Month: April 2024

In light of the charges brought against Keonne Rodriguez and William Lonergan Hill for their alleged operation of Samourai Wallet, I believe it is important for Bitcoiners to assess the current state of things. Too much of the discourse in Bitcoin today is simply lip flapping from state-sponsored hypnotists pushing intelligence-captured infrastructure rails as scaling solutions while manufacturing consent for transaction censorship and treasury centralization within the very private sector institutions that profiteered from the manufactured economic crises of the 21st century. Toxic maximalism in 2024 means cheering for U.S. dollar stablecoin issuers despite their recent onboarding of the Secret Service and the FBI, much like it meant celebrating the arrests of TornadoCash operators simply for being “shitcoiners.” It couldn’t happen here, no, not on Satoshi’s protocol. “Bitcoin is decentralized,” the hypnotists preached, and the issues concerning state regulation brought up by a small minority of maximalists were ignored en masse for further false prophet sermons simultaneously pushing the hypocritical imminent hyperinflation of the dollar and their dollarcoin as a human rights tool.

But this isn’t just another op-ed about my disdain for stablecoins. This is a wake up call. A wake up call for every one of you in Bitcoin to rub the All Time High-grains of six figure-sand out of your eyes and take a look around. How did we get here? How have we spent the last year arguing about what constitutes spam, and ethical use of Bitcoin, while completely ignoring the encroaching regulatory moat? There were more than enough signs. There were more than enough warnings. Congress is putting together drafted legislation for further internet regulation, stablecoin bills, social media application bans, while the state continues to redefine in real time what a cryptocurrency even is.

Bitcoin is a database. Bitcoin is speech. Bitcoin is code. Bitcoin isn’t money, and it certainly isn’t money under the jurisdiction of the United States. The compliance-driving hypnotists will tell you we must ask permission from our local governing offices for an embracement of bitcoin. So that we can pay our taxes in bitcoin and service our legal debts. Samourai Wallet didn’t operate a money laundering service, and certainly not a money transmitting business. They wrote code. Code that users across the globe, within a myriad of legal jurisdictions, utilized to exchange certain alphanumeric strings of data over the internet. The Bitcoin protocol is incapable of transferring criminal proceeds between parties due to UTXO destruction being a function of every spend. Satoshis do not exist, despite clever claims from both degenerate Ordinalstans and the DOJ’s regulatory arms. They are completely and utterly consumed during each transaction, and reborn bearing zero resemblance to where the entities actualizing blockchain heuristics claim they have came.

The United States Attorney for the Southern District of New York claims Samourai has executed over “$2 billion in unlawful transactions” while facilitating “more than $100 million in money laundering transactions.” This accusation contains a complete misunderstanding – not to mention a simply unconstitutional reframing – of what a Bitcoin transaction is and how it should be treated by our elected officials. Writing code is not a crime. Even when said code was written with the express purpose to enable the committing of a crime, the criminal action takes place when actualizing said intention, not at the onset of the authoring or even distribution of the code. Code is speech. Distributing code is an expression between parties of bytes reduces to bits, to ones and zeroes. Any precedent that establishes anything other than this is in direct violation of the first amendment, and further more, against the should-be-obvious natural code of freedom of expression.

There are PLENTY of ways that Bitcoin the network can spread itself across the globe, and how bitcoin the asset can monetize to astronomical heights without bringing an ounce more freedom to the populous of the world. Bitcoin’s definition has been gaslight by the hypnotists to be within the purview of the regulatory moat, and thus Bitcoin is in dire need of a redefinition. Bitcoin was never about dollar denominated value, it was never about perpetuating the UST market via Treasury-backed tokens utilized by captured on and off ramps. Bitcoin was never about embracing the state and the furthering of the reach and influence of the psychopathic criminals obsessed with changing the definition of speech and expression, of code and of numbers. We sat and watched the bookkeepers take their red felt pen and change the meaning of words, slowly bringing the frogs and their dictionaries to a boil, while taking shelter under the false pretense of an immutable ledger – misunderstanding the legal and rhetorical structure of that ledger itself was being reconstituted at its foundation.

Bitcoin is a tool of empowerment and Bitcoin is for enemies. Well, now our enemy, the state, is empowered, and their regulatory goons are barking like wolves at the gate. We must stay clever, and arm ourselves with the rhetoric needed for the oncoming onslaught against those that dare to build tools that threaten the spellings of the state.

Writing code is not a crime.

Whispering numbers to a loved one cannot be redefined as a criminal act.

Bitcoin is not money, but just a ledger.

A database.

Free Samourai. 

In a significant development, Keonne Rodriguez and William Lonergan Hill, founders and CEO of the privacy-focused Bitcoin wallet and mixer, Samourai Wallet, have been arrested and charged with money laundering and operating an unlicensed money transmitting business. The U.S. Department of Justice (DOJ), Southern District of New York, announced these charges today following an extensive investigation into their activities.

