Digital currencies accused of causing wrong-doing by money laundering activities: “U.S. accuses currency exchange of laundering $6 billion“. As it happens with media these days, the title is inappropriate and misleading. It is not the exchange that laundered money. It is the criminals that laundered their money by using the exchange. Being an exchange, being an electronic currency exchange does not equate to wrong-doing. It is the same as accusing a knife, or a knife manufacturer for causing a death of a person. Someone used the knife to kill the person. The knife is neutral. The use, the person acting on the knife, is wrong doing.
It might be the case with Liberty Reserve that it is actually run by criminals, and it might take part in criminal activities. But the article does not go into details. It simply inflames the topic, and blurs the lines between criminal activities and “neutral” activities. Digital currencies are neutral. Digital currency exchange is neutral. The exchange, and the electronic currencies, are tools, that can be used for good, or that can be used for evil.
This story is similar to file sharing systems and their operators. Megaupload and Kim Dotcom story comes to mind. Running a file sharing site does not equate to wrongdoing. It is people sharing illegally material that is not theirs equate to criminal activity. A service or tool that can be used to wrongdoing by people will remain what it is: a tool or service, regardless of how people decide to use it. Megaupload morphed into client-side security driven mega.co.nz, where the service operators doesn’t know what is being stored, and doesn’t have means of finding that out. Will digital currency exchanges move towards the same model? I think so.
What is so special about digital currencies? They are a threat to bank and governmental control apparatus. Yet, they are the answer to the problems traditional money system have. There are many arguments for changing the broken status quo. None knows exactly how it will all unfold.