We are someone else’s property.” Going down the Gizar route for now: Ancient war. Remnant ‘people’ and technologies. Continuity of purpose.

    So, who (or what) are our ‘Guardians’? If we go down the rabbit hole far enough, we may find very long-lived beings pulling the strings. The kind that think in thousand-year planning cycles. Even setting-up the intelligence agencies would be trivial for such planning cycles. (Not to mention society itself.)

    Therefore, “the rise of crypto-currencies as systems of finance and the intelligence agencies was there ab initio, and that the relationship is direct and immediate” may be truer than most think…

  3. The article cited sounds like another episode of financial info wars… to keep prices swinging as big players desparately try to get in on the downturns….

  4. When I see a new literary construct, I see a philological attempt to attach a scientific and precise definition to a real phenomenon. We purport ourselves to be a scientific culture. The existence of the phrase “parallel construction” in this article strongly suggests the phenomenon exists and is being actively studied.

    Whether information is coded in trinary or binary form and transmitted on networks (whether public or private), those connections can and will be tapped. Because of it’s federal mandate the NSA would target private networks first, then public networks after one possesses the requisite space and processors to handle the load. Even when data is encrypted it’s a mistake to assume no information can be derived from it. (I found this out recently when I ran into a problem with my credit union during the issuance of a cashiers check for a bill. DHS demanded all banking institutions install a subroutine that intercepted check information electronically to review for terrorist funding or money laundering activity, and because of a processing error, the check would not print. Who authorized this? Congressional action through the passage of recent legislation that strengthens our national security interests with new provisions for capturing and observing transactions. Can you say, “PROMIS mach n?” That’s what it smells like to me.) With enough data collected from a sender/receiver utilizing the same encryption keys consistently, there is always the possibility that any encryption method can be deconstructed given the tools and processors. Even without these tools one can still derive enough basic information for a FISA warrant to recover keys–and people are notoriously slack in where they place them for recovery. Because its electronic, and the behaviors of those who require and manage it are known and predictable, privacy in the crypto-currency model will not be allowed to exist.

    For Mr. Global the name of the game is their convenient and legal access to our economic wealth by the reduction of our liberty for both access and use. Their hope rests on our confusion of liberty with freedom. If we believe we are free because we are granted liberty, they possess all the power they need to create the world of their choosing. They give us what liberties they think we require and change them by legislative fiat when they see a more efficient method later. If we believe we have liberty because we are free, then we retain the right to say “No” and demand a seat at the table collectively with a stake in the future. I’m with Fitts on this one.

  5. I’ll go you one better; I think the entire NSA surveillance architecture was built in anticipation of cryptos and digital currencies. In fact I think that is its true raison d’être, otherwise it’s insane overkill for simple surveillance.

    Riding into town.
    Giza gas chamber saloon.
    Three finger whiskey.

    Bitcoin is transaction – at face value – with embedded clearing. Nothing more, nothing less. Man leaves fingerprints and footsteps wherever he goes, also on the internet. Browser history reflects habitat.

    The revolutionary act is being able to do business within a value system of one’s own choice. Bitcoin is already gold-backed, because buying gold is legal.

    Of course the powers that be want to access transaction history of all sorts. That is why Long John Silver keeps his treasure map in his wooden leg.

  7. Please note that the Ability for the No_Such_Agency to collect and analyze MAC addresses means that every Router on every network HAS BEEN PENTRATED !!!!!
    It’s not just bulk data collection at key nodes.
    MAC addresses don’t transit beyond the bounds of local area network.
    MAC are kept locally at the local router.

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