JUST IN: 🇺🇸 US DEPARTMENT OF JUSTICE ARRESTS POPULAR #BITCOIN MIXER SAMOURAI WALLET FOUNDERS AND CEO, CHARGED WITH MONEY LAUNDERING pic.twitter.com/8qyMBGRBjL

— Bitcoin Magazine (@BitcoinMagazine) April 24, 2024

The charges stem from allegations that Rodriguez and Hill, through their company Samourai Wallet, facilitated over $2 billion in unlawful transactions and allegedly laundered more than $100 million in criminal proceeds. This activity primarily involved transactions from illegal dark web markets, as well as schemes to defraud decentralized finance protocols, the DOJ stated. The defendants are accused by the DOJ of developing, marketing, and operating a bitcoin and cryptocurrency mixer that provided a platform for criminals to engage in large-scale money laundering.

“$2 billion in transactions with an unlicensed money transmitter means $2 billion flowed without any oversight, from whomever to wherever. Because of the company’s disregard for regulation, it’s alleged that Samourai Wallet laundered more than $100 million in criminal proceeds,” stated IRS-CI Special Agent in Charge Thomas Fattorusso. “Special Agents with IRS:CI New York and IRS:CI LA’s Cyber units worked with our federal and international law enforcement partners to not only arrest the founders and CEO, but to also seize their domain. Samourai Wallet is now closed for business.”

The coordinated effort by law enforcement agencies led to the arrests of Rodriguez and Hill. Rodriguez was apprehended in the Western District of Pennsylvania, while Hill was arrested in Portugal based on the U.S. criminal charges. The United States plans to seek Hill’s extradition to stand trial in the country.

“As alleged, Keonne Rodriguez and William Lonergan Hill are responsible for developing, marketing, and operating Samourai, a cryptocurrency mixing service that executed over $2 billion in unlawful transactions and served as a haven for criminals to engage in large-scale money laundering,” said U.S. Attorney Damian Williams. “Rodriguez and Hill allegedly knowingly facilitated the laundering of over $100 million of criminal proceeds from the Silk Road, Hydra Market, and a host of other computer hacking and fraud campaigns. Together with our law enforcement partners, we will continue to relentlessly pursue and dismantle criminal organizations that use cryptocurrency to hide illicit conduct.”

Furthermore, in collaboration with authorities in Iceland, Samourai’s web servers and domain were seized, along with a seizure warrant served on the Google Play Store for the Samourai Wallet mobile application. This action ensures that the application is no longer available for download in the United States.

FBI Assistant Director in Charge James Smith concluded: “Threat actors utilize technology to evade law enforcement detection and create environments conducive to criminal activity. For almost 10 years, Keonne Rodriguez and William Hill allegedly operated a mobile cryptocurrency mixing platform which provided other criminals a virtual haven for the clandestine exchange of illicit funds, the facilitation of more than $2 billion in illegal transactions, and $100 million in dark web money laundering. The FBI is committed to exposing covert financial schemes and ensuring no one can hide behind a screen to perpetuate financial wrongdoing.”

Originally published on Unchained.com.

Unchained is the official US Collaborative Custody partner of Bitcoin Magazine and an integral sponsor of related content published through Bitcoin Magazine. For more information on services offered, custody products, and the relationship between Unchained and Bitcoin Magazine, please visit our website. 

As a bitcoin miner, you have a lot to manage, from seeking out inexpensive electricity, to constructing facilities, to acquiring rigs and building a knowledgeable team that can keep them hashing. In speaking with mining companies over the years, we know that bitcoin custody is often an afterthought.

Here we’ll describe the process of securing your mined bitcoin in self-custody while managing a bitcoin treasury, CapEx, OpEx, OpSec, LP distributions, taxes, and more. Given the ever-present risks of hacks and suspended withdrawals, our goal is to explain the benefits and trade-offs of various approaches to bitcoin self-custody—regardless of the size of your operation.

Bitcoin self-custody considerations for miners

There are unique challenges miners face with self-custody in comparison to other types of bitcoin holders:

Miners receive a high frequency of incoming deposits from mining pool payouts, which can increase transaction costs due to UTXO bloat (more on this below).Some portion of mined bitcoin must be sold to cover overhead.

Other challenges are similar to that of other businesses that hold bitcoin:

Businesses may not have the in-house expertise needed to set up self-custody securely while minimizing complexity.Businesses generally have multiple operators and desire distributed control over bitcoin funds.Businesses want to minimize counterparty risk while eliminating the risks of malware, user error, storage media decay, phishing, physical attacks, and other security risks.

In all cases, holding the private keys to your organization’s bitcoin should be prioritized. As we’ll explain next, multisig can enhance the security of your bitcoin regardless of your organization’s size. While the details of your setup may vary, multisig helps to address many of the above concerns while allowing your bitcoin to touch exchanges only when necessary (e.g., for OpEx/CapEx).

