The Cover-Up Behind the Bitcoin Dump: Act One (Treasury Rumors)

Cryptocurrency Scam Apr 22, 2021

A lot happened to Bitcoin over the past few days (April 14th - 21st, 2021). While there is still much that is unknown, we can (fortunately) assert a few truths.

Unfortunately, these truths need to be asserted in lieu of dishonest narratives being pedaled by those in various positions within the blockchain space. '

The author of this piece won't proffer an opinion on why these entities are purposefully colluding to propagate a demonstrably false narrative. Looking at the situation optimistically, it is possible that the specific rumors that we're going to debunk in this article were spread due to a failure to perform due diligence on the part of the industry's leaders and "flagship publications".

Motivations aside, the core goal of this write-up is to provide more clarity to the 'average crypto user' by exposing these fraudulent claims empirically.

When Hell Broke Loose

Around April 17th, 2021, traders, influencers and other popular media members in the crypto space began noticing the price of Bitcoin and other crypto assets cratering en masse.

In the chart above, we can see that Bitcoin depreciated by nearly 20% in a little under two days (which is profound).

Treasury Department Rumors

At some point in the evening (for the United States), a tweet by an account with the handle, '@Fxhedgers' reported that:

"U.S. TREASURY TO CHARGE SEVERAL FINANCIAL INSTITUTIONS FOR MONEY LAUNDERING USING CRYPTOCURRENCIES -SOURCES"

The, now deleted tweet, can still be found on 'archive.is' here at this link: https://archive.is/3ilzc

Mania Ensues

In the hours following the tweet, there were several publications, influencer accounts and general participants in the cryptocurrency space that propagated this patently false information.

Below are screenshots of a few examples:

Credible Reasons to Suspect the Rumor Was False

While this is not an indictment of every individual and entity that shared this news, it is worth mentioning that there is significant evidence and objective fact that should've elicited significant skepticism on the part of more popular media outlets.

Role of the U.S. Treasury

Our biggest clue that the rumor regarding the Treasury Department was fake is the fact that declaring charges, filing indictments, etc., does not fall within its responsibilities.

And this is information that can be cross-referenced directly with the U.S. Treasury Department's website.

On that page (linked above), there is a list of duties that the Treasury department performs.

Notably, in the screenshot above, there are a few relevant bullet points to our topic at hand.

Specifically:

"Enforcing Federal finance and tax laws"

and

"Investigating and prosecuting tax evaders, counterfeiters, and forgers"

'Wait, so doesn't that mean the Treasury Department is responsible for financial prosecutions?'

Not quite.

If we refer back to the paragraph preceding those bullet points, we'll find a critical hint that yields more insight into how the Treasury Department normally proceeds with these matters.

Specifically, "The Departmental Offices are primarily responsible for the formulation of policy and management of the Department as a whole, while the operating bureaus carry out the specific operations assigned to the Department."

To investigate this claim, we decided to visit the hyperlinked 'Departmental Offices' reference in the aforementioned paragraph, which took us to another page on the Treasury department's website.

The offices page is prefixed with the statement:

"The Treasury Offices are composed of divisions headed by Assistant Secretaries and Under Secretaries who are primarily responsible for policy formulation and overall management of the Treasury Department."

Perusing down the list, we can see the most relevant one for our specific investigation is the 'Terrorism and Financial Intelligence (TFI)' office.

Specifically, the text reads:

"Terrorism and Financial Intelligence (TFI) develops and implements U.S. government strategies to combat terrorist financing domestically and internationally, develops and implements the National Money Laundering Strategy as well as other policies and programs to fight financial crimes."

The heading for this description brings us to another hyperlinked page on the Treasury Department's website.

Finally, on this page, we receive our answer for how financial crimes are delegated and eventually prosecuted (as an extension of the Treasury Department).

The last paragraph on this page tells us all we need to know about how financial crime under the Treasury Department's purview are prosecuted:

The statements worthy of attention were highlighted in the above screenshot, but will also be iterated below for convenience (in case anyone missed them!):

"Responsible for administering the Bank Secrecy Act (BSA) and other regulatory functions is one of Treasury's bureaus, the Financial Crimes Enforcement Network (FinCEN), which supports law enforcement investigative efforts and fosters interagency and global cooperation against domestic and international financial crimes."

"TFI also works in close partnership with the IRS Criminal Investigative Division (IRS-CI) to enforce laws against terrorist financing and money laundering, including the Bank Secrecy Act."

Looking at Live Indictment From the Department of Justice Involving the Bank Secrecy Act

As an example of which agency is given the public responsibility of handing crimes under the Treasury's purview, we're going to look at the DOJ's press release late 2020 announcing the indictment of BitMex executives (Arthur Hayes et. al).

Notably, on this page, the Treasury Department is listed even once, despite the fact that the case deals directly with crimes that are under the agency's purview (i.e., money laundering, violations of the Bank Secrecy Act, etc.).

In fact, the press release specifically states that:

"The prosecution is being handled by the Office's Money Laundering and Transnational Criminal Enterprises Unit."

Fake Treasury Claim Casts Serious Suspicion on the Causes of the Price Decline

At this point, we have not only thoroughly debunked the claims about the Treasury Department, we've also proven that there could never have been such a claim in the first place since the Treasury Department doesn't even handle these types of financial prosecutions directly.

The original tweet by this individual was also later deleted (without explanation):

Another factor that doesn't help the case against this being foul play is the fact that this individual's name on Twitter is 'Fxhedgers' (which highly implies that they have a financial stake in the markets ; 'FX' is a commonly used abbreviation for "forex", which is, itself, also an abbreviation for "foreign exchange trading", and cryptocurrencies exist within that sphere).