Australia probes bitcoin crime links as currency craves legitimacy

Australia probes bitcoin crime links as currency craves legitimacy

SYDNEY - A top Australian law enforcement agency is investigating bitcoin's role in organised crime, a senior official said, just as politicians and financial regulators embrace the digital currency as a legitimate part of modern business.

The investigation into bitcoin's crime links by one authority as others embrace it highlights the crossroads governments have reached as they struggle to regulate the five-year-old "cryptocurrency", a method of making anonymous payments which has surged in popularity around the world.

Australian Crime Commission Executive Director Judy Lind revealed for the first time that investigators will monitor"misuse of virtual currencies to facilitate criminal activity"at a national and international level, under an operation named Project Longstrike.

"We know that virtual currencies including bitcoin are used as payment methods to facilitate illicit trade on the darknet,"Lind told Reuters in a statement, referring to a hidden part of the Internet where information can be shared anonymously and without revealing the location of its source.

"Organised crime groups continue to make use of darknets to harbour trading in illicit commodities, including child exploitation material, illicit drugs and firearms, stolen credit card and identity data, and hacking techniques."

Project Longstrike is just the latest example of Australia's determination to crack down on bitcoin-enabled crime. Last month, Australia said it extradited to the United States the alleged primary moderator of Silk Road, a website where people bought illegal drugs like heroin using bitcoins.

In October, police seized Queensland state's first bitcoin automated teller machine five months after it opened, with media reporting police believed it was being used by a former motorcycle gang member to deal crystal methamphetamine.

Regulators around the world are wary after the Mt Gox bitcoin exchange filed for bankruptcy in Tokyo earlier this year, saying it lost some 850,000 bitcoins - worth about $300 million (S$521 million) at current prices - in a hacking attack.

Like many countries, Japan has allowed bitcoin trading to continue without establishing a full set of rules on its legal status. US authorities are yet to agree to cohesive laws, while the United Kingdom is seen as a world leader because it has classified bitcoins as a currency.

Australian authorities are also trying to facilitate legal bitcoin trades in a country where use of the currency is exploding.

Between its 23.6 million people, Australia has an estimated 7 per cent of the $5 billion worth of bitcoins now circulating, with reports of online retailers, real estate agents and even pubs accepting bitcoin payments.

The Australian Taxation Office has published a guide for bitcoin traders on how to declare their investments, and a parliamentary inquiry is trying to lay the groundwork for a broader regulatory approach to the digital currency.

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