Upgrade your Bitcoin security and get access to exclusive discounts on Unchained financial services. Visit our website to learn more.

Why miners need multisig

Better security than singlesig

Singlesignature (singlesig) wallets—controlled by a single key secured by a Trezor or Ledger hardware wallet, for instance—improve security, reduce counterparty risk, and remove exchanges as a single point of failure. With singlesig, however, your bitcoin is put at risk if a hardware wallet or seed phrase is lost or compromised. Just one or the other, in the wrong hands, could lead to permanent loss of funds.

Multisignature wallets, on the other hand, enable you to store bitcoin in a wallet controlled by multiple keys. They increase your security by ensuring more than one of those keys, held in different locations, are required to sign a transaction. If set up correctly, multisig can eliminate all single points of failure. For a miner, this means removing the risk of a single rogue employee moving funds, and creating redundancy so that the loss of a single hardware wallet or seed phrase cannot lead to a critical loss of funds.

Eliminates exchange custody risk

Exchanges can be a convenient place to send newly-mined bitcoin. They allow you to easily exchange bitcoin for your local fiat currency before sending funds to a linked bank account, and they even take care of things like UTXO management. In bitcoin, however, there is always a price to pay for convenience. The risks and potential downsides of using an exchange for key storage are numerous—the fact that they can cut you off at any time and the possibility of hacks and insolvency are only the beginning.

Flexibility to achieve an ideal balance of security and complexity

A 2-of-3 multisig quorum has three total keys where two are required to spend, which keeps your bitcoin secure even if one key is compromised. Many mining firms find that 2-of-3 multisig is the perfect setup for their corporate treasury because no single individual can compromise the entire treasury, while sending out LP payouts and monthly expenses is still kept straightforward (only two signatures required).

Higher-quorum multisig (e.g., 3-of-5, with five total keys and three required to spend) adds more keys and typically more individuals to the equation. This can technically improve the security of your bitcoin wallet in some cases—but also dramatically increases complexity. We wrote a comprehensive article explaining why this is the case, but for the purposes of this article, you just need to know the sweet spot for most individuals, organizations, and mining operations tends to be 2-of-3.

Fault-tolerance of a typical 2-of-3 multisig collaborative custody setup compared to a seedless 3-of-5 setup

The benefits of collaborative custody

When using multisig for your mining company’s treasury, you might also benefit by including an institution (like Unchained) to hold one of three keys for your multisig setup.

In addition to the enhanced security that multisig provides, collaborative custody can also help with:

Reduces the number of physical items (hardware wallets and seed phrases) you need to secure.Active monitoring over suspicious activity like unauthorized transaction signatures or account loginsA partner that can help your team recover the wallet in the event where one of your keys has been lost or compromised.

Wallet management

Managing mining pool payouts

Every miner needs to make decisions on security, transaction cost, and counterparty risk when deciding which type of wallets to use for their newly mined bitcoin.

Below are four example workflows that may help you determine which model is the best for your mining operation.

Workflow #1: Mining pool payouts sent to a singlesig wallet

In this popular workflow for smaller mining operations, you receive mining pool payouts directly to a singlesig wallet controlled by a single operator. Funds that need to be sold can then be sent to an exchange, while funds to be stored long-term are sent to a multisig wallet.

Workflow #2: Mining pool payouts sent to a multisig wallet

This workflow is the same as the workflow described above, except that mining pool payouts are sent to a multisig wallet instead of singlesig. A second multisig wallet is required for the corporate treasury.

Sending bitcoin payouts direct to multisig maximizes security throughout the workflow, but requires two people to approve each transaction to the exchange and treasury. As such, it is better suited for larger mining operations.

“With multisig you’re paying higher fees to remove counterparty risk.” – Griffin Haby, Mountain Lion Mining

Workflow #3: Split payouts from the mining pool

Some mining pools allow miners to split payouts between two or more accounts. In this workflow, we show automating the payout process to send a fixed percentage directly to cold storage, and the rest to an exchange to sell to cover overhead.

Workflow #4: Mining pool payouts sent to an exchange

In this workflow, bitcoin is mined directly to an exchange. This is far more convenient for the purposes of UTXO and fee management purposes, and allows immediate liquidation of funds, but leaves bitcoin in the most vulnerable state for the longest amount of time, with high counterparty risk.

Maintaining multiple fund buckets

Even within the above high-level approaches to bitcoin security, you may want to further separate wallets for separate purposes, like distributions, operating expenses, or corporate treasury. Keeping these buckets of bitcoin cryptographically separated from each other will make it far easier to keep track of your operation from a tax and accounting standpoint—and much easier to ensure those long-term satoshis aren’t being used for overhead!

Managing transaction fees

Miners are typically more concerned with collecting transaction fees from other users. However, when managing your bitcoin mining wallets, the fees you pay when sending bitcoin—whether to an exchange, cold storage, or investors/partners—should also be considered.

