Amazon Patents Method to Spy On Bitcoin Users, Breaking Anonymity

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The United States Patent and Trademark Office recently awarded a patent on a new technology to the online retailer Amazon. The new patent covers a method that could combine online shopping and tax information with data on Bitcoin users and their transactions. Amazon originally filed for the patent on September 29th, 2014. Using their patented technology, Amazon could offer a service to governments that would correlate tax data with Bitcoin wallet owners, allowing a crackdown on people who have not paid a capital gains tax on Bitcoin earnings.

In the patent application, Amazon goes on to state that their system would not just be able to correlate information about Bitcoin debit card users and their transactions, they would also be able to correlate information about users of any other cryptocurrency. Amazon would, of course, be able to collect more information about users of cryptocurrencies with public, transparent blockchains. Retailers could publish the shipping addresses and cryptocurrency addresses of customers to Amazon’s streaming data marketplace, which Amazon would then sell access to through a subscription service.

This would make Amazon unlike the darknet marketplace vendors, those dealing with online anonymity for all bitcoin transactions. Instead, with this new patent, Amazon would serve as a “streaming data marketplace” that combines information from a variety of sources to help them identify people.

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The information correlated with Amazon’s patented system would be offered to subscribers who want access to the information. One example from the patent application describing how Amazon’s system would be used as “a law enforcement agency may be a customer and may desire to receive global bitcoin transactions, correlated by country, with ISP data to determine the source IP addresses and shipping addresses that correlate to bitcoin addresses.” The United States postal service recruited darknet experts to learn more about illegal darknet weapons and drugs trafficking and Amazon may be helping field agents get one step closer to answers, but at a cost. “The streaming data marketplace may price this desired data out per GB (gigabyte), for example, and the agency can start running analytics on the desired data using the analysis module,” according to sources.

The streaming data marketplace would allow governments and private corporations to share the bulk data they collect on individuals. Like in the example mentioned in their patent application, law enforcement is likely to be a subscriber to Amazon’s streaming data marketplace. Various federal agencies are paying private corporations like Chainalysis for blockchain surveillance and analysis. As a result of similar surveillance help in Europe, Danish authorities have arrested multiple people responsible for drug trafficking on the darknet.

According to documents from whistleblower Edward Snowden, the NSA has been conducting its own blockchain surveillance program since 2013. The United States intelligence community is also particularly interested in finding a way to track more privacy-centric cryptocurrencies.

So far government agencies have trouble tracking any bitcoin transaction, as many users use bitcoin mixers and bitcoin tumblers to clean their coins. Therefore, it is likely such a streaming data marketplace would be of interest to the Internal Revenue Service (IRS). In their quest to catch Bitcoin users who aren’t paying taxes, the IRS has gone after Coinbase for customer information and has paid in excess of $85,000 to Chainalysis and in excess of $65,000 to Flashpoint, both of which are blockchain surveillance and analysis companies.

Besides the IRS, other federal agencies would likely be interested in subscribing to Amazon’s streaming data marketplace. Some of the other agencies that have paid blockchain analysis companies include the Drug Enforcement Administration (DEA), the Federal Bureau of Investigation (FBI), Immigration and Customs Enforcement (ICE), the Department of Homeland Security (DHS), the Department of Treasury’s Bureau of the Fiscal Service, and the Securities and Exchange Commission (SEC).

If Amazon does decide to commercialize their new patent, they would need to rely on retailers who accept cryptocurrencies to begin reporting their customer information to Amazon. It is not known if Amazon will actually go through with creating a streaming data marketplace. It should be noted that many patents get awarded that are never commercialized. Amazon has in the past been awarded patents for creating underground tunnels to transport Amazon packages through, as well as patents for its drone delivery service, Amazon Prime Air, which has yet to be rolled out beyond trial deliveries in a few different locations. It should also be noted that Amazon refused to confirm or deny if they were sharing data collected from customers Amazon Echo devices with the United States government.

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