June 28, 2013
‘It is a global
Aditya K Sood explains to
Suman Guha Mozumder the
dangers digital currency
poses to governments and
people across the world
Aditya K Sood, senior security con- sultant, IOActive, says online cur- rency transfer business companies like Liberty Reserve, which was
indicted in the United States in a $6 billion
money-laundering scheme, are becoming
an alternative to the global banking system.
The basic concept, he adds, is to start
with a fiat currency — an established
national currency — like the US dollar or
the Euro and convert it to an intermediate
digital currency until the transaction is
over, at which point the currency is converted back into fiat currency.
“It is true that according to the terms of
use digital currencies are not to be convert-
ed by recipients for use of criminal activi-
ties or money laundering,” he says. “But
these restrictions are essentially unenforce-
able and that is how money laundering is
Sood is a PhD candidate studying under-
ground economy at Michigan State
University, and has worked in the security
domain for Armorize, COSEINC and
does this come from and where does it go?
Where are the organizations that actually
perform e-currency transactions? The
Liberty Reserve was based somewhere in
And WebMoney, another e-currency
company, is based somewhere in Russia.
The problem is big for those countries
where actually the money is being extracted from, including the US.
The problem persists at the point where
cyber attackers actually steal critical or sen-
behind e-currency is that these organiza-
tions do not actually want to pay huge taxes
and transaction fee that is levied by differ-
ent credit cards companies, or for banking
The Business Interview
Aditya K Sood
How big is the problem of underground
economy in the United States?
I won’t say that it is a problem related
only to the US. It is a global problem. If you
talk about e-currency, the question is where
sitive information of different users and use
that information to carry out monetary
transactions. To do that they use what we
call e-currency. So from the country per-
spective it is a big problem for the US, but
it is also a big problem for countries all
around the world.