As we described in a previous article, bitcoin transaction fees depend on how congested the bitcoin network is at any given time and how much data is being processed in a transaction. One of the key factors behind the data size of a transaction is the number of UTXOs involved. Our article on the problem of too many UTXOs is a good primer on UTXO consolidations, payout thresholds, and how bitcoin transaction fees are calculated.

As a miner, there are four main ways you can reduce your transaction costs:

1. Increase payout thresholds from mining pools

If you use a mining pool, and take a high frequency of payouts, it’s going to result in a lot of small UTXOs in your destination wallet, which could be expensive to spend when the time comes.

To mitigate this, you can increase your pool payout threshold to reduce the number of deposits being made to your wallet (and therefore reduce the wallet’s UTXO count). This method is especially useful for future fee mitigation if you are pointing your payouts directly to a multisig wallet (which requires more data to make a transaction than a singlesig wallet).

2. Manually consolidate your UTXOs

You can further reduce the number of UTXOs in your wallet by periodically consolidating. This is a relatively simple process; you just need to author a transaction containing the UTXOs you wish to consolidate, and send them back to yourself. You can learn more in our article covering strategies to manage too many UTXOs.

3. Set a low fee…and wait

Block space is limited by design—the higher the demand for space (increased quantity of transactions), the higher fees will be. If you don’t need a transaction to be processed immediately, consider setting a lower fee rate than recommended at the time of sending. This makes the transaction take longer to process, but can help you avoid paying excessive fees during periods of high demand.

At any given time, there is a minimum fee rate the mempool is willing to accept. Typically, this stays between one to three sats/vbyte. Current fees can easily be viewed on most block explorers, such as mempool.space.

4. Batched spending

Miners who need to send multiple payments at the same time can reduce transaction fees by sending them all at once using a transaction method called batching. This method of consolidating multiple payments can be performed with many popular bitcoin wallets (such as Bitcoin Core, Electrum, or BlueWallet) and can be helpful for LP distributions or any other time you need to make multiple transactions at once.

Key management

Identify your keyholders

When your company decides to hold the keys to its bitcoin you will need to determine who at the company will physically hold the keys.

The goal is to distribute control over keys and seeds evenly. This gives no one person the ability to sign a transaction or move bitcoin on their own. What this looks like for your organization will depend on your specific circumstances, such as the number of principals, the number of keys, and whether the wallet is for long-term storage or simply distributing control over spends.

In the above example where you’ve decided to use 2-of-3 multisig for your mining operation’s bitcoin treasury (we’d typically recommend this), you might select the company’s CEO and CFO to hold a key each, and a collaborative custody partner to hold the third key.

Properly secure your hardware wallets and seed phrases

There are typically two separate physical items to protect for each of your company’s bitcoin keys: a hardware wallet and a seed phrase. A critical element of implementing a secure multisig model is the geographical distribution of hardware wallets and seed phrases so that no single physical location is a point of failure for your bitcoin.

Seed phrases are worth particular attention because they are a physical and unencrypted copy of your bitcoin private keys. You should always retain seed phrase backups of your keys to reduce the reliance on sometimes finicky hardware wallets.

The location of the hardware wallets and seed phrases should only be known to individuals who will be expected to provide transaction signatures to move bitcoin. Keep in mind: When storing and securing these items, you may want to ensure that no single person at your organization has seen or knows the location of the necessary hardware wallets or seed phrases to spend—so that no single person can compromise your bitcoin treasury.

Ongoing key maintenance

Key hygiene

After you’ve properly stored your hardware wallets and seed phrases, there are a few best practices you should observe to keep the device and data on the device in proper working order:

Keep the firmware up to date: This should be done roughly two to three times a year to ensure your hardware wallets have the best security, newest functionality, and will work to sign transactions when you need to.Perform key checks: At regular intervals, check that your hardware wallets are functional and check the physical security of your seed phrases. We recommend this should be done roughly four times a year.

Changing key holders

When a key holder leaves your mining operation, you should always replace their key as soon as possible. Don’t simply hand over the old key to a new key holder—that would be a a potential security hole. Even if the original key holder can be trusted and left in good standing, replacing the key reduces the risk that unauthorized signatures will be performed or attempted in the future.

Key replacements

To replace a key, you will need the new key holder to generate a new key, (if using multisig) create a new multisig wallet with the new quorum, and then (carefully) send all the company’s bitcoin to the new wallet.

If you’re using collaborative custody with Unchained Capital, our platform can safely guide you through the key replacement process. If you’re not using a collaborative partner, we’d recommend having someone technical on hand to help with the process.

For Unchained Capital clients needing help with key replacements, reach out to your dedicated account manager or client services.If you are unsure whether or not you need to perform a key replacement, or if you would like to learn how key replacements for multisig work technically, you can refer to this article.

