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Virtual money investigated to stem criminal use

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Posted August 14, 2013

New York is trying to corral the “Wild West” atmosphere of virtual currencies such as Bitcoin and may create new regulations to keep the growing technology from being used in crimes.

Financial Services Superintendent Benjamin Lawsky’s inquiry is confirmed in a memo provided to The Associated Press on Monday.

“We have seen instances where the cloak of anonymity provided by virtual currencies has helped support dangerous criminal activity, such as drug smuggling, money laundering, gun running and child pornography,” Lawsky wrote in the memo dated Monday. He described virtual currencies as a “Wild West” for criminals that could threaten national security.

The memo cites a wide range of companies and investors who received subpoenas for documents and data which Lawsky said will help better understand the burgeoning industry. Among the investors on the list are Google Ventures and another company called Winklevoss Capital Management, with “key personnel” listed as Tyler and Cameron and Winklevoss—the twins who sued Mark Zuckerberg in 2004 claiming he stole the idea for Facebook from a company founded by the Winklevosses and a third person from Harvard.

There was no immediate response to a request for comment from the Winklevoss brothers.

Lawsky said the investigation could lead to regulations that would also benefit virtual currency, which he called an innovative product and a legitimate business enterprise.

Virtual currency is composed of digital bits and based on mathematical schemes that guard against counterfeiting. Bitcoin was started in 2009 as a currency free from government controls, an entirely digital means of exchange for a digital age. It’s a rapidly growing phenomenon that has taken root as a payment method on some websites for both legal and illegal goods.

 

Read more at: Phys.org

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