As accusations are increasing on Bitcoin that it is being used for online drug peddling, the US authorities have opened a new front in their investigation. The government officials are looking for clues on how Bitcoin exchanges and other businesses that deal in the online currency are involved in online drug peddling.
The last year saw how Silk Road was peddling drugs and involved in other criminal activities, now the government agencies are examining possible ties between the Bitcoin exchanges and the online drug bazaar i.e. Silk Road. The primary focus of investigation is to know how the shuttered online drug market has become linked to Bitcoin.
The closure of Silk Road after it was found that it was associated with shady activities brought in disrepute to Bitcoin and brought in obstacles in front of those who were demanding for legitimizing the digital currency. In fact, Charlie Shrem one Bitcoin exchange was criminally charged over alleged ties to Silk Road in January this year.
Investigation Will Help Bitcoin at Large
Any investigation that brings transparency and helps Bitcoin get legitimacy from the government is definitely a positive, and conclusions have not been reached as to whether the exchanges were connected with Silk Road, going on, Bitcoin supporters may feel satisfied.
Earlier this winter several Bitcoin exchanges were subpoenaed from Manhattan federal prosecutors as they wanted to know the state of Bitcoin and the implications this digital currency may have. Bitcoin exchange Mt. Gox which was operating at that point of time too was asked to put its view to the prosecutors.
The situation was not as bad as today is after the collapse of Mt. Gox as it not just means losses of millions of dollars for investors, but also a loss of credibility for Bitcoin. The government agencies in the US inquiring about the involvement of Bitcoin exchanges in the shuttered online drug company Silk Road will clear a lot of questions.
Like the exposure of Silk Road, the collapse of Mt. Gox amplified authorities’ concerns about the stability of Bitcoin. It also forced Bitcoin supporters to think twice about investing in the digital currency. The major accusation is that Bitcoin can be used for anonymous transactions; it has higher potential in illegal or contraband activities like drugs and arms.
To contact the reporter of this story: Deepak Tiwari at email@example.com