Other considerations

Bitcoin mining and taxes

Bitcoin miners are responsible for understanding and abiding by local and federal tax regulations. Taxes and accounting as they pertain to bitcoin mining are beyond the scope of this guide, but they are relevant considerations and you should consult with an accountant or tax professional to learn more.

For US-based miners, Unchained’s Head of Legal Jeff Vandrew briefly touched on the topic of mining and taxes in his piece covering what you need to know about bitcoin mining, IRAs, and taxes:

If a taxpayer obtains bitcoin through mining, they must recognize income in the amount of the fair market value in U.S. dollar terms of the bitcoin received on the date of receipt. That recognized income is subject to income tax at ordinary income tax rates. On top of income tax, the taxpayer may also be subject to self-employment tax.

Get $100 off Unchained IRA and receive 1-year free of Bitcoin Magazine Pro market research ($250 value). Visit unchained.com and enter code “btcmag” at checkout.

Selling bitcoin

If you do need to convert bitcoin to your local currency to pay bills, taxes, or cover overhead, you may want to expedite the process by setting up an exchange account and linking an active bank account. Some exchanges can take days or weeks to approve new accounts, so plan accordingly, especially if you are up against a deadline like paying an invoice, payroll, or taxes.

Unchained Capital can help facilitate the purchase or sale of bitcoin straight to or from a multisig vault, within certain limits, for companies and individuals in the U.S. that reside in a state where our trading desk is active.

Collateralizing your bitcoin

Securing your bitcoin with a collaborative custody partner like Unchained Capital means you can easily use that bitcoin to access liquidity to reinvest in your mining operations—without ever selling your bitcoin. For more detailed information on bitcoin collateralized lending, visit unchained.com/loans.

Let Unchained Capital be your guide

Whether it be the daunting task of managing fees, advice on how to structure your bitcoin custody workflow, or access to a trading desk to buy and sell bitcoin, we’re here to help. Our multisig vaults for business give your organization complete control over your bitcoin while providing a trusted partner to guide you and your team through setup and to help with key replacements and wallet recovery if and when necessary.

Originally published on Unchained.com.

Unchained is the official US Collaborative Custody partner of Bitcoin Magazine and an integral sponsor of related content published through Bitcoin Magazine. For more information on services offered, custody products, and the relationship between Unchained and Bitcoin Magazine, please visit our website. 

The Open Source Justice Foundation is a 501(c)(3) tax-exempt public charity dedicated to spreading access to justice globally through open-source protocols and technology. Learn more about OSJF’s work at opensourcejustice.org.

Most people in the world are denied access to justice. An estimated four billion people live outside the protection of the law. Fifty-four percent of the world’s population lives under some form of authoritarian rule. And even in relatively stable democracies, the justice gap between low- and high-income earners is well documented.

The state has failed to provide courts that offer equal justice to all.

This is not a secret. For decades, politicians, lawyers, and charities have publicly decried the lack of affordable and accessible legal services. But politicians’ solution has been to simply funnel more taxpayer money into the failing court system. Lawyers continue to lobby for restrictive licensing requirements on the practice of law, jealously guarding their monopoly over justice. Legal aid charities do not exist to change this system, but to work within it. For these groups, “access to justice” means a wider door on the courthouse. They have no incentive to fundamentally alter the state-based justice system, a system that directly benefits them.

Those with the incentive to enact meaningful alternatives to this broken system are those that are excluded from it. These individuals and communities must take justice into their own hands. They should be empowered to resolve their own disputes peacefully and voluntarily without resort to the state, and guided by their own norms and standards of acceptable social conduct. Only once justice ceases to be the exclusive domain of the state can it spread freely to all.

Private, Alternative Dispute Resolution (ADR) systems and Online Dispute Resolution (ODR) technologies have the potential to drastically increase global access to justice. But the transformative power of conventional ADR and ODR tools are hindered by proprietary software licenses that shield source code from view. Without a way for users to verify the operation of these black-box solutions, they suffer from perceptions of unfairness or bias, which disincentivize use. And such closed-source licenses prevent communities from modifying the ODR tools to fit their specific needs.

By taking conventional ADR and ODR designs, however, and deploying them through free open-source software and protocols, communities and individuals can harness the full potential of these private dispute resolution systems. The result is Open Source Justice.

The tenets of the free and open-source software (FOSS) movement are aligned with the goal of advancing equal access to justice. FOSS is permissionless, inclusive, transparent, and anti-discriminatory.

Consider Richard Stallman’s four essential freedoms for open source software:

The freedom to run the program as you wish, for any purpose.

The freedom to study how the program works, and change it so it does your computing as you wish. Access to the source code is a precondition for this.

The freedom to redistribute copies so you can help others.

The freedom to distribute copies of your modified versions to others. By doing this you can give the whole community a chance to benefit from your changes. Access to the source code is a precondition for this.

Freedom 0, the freedom to run a program for any purpose, embodies respect for the choices and sovereignty of others. Sovereign communities should be free to set their own norms and values, and decide for themselves how disputes should be resolved consistent with those norms and values.

