back to article Facebook's Libra is a terrorist's best friend, thunders US Treasury: Crypto-coins dubbed 'national security risk'

The US Treasury Secretary today put a big dent into Facebook's Libra cryptocurrency plans, by claiming it would be a "national security risk," as well as a likely source of money laundering for – among others – terrorists. Steven Mnuchin held a press conference to make sure his attack got wide coverage. In it, he criticized …

  1. Luke Worm

    Bitcoin, Ethereum and others are ok then?

    1. Ashentaine

      He did condemn cryptocurrencies as a whole before singling out Libra. Though I suspect they don't care so much about unspecified terrorists using it as they dislike the idea of a massive corporation creating its own currency. Though the idea of Facebook using it to pay their employees in what would be company scrip is rather amusing...

      1. Time Waster

        Monopoly Money

        I’m waiting for them to try paying the $5bn fine with these.

      2. Eddy Ito Silver badge

        So we've got crypto-currency and "dark web" like private groups all rolled into one place. I somewhat shocked that politicians haven't already started spinning the "make new laws!" handle in a frenzy of OMG hand wringing.

      3. thosrtanner

        While it (paying in company scrip) is illegal in the UK, I'm not too clear on the position in other countries. I'd be really interested to see what'd happen if they tried that.

    2. Sorry that handle is already taken. Silver badge

      As always, This Is Good For Bitcoin

  2. Someone Else Silver badge

    For whom, again?

    The US Treasury Secretary today put a big dent into Facebook's Libra cryptocurrency plans, by claiming it would be a "national security risk," as well as a likely source of money laundering for – among others – terrorists the current President and his immediate family
    .

    There, FTFY. After all, now that Deutsche Bank is no longer available to perform that task, what's an emolument-loving, corrupt money-laundering, dictator wannabee going to do?

    1. JohnFen Silver badge

      Re: For whom, again?

      Well, you can always use Russian financiers.

  3. Anonymous Coward
    Anonymous Coward

    Bitcoin, for example, is not really useful for any type of transaction that isn't at least grey market. The fees per transaction and time to completion makes use impractical from a small retail standpoint, and for large retail, your block chain encrypted "private" transaction suddenly becomes very public as the results of the deal flow into the traditional banking system - say you buy a car or a house from someone who wants to say, pay their auto company back for the car, or roll the sale of the house into a new house, that bitcoin has to be converted into currency. And as soon as possible I imagine, to reduce exposure to negative currency fluctuations risk. Therefore the only types of transactions that are logical are those where both buyer and seller are willing to assume a lot of risk and price things accordingly with the understanding that the results of the transaction are to be kept "off the books". Then the seller of goods or services must find someone interested in "currency conversion" to make openly fungible their electronic currency, usually as long as possible after the original transaction.

    1. Anonymous Coward
      Anonymous Coward

      For what it's worth, I have bought entirely legal stuff using bitcoin, Scan offer it as one of their payment options.

      I have no idea what the tax man might think of that, but I just hope I'm too small-time to be noticed.

  4. cornetman Bronze badge

    As all sensible people know, crooks overwhelmingly prefer cash.

    1. Anonymous Coward
      Anonymous Coward

      I thought they preferred barter: keep governments completely out of it.

      1. Anonymous Coward
        Anonymous Coward

        Nope cash is king. Try bartering for drugs and see how far you get.

        1. Tom 38 Silver badge

          Try bartering for drugs and see how far you get.

          Petty dealers (particularly weed) do this all the time, they exchange their time to bag and sell a portion of a weight, and keep/sell the rest themselves, paying the upstream dealer their share afterwards.

          1. JohnFen Silver badge

            I don't think that's bartering. That's just retailing, and smoking your profits.

        2. Anonymous Coward
          Anonymous Coward

          Easy. Drugs FOR drugs. Corner a supply of a good drug the local dealers don't have, then arrange a mutual exchange: his drugs for yours. Diversified assortment means you can appeal to a wider clientele so you both win as long as you stay off each other's turf.

    2. Claverhouse Silver badge

      Difficult to pickpocket Bitcoin...

  5. Dan 55 Silver badge

    Trump's view on Facebook's Libra

    Literally the only thing he's said ever that I agree with.

    1. Anonymous Coward
      Anonymous Coward

      Re: Trump's view on Facebook's Libra

      Me too. I need a drink.

  6. JohnFen Silver badge

    Oh, please

    I'm totally opposed to Facebook's Libra because, well, Facebook.

    But the argument that it shouldn't be allowed "because terrorism" is just broken when we live in a world that has cash.

