Reports indicate that the U.S National Security Agency has been closely monitoring the Bitcoins Blockchain with an intention of identifying users on a distributed network.
In a report released by the Intercept, the agency did collect private data on specific users such as the device identifiers, user passwords and the internet activity. Through the “oakstar” program, the NSA has been monitoring the internet activities of Bitcoin users since 2013. It has however been noted that the NSA could be moving closer to pick out users who are initiating a Cryptocurrency transaction using its new program “monkeyrocket,” which is a sub-program that operates under “Oakstar.”
The intercept obtained an exclusive document from a U.S whistleblower, Edward Snowden that indicates the agency has prioritized Bitcoins surveillance. According to the documents, there is an indication that the NSA plans to work beyond the Bitcoins public ledger tracking because it is equally analyzing the global internet traffic and destroying software’s so as to disguise the user’s identity.
The “monkeyrocket” program has been found to be very useful because it has helped in tracking down the senders and receivers of Bitcoins. Besides that, the NSA is also alleged to have been using the “xkeyscore” system, which is a global internet monitoring system that was exposed in 2013 when classified documents concerning NSA surveillance were disclosed by Snowden. The powerful system was being used to investigate the Bitcoins user’s information.
The internal revenue service has greatly been concerned with gains from cryptocurrency tradings are being under-declared. This comes amidst concerns over the illicit use of cryptocurrencies in terrorism financing activities and money laundering activities. Bitcoins investors have now been warned that they are likely to face audits over their Cryptocurrency transactions.
The IRS in a statement warned those who do not properly report their income tax from virtual currency transactions could be audited for those transactions and would be liable for penalties and interests in the event of being culpable.
With the IRS issuing summons to the most popular Cryptocurrency exchange platform, Coinable, there is an expected long battle with the Cryptocurrency companies and its users.