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Senators target Bitcoin currency, citing drug sales

Charles Schumer and Joe Manchin are urging the U.S. attorney general to go after the peer-to-peer currency, also a favorite among hackers, in connection with the Silk Road online marketplace.

Bitcoin, a peer-to-peer currency floating around the Web, is now being targeted by two prominent senators.

Democratic Senators Charles Schumer of New York and Joe Manchin of West Virginia have written a letter to both Attorney General Eric Holder and Drug Enforcement Administration (DEA) chief Michele Leonhart expressing their desire for the organizations to take down an online marketplace known as "Silk Road," which allows customers to buy illegal drugs, including cocaine, heroin, ecstasy, and marijuana.

The senators said this about Bitcoin in their letter to the government agencies:

The only method of payment for these illegal purchases is an untraceable peer-to-peer currency known as Bitcoins. After purchasing Bitcoins through an exchange, a user can create an account on Silk Road and start purchasing illegal drugs from individuals around the world and have them delivered to their homes within days.

Bitcoin sprang up in 2009 as a peer-to-peer currency that intentionally avoided the prying eyes of law enforcement officials. In order to acquire Bitcoins, users access exchange sites to transfer actual currency, such as U.S. dollars, into the digital option. According to a posting on Wikipedia, there were 6.2 million Bitcoins on the market in May. The currency's official site says users can purchase a single Bitcoin for about $10.

Hackers also commonly use Bitcoin for donations.

For instance, the group LulzSec, which recently made a name for itself by hacking PBS and revealing personal information of Sony users, accepts Bitcoin donations. The organization said on its Twitter account that it needs Bitcoins to help it engage in more hacking.

As for Silk Road, there's no telling if the Justice Department or the DEA will be able to take it down or if anyone will be brought to justice. As the senators note, the marketplace uses anonymizing service Tor to keep personal information hidden. And moving it to another server wouldn't be all that difficult.

The DEA did not immediately respond to request for comment on what it might be doing to target Silk Road and Bitcoin.

(Via Reuters)