    1. doublelayer Silver badge

      Re: Oh, please

      It's pretty ridiculous to blame one cryptocurrency for a money laundering risk. Crypto can be used for that, but money laundering has been pretty easy for a number of criminals. Terrorists rarely need crypto because they can run bank accounts and get donations from various supporters as long as they make a token effort to hide who it is. Theoretically, everything with value, from gold to cash to securities to those pointless online game accounts, can be used for money laundering. The solution isn't banning whatever we've decided is being used, but either making that thing harder to launder or finding the people laundering with it and dealing with them using the tools of the criminal justice system.

      This idea of Facebook's is terrifying because Facebook has proven themselves to have a trustworthiness score somewhere below -100%, but it's almost certainly not going to be problematic because terrorists or someone else will use it to hide. It will be problematic because Facebook will attempt to monitor and control users' and nonusers' financial activity. Hate it for the right reason.

      1. Anonymous Coward
        Anonymous Coward

        Re: Oh, please

        Problem us, most links of the chain are either invisible or protected by hostile sovereignty.

  7. Anonymous Coward
    Anonymous Coward

    The value of illegal transactions carried out within the global financial system dwarfs the amount involved in criminal cash transactions.

  8. Teiwaz Silver badge

    He didn't go far enough in my opinion.

    Fell way short of declaring Facebook a terrorist organisation and shipping the FB executives off to Guantanamo for a waterboarding holiday.

  9. Rob F

    I quickly read the Libra White Paper

    It is here if you are interested

    https://libra.org/en-US/white-paper/

    I'd say a decent amount of provisions have been made, like the establishment of an independent subsidiary Calibra.

    KYC of all users is required, so I'd say the national security risk excuse is bunk. Could it destabilise established currencies in the future? Possibly, but it is supposed to be a stable coin.

    The backing of the currency with assets is something that should help with the coin confidence. https://libra.org/en-US/about-currency-reserve/#the_reserve

    To be honest, I understand the concern about anything associated with Facebook being bad news, but if you think about why they would want this to exist, it's just a really great way of removing the barrier to entry for so many commercial platforms. They could effectively wipe away any currency conversion costs that currently cost them money and hassle. No doubt that they could probably drive analytics on your purchase patterns etc. which will be another revenue stream, but the fact that Visa and Mastercard are already on the Libra consortium suggests this isn't going to be something new to them.

    1. Charles 9 Silver badge

      Re: I quickly read the Libra White Paper

      Independent, my butt. I'll believe it if they insert a clause in their charter barring anyone working in, with, or having less than two degrees of separation from Facebook for at least five years after they sever ties. Otherwise, it's just a pseudo-independent firm being pulled by invisible strings.

      1. doublelayer Silver badge

        Re: I quickly read the Libra White Paper

        It's not new for the credit card people to be tracking purchases, but they haven't had the kind of history Facebook has with massive privacy violations. I wouldn't mind having extra choices for credit card provider either, for privacy reasons as well, but there's no comparison between Facebook and the established companies for privacy.

        It's always nice to have an independent third party, but in order to establish its independence, I'll need to verify some things. It was started by Facebook, and they're the ones I'm afraid will hold too much influence. So I'll have to ask some questions. Are Facebook employees in this organization? Do Facebook have any control mechanisms over this organization? Is Facebook running the technical parts of the system? Let's check ... the answers are yes, yes, and yes. Let's ask a few more questions. Is there a method of throwing out Facebook? Is there some type of channel whereby the other people in this organization can override Facebook's decisions, including technical ones? Is there a method for end users to control the actions of this group? I'll check on those too ... no, no, and no.

        1. JohnFen Silver badge

          Re: I quickly read the Libra White Paper

          "It's not new for the credit card people to be tracking purchases, but they haven't had the kind of history Facebook has with massive privacy violations."

          That probably has something to do with banking regulations, something that doesn't really apply to cryptocurrencies.

          1. Charles 9 Silver badge

            Re: I quickly read the Libra White Paper

            It will if they try to go mainstream. How else will people buy into cryptocurrency without other currency with which to trade? It's not like the average Joe will be able to dedicate their computing time to mine for cryptocurrency (the pros will be on that the instant it goes legit, maybe even before). Coinbase (which trades in Bitcoin) opens their books to the Feds for this reason.

    2. Sorry that handle is already taken. Silver badge

      Re: I quickly read the Libra White Paper

      They can also control exactly what you do with your money, because it's not really your money, it's theirs and they're just letting you use it.

      Yeah nah.

