Bitcoin in Lebanon

8/10/2019 Bitcoin in Lebanon

1/32

2 2 M A Y 2 0 1 4

M O N A E L A C H K A R J A B B O U R

P R E S I D E N T O F L I T A

M E M B E R F O U N D E R O F T H E P A N A R A BO B S E R V A T O R Y F O R C Y B E R S E C U R I T Y

M A J _ A J @ H O T M A I L . C O N

Bitcoin In Lebanon

Legal aspects
mailto:[email protected]:[email protected]


2/32

For each economy its cuurency?

Currency : evolving economic needs

Physical backup (gold, silver, bronze)

Bills (pre defined value, hold valid numbers, issued by

financial and political authority)


3/32

Our concerns

Where there is money there is crime

Information society trustful development

Legal security

Cybersecurity More users, more attacks: Kaspersky Lab stats show a

surge in Bitcoin cybercrime 22 Apr 2014

More than 30 samples of finance-related malware were selected

Nine of them were the program designed to steal the crypto-currency and represented a total of 29% of all financial cyber attacksperformed using malicious applications.


4/32

Bitcoin and e-money: few similarities

Bitcoin is different from e-money

regulators and policy makers have to be cautious notto confuse the two

- both being in digital format - e-money is a mechanism for interacting with

government-issued and regulated currencies such asdollars and euros

Bitcoin is a virtual currency that has no fiat currencycounterpart


5/32

Bitcoin

Masterpiece of technology

Open source software

It is based on peer to peer and digital signature

Digital currency system created to facilitate internetcommerce

Replacing trust with cryptography

Distributed and de-centralized financial payment system

no transaction fees

anonymous transfer


6/32

Price volatility, value fluctuations, which makes pricingdifficult

Security: theft of bitcoins, crash of digital currency Lack of national control because of the nature of the

network

Irreversible transactions (protection of consumer)

Bitcoin police (self regulation)

Sovereingty


7/32

Legal status

Gray region

Is it lawful to create private currency

Government responsible for coining money and

regulating the value Criminal sanctions


8/32

Bitcoin and the traditional legal framework

rooted in a philosophy of freedom,bitcoins useraises a range of civil liberties issues such as: consumer protection

cyber crime

privacy

Innovative development raising legal and regulatoryissues- finding acceptable methods for authentication

- protecting information and privacy- accomodating special needs of law enforcement

- creating the requisite means of settling disputes


9/32

Exploiting lack of security

a way to steal Bitcoin is to directly attack users exploiting lack ofsecurity in their systems and in many cases the total absence ofdefenses to secure digital wallets.

The simplest way is to steal/discover its password; the attack against Mt. Gox was possible due hacking that exposed the

list of user accounts and password hashes.

The knowledge of the password allows the hackers to compromise the

encrypted users wallet.

The wallet encryption doesnt represent a great protection againsthacking attacks ( host compromised by malware, or if malicious codeis able to sniff the passphrase using, for example, a keylogger)


10/32

Threats to the user

Criminals can conduct cyber-attacks to steal Bitcoinsfrom the victims wallet. They can adopt varioustechniques, such as use of malware to steal a digitalwallet or social engineering attacks, to gather

information on Bitcoin users funds.

Another way to monetize the interest in the virtual coinis the abuse of computational resources of victims. Thisis by cyber-criminals using a botnet composed of a large

number of machines infected with malware equippedwith a miner module.


11/32

Speculation

A way to get a profit by Bitcoin is speculating on thevalue of the Bitcoins.

Legal activity but the virtual currencies schema suffersoscillations related to incidents such as a cyber-attack(e.g.DDoSor a Data Breach)

a fall in the trust in the digital coin

. An ill-intentioned hacker could conduct cyber-attacks

against principal exchange services to influence theglobal level of trust in the currency and consequently itsvalue. In this way, the criminals could acquire or sellhuge volumes of the currency, making great profits.
http://securityaffairs.co/wordpress/13595/cyber-crime/bitcoin-in-the-storm-and-cybercrime-try-advantage.htmlhttp://securityaffairs.co/wordpress/13595/cyber-crime/bitcoin-in-the-storm-and-cybercrime-try-advantage.html


12/32

Theft of Bitcoin: bank robbery

The problem of theft of Bitcoin is exactly the same for any othercurrency: different techniques

Theft of Bitcoin can be perpetrated by cyber-criminals to make: - a direct profit

