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When Criminals Abuse the Blockchain: Establishing Personal Jurisdiction in a Decentralised Environment

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  • Casey Watters

    (Faculty of Law, Bond University, Gold Coast 4226, Australia)

Abstract

In August of 2022, the United States Department of Treasury sanctioned the virtual currency mixer Tornado Cash, an open-source and fully decentralised piece of software running on the Ethereum blockchain, subsequently leading to the arrest of one of its developers in the Netherlands. Not only was this the first time the Office of Foreign Assets Control (OFAC) extended its authority to sanction a foreign ‘person’ to software, but the decentralised nature of the software and global usage highlight the challenge of establishing jurisdiction over decentralised software and its global user base. The government claims jurisdiction over citizens, residents, and any assets that pass through the country’s territory. As a global financial center with most large tech companies, this often facilitates the establishment of jurisdiction over global conduct that passes through US servers. However, decentralised programs on blockchains with nodes located around the world challenge this traditional approach as either nearly all countries can claim jurisdiction over users, subjecting users to criminal laws in countries with which they have no true interaction, or they limit jurisdiction, thereby risking abuse by bad actors. This article takes a comparative approach to examine the challenges to establishing criminal jurisdiction on cryptocurrency-related crimes.

Suggested Citation

  • Casey Watters, 2023. "When Criminals Abuse the Blockchain: Establishing Personal Jurisdiction in a Decentralised Environment," Laws, MDPI, vol. 12(2), pages 1-16, April.
    • Handle: RePEc:gam:jlawss:v:12:y:2023:i:2:p:33-:d:1124572
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    References listed on IDEAS

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    Cited by:

    1. Zaheer Abbas & Seunghwan Myeong, 2024. "A Comprehensive Study of Blockchain Technology and Its Role in Promoting Sustainability and Circularity across Large-Scale Industry," Sustainability, MDPI, vol. 16(10), pages 1-33, May.
    2. Casey Watters, 2023. "Digital Gold or Digital Security? Unravelling the Legal Fabric of Decentralised Digital Assets," Commodities, MDPI, vol. 2(4), pages 1-12, October.
    3. Namryoung Lee, 2023. "The Relationship between a Company’s Cryptocurrency Holdings and Its Sustainable Performance—With a Focus on External and Internal Financial Issues and Cash," Sustainability, MDPI, vol. 15(23), pages 1-15, November.

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