Crypto, justice and geopolitics set to collide at landmark trial of Virgil Griffith

Crypto, justice and geopolitics set to collide at landmark trial of Virgil Griffith

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Crypto, justice and geopolitics set to collide at landmark trial of Virgil Griffith Ethan Lou: Case alleging that young American tried to help North Korea evade sanctions cuts to the heart of U.S. government’s unease about crypto Photo by National Post photo illustration

Article content In 2019, I went to North Korea for a cryptocurrency conference. It was unforgettable, largely because of what happened afterward: an American from that trip later ended up arrested by his country over remarks he made at the event.

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Article content I am talking, of course, about Virgil Griffith, the Alabama native who, at the time, headed special projects at the Ethereum Foundation. Griffith, then 36, is accused of trying to help North Korea evade economic sanctions by imparting the sacred fire of blockchain knowledge. While the defence has requested a postponement, his trial is scheduled to begin next Monday, and he faces up to 20 years in prison if convicted. We apologize, but this video has failed to load.

tap here to see other videos from our team. Try refreshing your browser, or Crypto, justice and geopolitics set to collide at landmark trial of Virgil Griffith Back to video Not surprisingly, I have been paying close attention to the case. Because of that unexpected arrest, I ended up depicting the trip in my upcoming book, Once a Bitcoin Miner: Scandal and Turmoil in the Cryptocurrency Wild West. And I will be watching the trial closely. The issue at hand is not simple. The defence does not dispute that Griffith spoke at the North Korean conference. Rather, it is expected to say that he had presented only surface-level, publicly available crypto information. Having been there, I am inclined to agree. But how relevant that is in terms of getting an acquittal can be quite subjective.

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Article content In any case, my interest is not just because of my front-row seat to the events. In American terms, this trial lies at the rare intersection of Silicon Valley, New York and Washington — the unique confluence of technology, finance and geopolitics. It marks how cryptocurrency and blockchain are increasingly blurring the borders between disparate fields, upending practices and norms long taken for granted. The case against Griffith centres on the idea of economic sanctions. Such actions, often U.S.-led, punish targeted countries by restricting their international trade. Critics argue that sanctions do not work and that it is only the ordinary people in the targeted countries that suffer. But Iran has been forced to the negotiating table to curb its nuclear program. And Russia has an economy smaller than Canada’s, while North Korea ranks below Afghanistan. Those sanctioned countries remain hostile toward the West, but they would arguably be a greater threat if they had their full economic capabilities.

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Article content And sanctions are easy. With the U.S. dollar as the most transacted international currency, the American government exerts wide control over the infrastructure used to move it. The effort is low and so is the risk. So, such measures have been increasingly used. North Korea, accused of rampant human rights violations, was sanctioned more times in the two years of 2016 and 2017 than in the previous two decades. Enter cryptocurrency. It is outside the traditional financial system and can be moved without centralized control. North Korea has allegedly hacked exchange platforms in South Korea, operated large-scale mining efforts and deployed ransomware attacks that demanded payment in digital coins. The totalitarian state has reportedly amassed hundreds of millions worth of cryptocurrency. To the Americans, that represents a grave threat to their favored tool of the sanction, and that’s where the justice department comes in.

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Article content More On This Topic Cryptocurrencies swept up in China property crisis that’s rattling the world County employee accused of hiding Bitcoin mining operation under the floor at work and racking up $6,000 electrical bill Cryptocurrency: Rise of decentralized finance sparks ‘dirty money’ fears There are always more laws than resources, so the latter are selectively used. San Francisco has deprioritized marijuana possession. Nearly every top prosecutor at the prestigious Southern District of New York is known for a focus: Rudy Giuliani, the mafia; Preet Bharara, Wall Street. Under the last U.S. president, the administration went hard on immigration. Griffith’s prosecution is a reflection of bigger-picture priorities. In the press release that followed Griffith’s arrest, with respect to the sanctity of sanctions, government officials beat the message in with a stick. The then-head of the Southern District said Griffith had “jeopardized” the government’s plan to “place maximum pressure on North Korea’s dangerous regime.” A top agent from the Federal Bureau of Investigation said, “We cannot allow anyone to evade sanctions, because the consequences … put the world at risk.”