- attack the virtual currency scheme itself - speculation purposes - affect the level of trust on the currency

The principal methods to steal Bitcoins are : - hacking techniques and malware-based attacks


13/32


14/32

Event reportedbyMt. Gox

In June 2011, one of the principal Bitcoin exchangeswas victim of a memorable attack that obtained 6%of all the virtual currency in circulation at that time

(around 400,000 Bitcoins for a total amount of $9 million) 478 accounts have been deprived of 25,000 Bitcoin transferred

on th largest currency exchange.
http://articles.economictimes.indiatimes.com/2014-02-13/news/47305078_1_bitstamp-bitcoin-exchanges-bitcoin-foundationhttp://articles.economictimes.indiatimes.com/2014-02-13/news/47305078_1_bitstamp-bitcoin-exchanges-bitcoin-foundation


15/32

users

2014 A massive cyber attack f-distributed denial ofservice- from unknown sources that has beenspamming bitcoin exchanges involved thousands of

phantom transactions, forcing at least three of theonline platforms that store bitcoins and trade them fortraditional currencies to shut down

Canadian Flexcoin bank has collapsed after a virtual

bank robbery sharing the recent fate of Japans Mt Gox exchange.
http://articles.economictimes.indiatimes.com/2014-02-13/news/47305078_1_bitstamp-bitcoin-exchanges-bitcoin-foundationhttp://articles.economictimes.indiatimes.com/2014-02-13/news/47305078_1_bitstamp-bitcoin-exchanges-bitcoin-foundation


16/32

Currency Dimensions

Use

Organization of values

Sovereighnty of nation states

People wellfare Stability of economy and relation


17/32

how can these traditional law apply to bitcoin?


18/32

Who is concerned?

Who use it? In the beginning, (hobbyists and mathematicians.

Actually, ordinary people (for legal purchase, no

legal byrden)

ordinary users, miners, and exchanges

And

People seeking to protect privacy cyber criminals and terrorists


19/32

Miners : are they transmitters?

The second category of Bitcoin users

participate in Bitcoin's distributed transaction-clearing process

Compete for the free bitcoins that are awarded at random to one

miner every 10 minutes


20/32

Exchangers

exchange firms help users convert between bitcoins andtraditional currencies.

These companies qualify as money-transmittingbusinesses and are therefore subject to applicableregulations

Bitcoin exchanges need to register as money-transmitting services with the relevant state or federalauthorities and comply with regulations governingmoney-transmitting services

That may not be easy

leading Bitcoin exchange, Mt.Gox, is currently located inJapan


21/32

Iowa State HackedTo Mine Bitcoins

2014- the university identified several separateservers that were involved in the attack and said thatthey were compromised specifically to mine Bitcoins.

M l d i


22/32

Money laundering

Forcing the Bitcoin network to comply with locallaws are likely to fail

Outlawing the cryptocurrency or shutting down

networks wont work It will continue to operate in other jurisdictions

difficult to unmask the parties to transactions within theBitcoin economy

complete ban would be a waste of time


23/32

Problems

Counterfeiting (in the context of digital money itsthe double spending

problem)

Bitcoins solution: use of blockchain


24/32

The cost of trust: Regulating and transferring

Stable economic growth

Redistribute wealth

Reduce unemployment

Finance deficit Minimizing the risks (threat of frauds)

trusted third parties

Central banks

Financial intermediaries


25/32

No official backing

Based entirely on faith

Similar to fiat currency

Spent wherever a merchant accepts them

Costs of doing business is reduced Small value transactions are possible

No payment reversal


26/32

Few merchants accept bitcoin

NGO accept donation (wikileaks)

Hacker group Lulz security

Bitcoin exchange (conversion of bitcoins to fiatcurrencies)


27/32

Some nation reaction

bitcoin is evolving from an amateur hobby to therealm of professional finance

bitcoin was appealing to criminals and could do

damage to the U.S. economy China and Thailand have banned the money

Americans May be left holding the bag on avalueless currency.?


28/32

Money in legal frameworks


29/32


30/32


31/32

Backing criminal activities?

Money laundering

Tax evasion

Sale of stolen credit cards

Funding of online gambling (in jurisdiction where itis prohibited)

Purchase pf drugs online (silk road marketplace=TOR. It accepts only bitcoins


32/32

Thanks for your attention

Documents

Bitcoin in Lebanon