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Bitcoin is currently the most popular of the many cryptocurrencies available on the market. Cryptocurrencies are often referred to as a digital asset/currency, in that it is not a tangible, physical object under the control of a regulating authority or even a nation-state. They can be used to instantly trade with anyone across the world, pseudonymously and with very little fees and are often used as a ‘store of value’ allowing speculators to trade with each other or on commercial currency exchanges. As well as exchanges, cryptocurrencies can be obtained from direct trading (for example localbitcoins.com), eBay or other sales sites, at Bitcoin ATMs, from local traders, or they can be ‘mined’.
Generally, cryptocurrency transactions are recorded in a public ledger referred to as the blockchain: every time a transaction is conducted, it is submitted across the network where peers of the network confirm and validate the transaction. After validating a transaction, a peer places it within a block containing hundreds of other validated transactions. New blocks are created on a schedule and appended onto the end of the ledger, hence the name blockchain. Therefore, the blockchain contains details of every transaction ever executed, including recipient and sender’s addresses, quantities, etc. Information attributing an address/wallet or a transaction to a person is not held on the blockchain.
Cryptocurrencies that rely on anonymity pose a challenge in any litigation, but there may be methods for litigators to attain discoverable evidence. As to the unregulated and decentralised nature of cryptocurrencies, there are several regulatory and legal issues that arise. One such challenge that eDiscovery can assist with, is the pseudonymous nature of their use, and the methods that can be used to attribute a wallet, address or other indicators of cryptocurrency to an individual. Due to the perceived anonymity, cryptocurrencies have become the ideal technology for money laundering and fraudulent activities.
The most viable approach to addressing cryptocurrency challenges within eDiscovery is through the application of digital forensics. By forensically imaging a hard drive or USB, a user’s wallet files can be accessed, directly outlining the transaction history from the exchange. However, there is the possibility that users could evade the authorities by setting up numerous accounts with alternative forms of cryptocurrency. This anonymity represents just one of the many potential legal issues for litigators searching for evidence.
CYFOR’s highly qualified digital forensic professionals conduct criminal and civil cryptocurrency investigations for public bodies, law firms, large corporations and law enforcement. Employing a broad range of blockchain investigation and data gathering techniques (including open and closed sources of information and dark web search methods), we can address cryptocurrency challenges in eDiscovery by identifying evidence of cryptocurrencies and assist in their seizure by utilising advanced digital forensic techniques.
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