Freedom 1, the freedom to access, study, and change source code, is essential to empowering sovereign individuals and communities to make those choices for themselves. This freedom further embodies the value of transparency, which is necessary for any dispute resolution system to gain legitimacy, trust, and perceptions of fairness.

Freedom 2, the freedom to redistribute copies to help others, will accelerate the spread of ODR and ADR tools to those jurisdictions where justice is lacking or diminished.

Freedom 3, allowing modification and redistribution of modified software, allows communities to adapt dispute resolution tools to fit their circumstances and values. It also allows communities that have created their own open-source dispute resolution systems to share their tools with other similarly situated or sympathetic communities — again accelerating access to justice.

The FOSS movement places user freedom above all else. The user should be in control of the software, the software should not control the user.

Likewise, the Open Source Justice movement places the disputant’s freedom above all else. While communities should be empowered to define their own concepts of justice and design their own procedures for provisioning that justice, individuals must be given the choice to opt in to their chosen justice system. Voluntaryness and non-coercion are hallmarks of Open Source Justice.

This is a call to all developers, lawyers, entrepreneurs and other stakeholders interested in real access to justice to devise, build, and support new ODR and ADR systems consistent with the values of the FOSS movement.

Join the Open Source Justice movement today.

Edward Snowden has called the recent renewal of FISA 702, “the biggest encroachment on your privacy rights since the Patriot Act.”

In the middle of the night, in secret, the US Senate voted to renew FISA Section 702 as a part of a broader bill called the Reforming Intelligence and Securing America Act (RISSA) H.R.7888.

The bill had passed through the House the week prior and was set to be voted on Wednesday but the vote was delayed. As Friday came and went, it appeared that we, the People, might have another weekend to rally against the Senate vote.

Alas, Americans woke up Saturday morning to find that the vote had taken place overnight and was signed into law over the weekend.

Mainstream Media would have you believe that the bill is vital for National Security and that the United States was in immediate and dire need of warrantless spying powers. The NY Times published an article titled, “Government Surveillance Keeps Us Safe.”

There is, of course, much more to the story.

Many members of the Senate were told by the House Intelligence Committee that the urgent vote was vital for national security but they were not told that FISA had already granted approval for Section 702 surveillance to continue until April 2025, even if the bill expired. The vote was held under the pretense of a blatant lie.

Warrantless spying not only lives on, it expands.

Liza Goitein is the Co-Director of the Liberty and National Security Program at the Brennan Center for Justice and has been following the renewal closely.

The bill didn’t just renew the FISA provision, which provides targeted warrantless spying powers to the administrative state, it also greatly expanded those powers by changing a few key definitions.

The amended provision will allow the government to require everyday Americans and regular businesses to spy on fellow citizens, effectively turning everyone into a spy. With the new provision in place, FISA courts can now compel anyone with access to communications equipment to cooperate with the NSA in collecting messages and communications. Previously the statute only authorized the collection of data and communications stored by U.S. internet service providers like Google, Facebook and Microsoft or telecom providers such as AT&T and Verizon.

With the new rules in place, nearly anyone, with few exceptions, can be compelled to access and turn over your data, giving US intelligence agencies extensive new powers.

Senator Ron Wyden, addressing the Senate floor, points out that the new powers could “for example, by forcing an employee to insert a USB thumb drive into a server at an office they clean or guard at night.”

It must be considered how bitcoin and crypto companies could now be compelled to turn over full access to their records of every transaction ever facilitated. While such access already exists under BSA regulations there are still some checks and balances in place providing transparency to the process. This is not the case within the FISA court process. Furthermore, a case potentially could be made that the new regulations define node runners as facilitators of communication, opening up anyone running a bitcoin node to the threat of participation with the secret courts.

The RISAA renewal of FISA Section 702 not only abolishes the Fourth Amendment rights of US Citizens, it is also being used to bypass First Amendment rights. A report from 2023, for example, showed that the FBI used Section 702 to spy on protestors and journalists. And that the FBI abused the authority of Section 702 over 300,000 throughout 2020 and 2021.

The Foreign Intelligence Surveillance Act of 1978, FISA, was originally enacted to “provide judicial and congressional oversight of foreign intelligence surveillance activities while maintaining the secrecy necessary to effectively monitor national security threats.” BJA

The USA Patriot Act, first passed in 2001 and reauthorized in 2006, expanded FISA to allow the government to obtain the personal records of ordinary Americans from libraries and Internet Service Providers, even when they have no connection to terrorism.

Section 702 is a key provision of the FISA Amendments Act of 2008.

The 2024 renewal of FISA Section 702 extends the provision for two years, under the new definitions. It’s vital that anyone who cares about their right to privacy or about our First and Fourth Amendment rights as citizens of the United States make their voices heard so that when the time comes to renew the act, it cannot be done in the shadows of the night.