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Article content Tellingly, the charge against Griffith isn’t necessarily that he succeeded in benefitting North Korea — just that he tried to do so. Cryptocurrency is young, and North Korea is poor. There has been little evidence that either is yet sophisticated enough to meaningfully affect sanctions. For all North Korea’s alleged amassing of cryptocurrency, any higher-order use of it by the country is still largely theoretical. But theory is scary. Nearly every country hostile to the West has been looking into its own digital currency, with China blazing the trail. El Salvador has adopted Bitcoin as legal tender. Dollar dominance is widely under threat, and with that, the future power of sanctions is uncertain. If and when North Korea actually uses crypto to dodge sanctions, any enforcement will be too late.

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Article content A chief pillar of justice is deterrence, to show the consequences of an act so that others do not attempt it. Regardless of whether Griffith has broken the letter of the law, he is but an unfortunate bit player caught in bigger tides, and this trial will not be the last of its kind. Ethan Lou is a journalist and author of Once a Bitcoin Miner: Scandal and Turmoil in the Cryptocurrency Wild West, to be released Oct. 19.

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On Sunday Before North Korea Trial US Quotes Virgil Griffith Email To Ethereum Foundation Founder

On Sunday Before North Korea Trial US Quotes Virgil Griffith Email To Ethereum Foundation Founder By Matthew Russell Lee, Pod Exclusive Patreon

BBC - G uardian UK - Honduras - The Source

SDNY COURTHOUSE, Sept 26 – Virgil Griffith, charged with violating North Korea sanctions in connection with a crypto-currency conference there, faced a bail review proceeding - in person - on July 20. He lost and was remanded. Inner City Press was there, and live tweeted, here and below (podcast here)

On September 14, in the run up to the trial starting on September 27, there was a final pre-trial conference replete with rulings. Inner City Press live tweeted it her e.

On September 22, Judge Castel denied Griffith’s sealed motion to depose the Ethereum Foundation’s general counsel Tju Liang Chua, or to allow him to testify by video. Order on Patreon here. On other grounds - late produced discovery - Griffith’s lawyers asked for a week continuance in the trial.

On September 23, initially without Griffith present, Judge Castel held a hearing then denied the request for delay. Inner City Press live tweeted it here.

On September 26, the Sunday before the trial starts on Monday, the US Attorney’s Office docketed their opposition to the testimony of Ethereum’s General Counsel, and e-mails of Virgil Griffith, filing on DocumentCloud here. Song here

The motion included: “The defendant served as one of the highest-ranking individuals in the Ethereum Foundation, as “Head of Special Projects,” and worked to pursue the DPRK node in coordination with the organization’s founder and its Executive Director…. on August 7, 2018, the defendant forwarded a proposal from CC-4 to place an Ethereum node inside the DPRK to the founder of the Ethereum Foundation, and another Foundation employee. See GX 3013 (attached hereto as Exhibit 5). The next day, on August 8, 2018, Griffith told another Ethereum colleague, “Let me ask Tju Liang [that is, the proposed Deponent] as well as a DPRK specialist whether if it’s possible to do this without violating sanctions. Will update you both.” When the colleague emphasized, “It can’t be a sanction workaround loophole thing either,” Griffith responded, “I’ll see what the lawyer says.” This record of Griffith’s close coordination with the leaders of the Ethereum Foundation to pursue the node, along with his decision to seek advice from Ethereum’s own in-house General Counsel, make clear that Griffith was not acting solely in his personal capacity when he contacted the proposed Deponent.” On Saturday, Griffith’s lawyer belatedly docketed their motion, on Patreon here.

From September 23: Assistant US Attorney: There is no basis for an adjournment of the trial. They are not requesting to exclude, it seems. Judge Castel: The parties agreed the US would make trial exhibit available on a rolling basis up to Sept 17? AUSA: We did not agree to end then

It’s 3:15 pm and… “It’s the MCC, I have Virgil here.”

Virgil: Hello. Judge Castel: Welcome.

Inner City Press will cover the trial.

The case is US v. Griffith, 20-cr-15 (Castel). ***

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