Count 1 of the indictment of the 12 Russian GRU officers (conspiracy to commit an offense against the United States) begins with “In or around 2016, the Russian Federation (“Russia”) operated a military intelligence agency called the Main Intelligence Directorate of the General Staff (“GRU”). The GRU had multiple units, including Units 26165 and 74455, engaged in cyber operations that involved the staged releases of documents stolen through computer intrusions. These units conducted large scale cyber operations to interfere with the 2016 U.S. presidential election.”
Mr. Mueller and his team are exceptional prosecutors and lawyers. Every word and phrase in a Special Counsel indictment has meaning. So to begin this indictment with “the Russian Federation” is telling.
And Count 10 – conspiracy to commit money laundering – is a text-book example of using bitcoin to fund criminal activity. Paragraphs 57 to 62 of the indictment provide the details:
“… the Defendants conspired to launder the equivalent of more than $95,000 through a web of transactions structured to capitalize on the perceived anonymity of cryptocurrencies such as bitcoin. Although the Conspirators caused transactions to be conducted in a variety of currencies, including U.S. dollars, they principally used bitcoin when purchasing servers, registering domains, and otherwise making payments in furtherance of hacking activity. Many of these payments were processed by companies located in the United States that provided payment processing services to hosting companies, domain registrars, and other vendors both international and domestic. The use of bitcoin allowed the Conspirators to avoid direct relationships with traditional financial institutions, allowing them to evade greater scrutiny of their identities and sources of funds. All bitcoin transactions are added to a public ledger called the Blockchain, but the Blockchain identifies the parties to each transaction only by alpha-numeric identifiers known as bitcoin addresses. To further avoid creating a centralized paper trail of all of their purchases, the Conspirators purchased infrastructure using hundreds of different email accounts, in some cases using a new account for each purchase. The Conspirators used fictitious names and addresses in order to obscure their identities and their links to Russia and the Russian government.”
And the defendants (are alleged to have) not only bought bitcoin, but earned it through mining:
“The Conspirators funded the purchase of computer infrastructure for their hacking activity in part by “mining” bitcoin. Individuals and entities can mine bitcoin by allowing their computing power to be used to verify and record payments on the bitcoin public ledger, a service for which they are rewarded with freshly-minted bitcoin. The pool of bitcoin generated from the GRU’s mining activity was used, for example, to pay a Romanian company to register the domain dcleaks.com through a payment processing company located in the United States. In addition to mining bitcoin, the Conspirators acquired bitcoin through a variety of means designed to obscure the origin of the funds. This included purchasing bitcoin through peer-to-peer exchanges, moving funds through other digital currencies, and using pre-paid cards. They also enlisted the assistance of one or more third-party exchangers who facilitated layered transactions through digital currency exchange platforms providing heightened anonymity.”
The indictment is US v 12 Russian GRU Officers Indictment DCDC 18CR00215 7-13-18
(An indictment contains allegations that have yet to be proven in a court of law.)