This is a guest post by Michelle Weekley. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Company Name: Unchained

Founders: Joe Kelly and Dhruv Bansal

Date Founded: October 2016

Location of Headquarters: Austin, TX

Amount of Bitcoin in Treasury: Not disclosed

Number of Employees: 107

Website: https://unchained.com/

Public or Private? Private

Joe Kelly and Dhruv Bansal started Unchained with one main objective: to provide financial services to people like themselves — long-term bitcoin holders. Since 2017, when Unchained launched its first product, a lending desk that allowed customers to borrow US dollars against their bitcoin, the company has developed into a full-on financial services company for Bitcoiners who value holding their private keys.

Unchained now offers a suite of services and products, including multsig vaults for both individuals and businesses, a bitcoin trading desk, a bitcoin IRA and inheritance planning for bitcoin. Where Unchained really shines, though, is not just in how it helps clients safely secure their bitcoin, but in how it guides them through the process of doing so. It has a Concierge Onboarding team that walks clients through the often vulnerable process of setting up a multisig vault.

“We really like being a navigator,” Kelly told Bitcoin Magazine. “We’re not authoritative, like ‘You should do that.’ We’re the guide. We’re here to help show you ‘Here’s a map. Here’s a couple of trails you could take up the mountain. Pick your way, and if you need somebody to be your sherpa up one of these trails, we’ll do that for you.’”

I sat down with Kelly to learn more about the philosophy that underpins Unchained’s approach, the company’s history and how it’s established itself as one of the most trusted financial service providers in the Bitcoin space.

A transcript of our conversation, edited for length and clarity, follows below.

Frank Corva: How did you and your co-founder Dhruv Bansal meet?

Joe Kelly: Craigslist. I was an undergraduate college dropout looking for my next opportunities, and Dhruv was in grad school. His department, the physics department, was looking for a new website. They posted the gig like, “Hey, come build a website.” I was like, “Maybe I want to start a web development firm.” So, I came in to meet him at the center for nonlinear dynamics, which is chaos theory. I told Dhruv I’d always been hyper curious about this field of study. That’s been an enduring part of our relationship, our shared curiosity about complexity science. We started building the company after that.

Corva: So, you’re an autodidact. Are you the type that will seek out mentors or do you just read everything you can find on a topic until you understand it thoroughly?

Kelly: It’s a mix. Like a lot of humans, I can just go with intuition versus deriving knowledge from a book. I wish I’d had more mentors. Over the last decade plus, I’ve been thrown into the deep end of being a CEO. I’ve had to learn a lot on the job.

Corva: What have been some of the hurdles that you’ve surmounted with Unchained since you founded it in 2016?

Kelly: One of the things that excited me most with Unchained early was that it felt like a very contrarian bet in a couple ways. Back in 2016, all the VC funding was about “We’re not sure about this Bitcoin thing, but blockchain is the real technology.”

But Dhruv and I looked at people like us that held bitcoin for the long term and felt that we were the customer we wanted to serve: the long-term bitcoin holder had sort of no financial services advocate for them, no trusted institution that worked with them in a healthy way.

Then it was feedback like, “Well, what about these other coins? Or why don’t you lend out the bitcoin like BlockFi is doing and increase your revenues?” Saying no to those things was also contrarian. Principally, we said, “No, Bitcoin. Bitcoin is it. Bitcoin is enough.” The idea of lending out bitcoin was popular, but I’m really grateful we didn’t do that. Otherwise, we would have risked our fate like everyone else.

We were willing to be unpopular, stand alone and be underfunded compared to competitors for a lot of our early history. That changed, thankfully, with partnerships like NYDIG, who led our series A in 2021. That put us more on the map of having money, having resources and looking like we knew all along that we were going to be right.

Corva: So, is the long-term bitcoin holder the typical Unchained user?

Kelly: Yeah, that core sweet spot is that the individual long-term bitcoin holder who gravitates to self-custody because they’re already doing it or wants to work with somebody that helps them feel comfortable doing it.

Now, some of our core sweet spots are those people’s businesses or their trusts. Unchained is one of the few places that enables you to onboard a trust while you can still hold your keys. It’s not like you give them up to some third-party custodian to get those benefits.

Corva: Which products are currently your most popular?

Kelly: Unchained Vault is the bread and butter product that most every client uses. 95% of all clients have a vault that’s either a personal or business account.

More than a third of our clients have IRAs with us now. That’s been one of our faster growing product lines over the last year or two.

Loans are taken by some percentage of clients, but not everyone.

Trading really couples well with a vault. Increasingly, a bigger portion of the client base uses our trading desk, as well.

Click the image to get $100 off Unchained IRA.

Corva: When I think of Unchained’s approach, the two words that come to mind are “security” and “service.” You have a concierge service to help onboard clients and I’ve heard you talk about how important security is when it comes to storing the bitcoin that clients lend to you. Did you know that security and service would be at the center of what you do since the beginning?

