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 Silk Road’s illicit marketplace in 2015 and settling 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 submission until the final year.
Despite Haun’s enjoyment 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 to 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. Retake us 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] becomes not possible, of a route. No extra possible than prosecuting cash or prosecuting the internet, or prosecuting any era. It’s no longer like there has been “crypto Twitter,” Or maybe there was; however, I 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 because cryptocurrency changed into use; it becomes due to the fact crimes have been committed. It wasn’t approximately the medium of transaction.
My position became now not just prosecuting criminal use-cases, however genuinely instructing, serving, and doing outreach—being a liaison for the cryptocurrency network and the authorities and doing a fair little bit of education 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 various people running in the cryptocurrency field, with tactics that I knew became absolutely above board. By the character of 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. We will say the Digital Currency Task Force that I was walking became surely obtainable trying to engage 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, because we didn’t need to reason alarm to a selected business enterprise, we didn’t need to 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 because 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, which becomes shared with the aid of many 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 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 a 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 because 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 using 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.
TIn this example; blockchain facts are also frequently held up, for instance, why anonymity in bitcoin is a fable. Exactly, because it’s pseudonymous, a lot of criminal actors in the early day’s idea 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. When the Silk Road case became going on, there were 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.