  10. Roj Blake Silver badge

    In order to ensure Libra isn't used for money laundering etc...

    ...Facebook will need to collect vast amounts of transaction data and other financial information.

    They don't want to intrude into people's lives, you understand, but they want to do the right thing.

    And if that treasure trove of private information just happens to accidentally get sold by Facebook, then that's something that they couldn't possibly have foreseen.

    1. This post has been deleted by its author

    2. Dan 55 Silver badge

      Re: In order to ensure Libra isn't used for money laundering etc...

      Facebook don't sell data, just the access to that data (think Cambridge Analytica). And if the third party spends half an hour working out the API so they manage to get a bit more than they should, well that's terrible of them (nudge, wink). It was expressly forbidden by the contract so it's not Facebook's fault for making a sieve-like API.

  11. Pascal Monett Silver badge

    "if America does not lead innovation in the digital currency and payments area"

    America is already not leading in the digital currency and payments area. Paypal was created because America is a 3rd-world country when it comes to payment convenience. I read about all the initiatives that regularly crop up to make cash transfers easier and I always think "this will never take off in Europe".

    Why ? Because I have a six-digit pin contactless Visa card that I can use anywhere in the world, and when I use it online I have a token generator that gives a six-digit number that I have to input to have the transaction authorized by my bank. I have online banking (also protected by a password and the token generator) where I can wire money to anyone I have the IBAN of. In short, I can manage and transfer my money as I please and very easily.

    Then you have cryptocurrency, and yes I do believe that criminals are in charge of that. Either they are criminally incompetent exchange managers, or just outright criminals who stay in the game only long enough to have a nice bag of loot to leave with. I am not surprised that FaceBook wants in on that, it's right in The Zuck's mental ballpark. But I will no more deal with any cryptocurrency than I will willingly give FaceBook access to my private life.

    1. JohnFen Silver badge

      Re: "if America does not lead innovation in the digital currency and payments area"

      If you're allergic to extreme pedantry, skip the rest of the rest of this comment.

      "because America is a 3rd-world country"

      This isn't true by definition. The "first world" consists of NATO bloc nations. The "second world" consists of Communist bloc nations. The "third world" consists of nations that are not aligned with either. The term "third world nation", despite common misuse, is not a descriptor of anything other than political alignment.

      I'm sorry, but this has been a pet peeve of mine for decades so I had to be that annoying guy.

      1. doublelayer Silver badge

        Re: "if America does not lead innovation in the digital currency and payments area"

        I'd like to petition the prescriptivist society to change the definition. My full petition is as follows:

        Yes, your pedantry is correct, but I think we should fix that. The second world, as previously defined, ceased to exist three decades ago, as the block referred to by that name was directed by the Soviet Union. The existence of nominally communist nations does not mean there's a "second world", and that term no longer gets used. Meanwhile, many countries have been assigned to "first world" status despite not being NATO members and not necessarily having had an adversarial relationship with the "second world", including Japan, Australia, and New Zealand. Therefore, we, calling ourselves the descriptivists, would suggest that we revoke the previously-established definitions of first, second, and third worlds and reassign them to mean what everyone else has been using them for for a while.

        1. JohnFen Silver badge

          Re: "if America does not lead innovation in the digital currency and payments area"

          Yes, that argument is not without validity (which is why I made sure to acknowledge that I was being excruciatingly pedantic).

          However, I personally would prefer that we just stop using the "third world" as a shorthand for "poor/underdeveloped/whatever" and instead actually say poor/underdeveloped/whatever. But then, I'm a pedant.

      2. grrrrrrrr

        Re: "if America does not lead innovation in the digital currency and payments area"

        Do only extreme pedants skip the rest of the rest, or is one rest sufficient for the rest of the rest of us?

        I rest rest my case.

  12. Claverhouse Silver badge
    Angel

    The Cunning of The Dove

    Suppose, just suppose Trumpo the Magnificent wants to fill his boots.

    Now he could --- although his strict Presbyterian ethics prevent him actually doing anything shady, of course --- hoard Bitcoin and all the little coins through proxies;

    use his Bully Pulpit to denounce cryptocurrencies;

    await for the Democrats and Never-Trumpers to lose their tiny collective minds again, and in a reflex spasm of 'Orange Man Bad' embrace Bitcoin and invest all they can, just to show him;

    Dump his holdings

    .

    .

    https://upload.wikimedia.org/wikipedia/commons/d/d4/Bubble.folly.jpg

  13. iron Silver badge

    criticizing Facebooks's

    Facebooks's

    Really?

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