Earlier this year the Treasury Department expressed concern that a number of companies involved in virtual currencies, particularly those located outside the U.S., aren’t following basic anti-money laundering standards. Special counsel Robert Mueller’s indictment of 12 Russian intelligence officials may be the most vivid illustration yet of how cryptocurrencies can be used for alleged criminal purposes.

The indictment includes charges of money laundering through the use of Bitcoin, the leading virtual currency, to mask the illegal activities of officers in the GRU, a Russian military intelligence agency. Though cryptocurrencies have been tied to illicit activity in the past, the prominent mention of Bitcoin throughout the indictment could increase scrutiny of the new financial sector, which is already viewed skeptically by many regulators.

“Bitcoin faces the same challenges of perception that the early internet did,” said Jerry Brito, executive director of the virtual currency policy and advocacy nonprofit Coin Center. “Good guys can use it and bad guys can use it.” Mueller’s indictment charges that the Russians conspired to launder the equivalent of more than $95,000 to “facilitate the purchase of infrastructure used in their hacking activity” during the 2016 presidential election.

They used a “web of transactions structured to capitalize on the perceived anonymity of cryptocurrencies such as Bitcoin,” it said. The spies engaged in a practice called mining — using a computer to help process Bitcoin and record transactions — to help fund their equipment purchases, Mueller’s team alleged.

They also used dummy accounts and one or more third-party exchanges to try to conceal who they were and what they were doing. Though Bitcoin is pseudonymous — meaning it masks user identities with lengthy alphanumeric keys in its public ledger, called a blockchain — advocates and law enforcement officials say that public record makes it easier to track than its reputation suggests. Read more from politico.com…

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