The military's innovation branch is conducting a comprehensive investigation of cryptocurrencies to assess the threats to national security and law enforcement posed by the proliferation of digital assets.
The Defense Advanced Research Projects Agency, or DARPA, which built the original technology that underpins the internet, has engaged the crypto intelligence business Inca Digital to conduct the one-year experiment.
The business will develop tools that will offer the Pentagon with a comprehensive understanding of the inner workings of crypto markets, in part to aid in the fight against illegal use of digital assets.
Mark Flood, a program manager at the CIA, told The Washington Post in an interview that the bitcoin universe is being mapped in some detail as part of this endeavor.
In addition to tackling illegal money, the agency plans to use the data to get insight into the processes that influence traditional financial markets, where exact information is more difficult to collect.
The deal is the most recent indication that federal agencies are intensifying their efforts to confront rogue regimes, terrorists, and other criminal actors that utilize cryptocurrencies to fund their operations.
Last month, the Treasury Department imposed its first-ever sanctions against software code, targeting Tornado Cash, a company that helped North Korean hackers and others launder stolen cryptocurrency.
This Monday, the government issued a call for public input on the national security and criminal finance risks posed by cryptocurrencies. Separately, earlier this month, the Justice Department announced the development of a national network of 150 prosecutors to coordinate crypto-related investigations and prosecutions.
Flood alleged that North Korean government-affiliated hackers stole billions of dollars in digital assets for the regime's weapons development. And shortly prior to this spring's invasion, the Ukrainian government identified Russian financial sector attacks.
The history of cryptocurrencies, from Bitcoin to Stablecoin, is a house of cards.
The financial sector may become a component of modern warfare in the future, and whatever we can do to strengthen and safeguard the US financial sector and the financial sectors of our allies is advantageous, according to a former Treasury official who has researched systemic financial risk.
However, governments have had difficulty regulating cryptocurrencies. Due to a lack of regulatory control, the industry has morphed into a shadow financial system that offers several opportunities for competent crooks.
Adam Zarazinski, CEO of Inca Digital, claimed that his company's work for DARPA will be "quite diversified." The project aims, among other things, to help the government comprehend how money flows into and out of blockchain systems, which are public ledgers maintained by a dispersed network of computers.
It is also intended to distinguish between legitimate bitcoin trade and bot-driven activity and to identify crypto-based scams.
Zarazinski, a former Air Force officer who had worked in criminal intelligence for Interpol, stated, "There's a lot of concern about crypto scams right now." According to him, the scheme's organizers are often "well-organized, worldwide criminal networks sponsored by opposing nations or given tacit approval to carry out these operations, and billions of dollars are stolen from Americans and Europeans."
The discredited pioneer of bitcoin asserts he is not on the run. Nevertheless, nobody knows where he is.
This is not the first time DARPA has explored blockchain technology. In June, the government released a research commissioned from the cybersecurity firm Trail of Bits, which found that blockchains frequently contain weaknesses that render their security promises invalid.
However, Flood noted that the agency's current activity is not designed to track particular bitcoin users. He stated, "DARPA does not undertake surveillance." Please note that we are very careful not to include personally identifiable information in our study.
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