In our most recent podcast, several Nuix security experts—and cryptocurrency enthusiasts—discussed cryptocurrencies. Bitcoin and others (collectively called altcoins) are rising in the public consciousness daily and investors are watching their rising (and falling) prices with keen interest. There’s talk of a cryptocurrency bubble that may, or may not, be on the cusp of bursting.
It’s a perfect storm of intrigue and arcane with sophisticated terms like blockchain and hot wallets. It’s all about money—everyone’s favorite topic—mixed with high technology, opportunity, and danger. Bitcoin is the currency of choice for shadowy hackers and 21st century organized crime gangs. It’s a lightning rod for people suspicious of central authority. With so many new currencies currently available, they aren’t going to disappear any time soon.
It’s also an area of legal and cybersecurity uncertainty. Stories like the one that prompted our podcast, where a Florida judge denied an asset freeze for an alleged $2B scam by BitConnect, force us to take a hard look at how law enforcement agencies will investigate transactional systems that are, by design, supposed to be anonymous. It also demonstrates how important it will be for cryptocurrency providers to protect their infrastructure against cybercriminals; there’s more at stake than just customer Social Security numbers, after all.
But What About eDiscovery?
During the podcast, I asked a question many of our customers are likely also thinking about: How does eDiscovery work in a cryptocurrency case? What challenges do legal teams face in a situation like BitConnect’s, on either side of the case?
The first interesting element, according to Nkosi Shields and Ryan Walton of Baker Hostetler, is that some cryptocurrencies aren’t anonymous. In fact, some were designed from the outset to be transparent. Their article discusses the idea of court orders to provide a copy of a user’s cryptocurrency wallet. The wallet is a critical component of the cryptocurrency trading system, as it stores the user’s transaction history, allows the user to send and receive digital currency, and stores the user’s public and private encryption keys.
The information in cryptocurrency wallets will be more important than I think we realize today. Remember the feud between the FBI and Apple over iPhone decryption? It stands to reason that we will see a similar fight over an encrypted BitCoin wallet in the future. It would be ironic if that wallet was stored on a locked iPhone, wouldn’t it?
It’s interesting to note that the blockchain itself, which cryptocurrency depends on, is actually available to view by the public. The availability of transactions is central to the function of the blockchain. It could be a key source of information during discovery, especially in conjunction with the public and private encryption keys found in an individual’s wallet.
Cryptocurrency’s future is uncertain. Its volatility today has prompted a wide variety of opinions about its viability as a replacement for traditional currency or a legitimate investment opportunity. Regardless of how things play out for the currencies in general, legal action involving cryptocurrency providers is an absolute certainty. That means legal teams, judges, and their support staff will need to develop practices to effectively discover the evidence they’ll need to conduct their cases.