Kelly: Security was there at the foundation early on. And I was on the front lines answering customer inquiries in our first year or two. We had a culture of really taking care of clients as much as possible when our main product was lending.

As we launched the vault product in 2019, part of what unlocked that product for us was the Concierge Onboarding product, which brings clients through the process of initializing the hardware wallets and getting set up with the multisig vault. That interaction is led by someone on our team, which is a big trust building opportunity.

While someone is making a backup of their private key in a live session — off camera, of course — going through those really vulnerable, private steps of initializing [their multsig vault], they’ve got an Unchained representative on the other side coaching them through it, answering any questions and making them feel comfortable. So, yeah, I think you nailed it when you said that security and service come together at Unchained.

Corva: Do you find it harder to convince people to use Unchained now that the spot Bitcoin ETFs are live and more convenient investment vehicles?

Kelly: The ETF does a great job in growing overall awareness for Bitcoin, creating more legitimacy around the asset for those that might have been on the fence. We haven’t seen it cloud or affect our client onboarding funnel. That still runs at a full pace like it was pre-ETF and has even been accelerated since the ETFs launched earlier this year.

One of the most effective elements of our sales approach is the army of Bitcoiners out there that don’t work at Unchained but encourage everyone to practice self custody. People sometimes come to us because they feel the peer pressure of “Hey, you know, I’ve been going to Bitcoin meetups, and I know I need to get my base for self custody.”

Also, over the last two years, the median age of our clients has gone up. More members of the Boomer generation have been holding bitcoin. Maybe they’re two or three years into the space after buying in 2020-21 and like “Alright, now I’m ready to do this. I’ve been through the trough and some of the peak and I’m going to hold this for a decade or more. Let me finally get self custody figured out.”

Corva: It sounds like you’re quite in touch with what customers want. I’ve also read that you pay close attention to customer feedback and factor it into your approach at Unchained. Can you give an example of a product you’ve created based on customer feedback?

Kelly: One example is last year in Q4 we launched Sound Advisory, which is our Registered Investment Advisor affiliate. The thinking behind that came out of customers that would come in for a Concierge Onboarding and talk to one of our frontline people. One of the last questions they would ask was, “Do you know anybody that can give me financial advice for my bitcoin? I can’t talk to my traditional financial advisor, but I’m nearing retirement age and I’m thinking about when I might want to sell some bitcoin or whether I want to get a loan against my bitcoin.”

People want to think through those decisions practically. The awful reality for a lot of people is you can’t talk to your financial advisor, you’ve got to hide this part of your portfolio. They’re not going to be philosophically aligned with you. It’s really difficult when you don’t have that alignment with somebody who should be such a trusted advisor.

Corva: I know that feeling. What else have you learned from your customers over the years?

Kelly: Something we’ve seen at Unchained, having been around for eight years now, is how Bitcoin adoption happens in the wake of macro geopolitical events or things that wake people up like, “Hey, it’s not actually my money at the bank.”

Also, people learn from things like the Canadian trucker protest where they saw that you can lose access to your dollars if you believe in certain things.

Then we had the failures of SVB and First Republic last year.

What we’ve created at Unchained is really kind of an antifragile set of products and services that aligns with core tenets and the core philosophy of Bitcoin. That means that when a lot of those bad things happen, we see influxes of clients.

I’m immensely proud of what the team has done here in terms of helping thousands of people get into a really comfortable position with assets outside of the traditional financial system and outside of systems that [are prone to] centralized risks of seizure or control over their bitcoin.

Unchained has over 7,000 clients that secure over 90,000 bitcoin with 12,000 keys. In four years, maybe that’s 100,000 keys securing tens of billions of dollars worth of bitcoin.

I think that’ll be a really unique financial institution that couldn’t have existed before. And our goal is to do that profitably in a way where we’re around as long as possible but also that’s going to be a net good for society, the industry and ecosystem overall.

Corva: I give you an immense amount of credit for not underestimating the user. What you’re doing with Unchained is saying, “We’re going to give you the full Bitcoin experience.” At the same time, you’re a financial services company and can play the TradFi game. It’s great for people who are more familiar with traditional finance, but who want to understand bitcoin and what makes it different from traditional assets or investments.

Kelly: It’s a model and an attitude that’s in contrast to the classic Wall Street attitude, which looks for “How do I get your money over here so I can make more money?” There’s obviously a version of that’s not always just in the client’s interest.

We’re the [opposite]. We’re trying to do business transparently — literally transparently on the blockchain — and as a company.

Corva: It’s apparent that you’re playing a long game, because your clients are going to have this experience with Unchained that’s different from the experience they have with traditional financial institutions, and they’re going to tell their friends about Unchained.

Kelly: It goes back to your ETF question. You may buy some shares in the ETF as your first exposure to bitcoin, but you’re only partially converted at that point. The full conversion happens when you’ve taken your sacrament of sending bitcoin with a hardware wallet. That’s a key part of the journey.