As an assistant US Attorney for northern California, Kathryn Haun peered into some of the darkest corners of the cryptocurrency world. Among her greatest hits have been the prosecution of a couple of rogue federal dealers who were stealing bitcoin whilst investigating the illicit marketplace Silk Road in 2015, and settling a criminal research into Ripple later that same year.
Those have been uncertain instances for the cryptocurrency world. It becomes associated with black-market tablets through Silk Road and the meteoric upward thrust—and simply as surprising crumble—of the Tokyo-based Mt. Gox trade. Haun, who goes with the aid of Katie, became the point person for all matters cryptocurrency in the US government, heading the primary move-company project force at the enterprise. She held that submit until the final year.
Despite Haun’s enjoy with the crooks and scammers inside the bitcoin world, she emerged as a vocal supporter of cryptocurrencies. Her time in authorities also made her a sought-after interpreter of regulatory traits affecting the crypto international. After leaving the Justice Department final May, she now teaches a category on cryptocurrency at Stanford’s commercial enterprise college, with economist Susan Athey, and sits on the board of Coinbase, considered one of the most important crypto exchanges.
Quartz spoke to Haun via cellphone to get her read on the US authorities’ sharpening consciousness on crypto regulation; the industry insider who tipped her off to a rogue agent; and “crypto Twitter.” The communication has been edited for duration and readability.
Quartz: According to reports, you commenced looking into bitcoin almost by the twist of fate. Take us again to that second in 2012—what happened?
Haun: My history at that point in my career was organized crime and murders. I had just come off doing a -month homicide trial that involved rival crook enterprises murdering every different and 80 defendants. It becomes the latest in a series of trials I had completed on organized crime, which I had usually found very captivating and satisfying work. At that point, I determined I become equipped for a trade. I felt I had been there, finished that, in phrases of the prepared crime global. I became deliberating leaving the government.
Then my boss comes in sooner or later and says here’s something absolutely different you might want to sink your tooth into. How approximately you prosecute this “bitcoin”? How do you prosecute bitcoin?! We had by no means heard of it. That very night time I started out reading about it and right away I discovered that [prosecuting bitcoin] become not possible, of a route. No extra possible than prosecuting cash or prosecuting the internet, or prosecuting any kind of era.
It’s no longer like there has been “crypto Twitter,” or maybe there was, however, I simply wasn’t on Twitter then. I examine the entirety I may want to and I changed into watching YouTube films and I commenced mastering about the technology. Some of the folks that taught me plenty about the technology early on have been a couple of federal sellers. They had been on the more youthful aspect.
What became your approach to coping with early bitcoin cases?
I fast learned prosecuting the generation of bitcoin wasn’t feasible, primary; nor became it desirable, variety two. Instead, what I set approximately doing become prosecuting some of the criminals makes use of-of bitcoin. You understand approximately some of [the cases], however now not they all are public. Some of them have remained under seal.
The challenge pressure I become leading became targeted on some of the worst criminal use cases concerning cryptocurrency. I want to strain it wasn’t due to the fact cryptocurrency changed into used; it becomes due to the fact crimes have been committed. It wasn’t approximately the medium of transaction.
My position become became now not just prosecuting criminal use-cases, however genuinely instructing, serving, and doing outreach—being a liaison for the cryptocurrency network and for the authorities, and additionally doing a fair little bit of education in the government. We have been nevertheless seeking to get people to recognize cryptocurrency isn’t criminal.
How did you arrive at that end?
One factor has to do with jurisdiction. I was primarily based here in the heart of Silicon Valley. I was surrounded by the aid of a variety of people running in the cryptocurrency field, with tactics that I knew became absolutely above board. By the character of in which I was, I changed into surrounded via a number of these technologists and builders. That becomes the first cue proper there—it’s no longer like several of these people are working in this big criminal business enterprise.
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Prosecuting bitcoin is no extra feasible than prosecuting cash
What was your relationship like with the crypto industry again then?
It’s difficult to say what my dating changed into. It wasn’t a one-length-suits-all aspect. I think we will say the Digital Currency Task Force that I was walking became surely obtainable trying to be engaged with the network. The network realized we’re no longer right here trying to shut [them] down. We’re seeking to get facts. A lot of the network didn’t want horrific actors. They wanted the era to head mainstream, and that’s authentic I think of the general public of corporations the task pressure became interfacing with.
What became the tone of those meetings with the community like within the early days?
Every interaction becomes a chunk unique. Sometimes, due to the fact we didn’t need to reason alarm to a selected business enterprise, we didn’t need to just cross and serve a subpoena or a search warrant. Sometimes, we’d be added to an organization via a friendly advent.
When [companies] saw a number of the cases that got here out publicly, whilst the Shaun Bridges and Carl Mark Force instances came out publicly, some inside the network were like, “Oh, we do want the one’s kinds of instances prosecuted.” It turns out we need the cooperation of gamers in the cryptocurrency area to carry the one’s cases. Some inside the space also went out of their manner to piece together proof. It was a sensitive aspect, due to the fact we couldn’t reveal what we had been running on.
So crypto human beings had been pretty welcoming?
I could not say welcoming. But I also wouldn’t say they slammed the door.
I think there has been a not unusual interest in maintaining those various behaviors off the platform, and that becomes shared with the aid of a whole lot of participants of the cryptocurrency network. It wasn’t in all people’s enterprise interest to have a nefarious interest in their platform. While they weren’t welcoming, they weren’t unwilling to participate. They understood the need for the felony or investigative method.
You convicted Bridges and Force—undercover federal agents who stole bitcoin when they were assigned to analyze the Silk Road case—partly thanks to evidencing from the bitcoin blockchain. How did that come approximately?
I can’t necessarily take credit score for that. Especially for this situation, it changed into something wherein the dealers I changed into working with, from the Internal Revenue Service, FBI, and Homeland Security Investigations, have been very deep into this technology, and who knew because we have a wallet cope with, we will use a pockets explorer and song this. And I changed into asking to expose me how.
We had been trying to figure this out in real-time, the usage of the blockchain.Information, a pockets explorer. These were public gear, which changed into a vital aspect on the time, due to the fact these retailers have been nevertheless hired by using the federal government. Something that’s no longer widely known is that one of those dealers [who was convicted] became the self-appointed digital forex man or woman for the Secret Service. We have been truly anxious that if we had been the use of any prison system, even a secret authorities legal procedure, it might be discovered by the goal of our investigation. Having these public tools was very useful.
The use of blockchain facts in this example is also frequently held up for instance of why anonymity in bitcoin is a fable.
Exactly, because it’s pseudonymous. A lot of criminal actors in the early day’s idea it turned into anonymous, however, definitely, it’s pseudonymous. But that wasn’t well known at the time. The well-known shows used if so have been derived from the blockchain and certainly illustrated how this could be traced.
During the time the Silk Road case become going on, there was loads of chatter within the bitcoin world about what you had been up to. I don’t forget one rumor which you have been in Japan investigating Mt. Gox.