Since 2007, the DEA has seized over $4 billion in cash from people who are only suspected of having committed a crime. In 81% of seizures totaling $3.2 billion, no civil or criminal charges were ever filed. Civil liberties advocates argue that civil asset forfeiture laws can be abused by police to shake down those they suspect are involved in criminal activity.
These figures do not include the value of assets such as houses, electronics, clothing, and automobiles which were also seized.
Law enforcement groups argue that the practice is a valuable tool for fighting criminal organizations, allowing them to seize drug profits and other ill-gotten goods. But the Inspector General’s report “raises serious concerns that maybe real purpose here is not to fight crime, but to seize and forfeit property,” said Darpana Sheth, senior attorney of the Institute for Justice, a civil liberties group that has fought for forfeiture reform.
The Inspector General found that the Department of Justice “does not collect or evaluate the data necessary to know whether its seizures and forfeitures are effective, or the extent to which seizures present potential risks to civil liberties.”
Bitcoin was created by Satoshi and the Cypherpunks in 2009 to provide among a number of things, a decentralized currency which cannot (if proper security measures are taken) be seized by hackers, authorities, or financial institutions.
How Bitcoin Stops Civil Asset Forfeiture
If one takes the proper measures to secure their assets with bitcoin, they can avoid a number of worst case scenarios.
The days of keeping your money in the same central banks that have been taking advantage of their customers ever since the US dollar was no longer backed by gold. However, if you have bitcoin and other cryptocurrencies, you do not want to keep them on an exchange. Instead, you should only use exchanges to buy, then immediately transfer to your cold wallet.
The reason for this is that exchanges such as Coinbase violate the decentralization principles that bitcoin was founded on by Satoshi Nakamoto. If you keep your coins on an exchange, you’re just trading one central bank for another. The authorities simply have to subpoena whatever exchange you keep your funds on.
Andreas Antonopoulos explains, “Your keys, your coins, not your keys, not your coins.” However, you can be certain the coins will remain in your possession by having a 12 – 24 word seed that acts as a backup mnemonic for your private key.
How To Secure Your Bitcoin
While gaining access to your exchange account may be difficult or unlikely, you must always operate with security in mind. If your accounts are compromised and your coins are stolen, there is no way to get them back. The only way to protect your coins from theft is to store them offline.
- Storing your coins offline is the only way to protect your coins from theft. The most secure way to store your coins is by using a hardware wallet such as Trezor or Ledger S Nano. Contrary to what many people think, your coins are not actually stored on your hardware wallet. What you really have is a keychain which acts as a single purpose computer which stores your keys securely with additional duress passwords which make it impossible for someone to discern whether they have found your fortune or not. Your coins will always exist in cyberspace on the blockchain.
- Securing your email accounts using 2FA (two factor authentication) is just as important. I recommend Authy and Google Authenticator. To further secure your coins, you should consider purchasing a Yubikey which when enabled on your gmail or other email accounts prevents any sessions from computers that do not have your specific yubikey plugged into the USB port. The only tradeoff is that you cannot access that email account without the key, so you should create separate email accounts for cryptocurrency, personal, and work.
- Spread your investments across different exchanges to protect one compromised account from wiping you out. Since the exchange controls the keys to your wallet, that means you do not actually control your coins. When Mt Gox, the largest cryptocurrency exchange which was handling 70% of bitcoin transactions worldwide was hacked in 2014, it was soon revealed that 680,000 bitcoin had been stolen, which is worth around $1 billion in US dollars today. Monitoring the social media accounts of exchanges can help you spot fishy activity so you can withdrawal your funds before sh*t hits the fan.
- Keeping a low profile is the last rule for securing your cryptocurrency. Hackers and criminals target those they know are involved in the cryptocurrency scene. In May, over $5 million was stolen from those in attendance of Consensus– a cryptocurrency conference with a number of successful people in attendance. The cryptocurrency and 40 phone numbers were stolen by exploiting a SIM card vulnerability that no one saw coming. Never disclose how much cryptocurrency you have, where you store it, and create usernames which are not associated if you’re communicating on discussion boards.
If you don’t have too much to lose on an exchange, only a few hundred dollars, simply enabling 2FA on your email account(s) and exchange accounts will likely be sufficient for now. However, as your holdings grow, it is time to transfer most of your digital wealth to a hardware or paper wallet and secure them under lock and key.
So long as you follow these steps, you should be safe from everything from civil asset forfeiture to hackers.
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