(Photo by Ed JONES / AFP)
A few weeks ago, the FBI arrested an Alabama-born computer programmer for allegedly helping the North Korean regime evade U.S. sanctions through blockchain technology. According to the Department of Justice complaint, Ethereum developer Virgil Griffith provided technical education at an April 2019 blockchain conference in Pyongyang run by the regime. He also reportedly conspired to send cryptocurrency between North Korea and South Korea and encouraged other Americans to attend another Pyongyang blockchain conference scheduled for 2020.
Many prominent voices in the crypto space condemn Griffith’s actions, but there has been sympathy in some corners from those who echo Griffith’s line of thinking: He argued that spreading knowledge about blockchain and crypto could help bring peace to the Korean peninsula.
Such thinking is illogical. And it is blind to the nature of the Kim Jong Un regime, the actual nuclear threat, and the high stakes involved in the conflict. North Korea is the world’s most controlled society. Giving its ruling elites new capabilities to circumvent sanctions only helps them better enrich themselves. It increases their stranglehold on power and makes the regime more recalcitrant toward diplomatic engagement. The North Korean people have continued to suffer for decades precisely because sophisticated sanctions evasion schemes help the regime fill its coffers and, thus, maintain the status quo.
If blockchain enthusiasts want financial technology to help liberate those living under oppressive governments, there is a much better way: Assist those who are actually working to uplift and empower those who are truly oppressed. There are many organizations that provide humanitarian aid to the everyday North Korean suffering under the regime.
Cryptocurrencies could play a role in supporting such efforts. And it may not require more than simple collaboration between interested parties in both the crypto space and the NGO community. They should work together to create a campaign for cryptocurrency charitable giving that supports non-profit organizations that rescue North Korean refugees. And it could be done in a way that regulators approve.
International charitable giving is a multi-billion dollar industry, but most of those donations flow into opaque infrastructures where donors are blind to the real-time funding streams of the organizations they support. Blockchain technology’s defining features are the transparency of its ledger and the ability to more efficiently transfer value across borders. Donations via cryptocurrency—if orchestrated via credible exchanges and NGOs—could bring transparency to donations and widen the pool of givers to many causes.
The following is how such a campaign could work, using the example of a hypothetical donor concerned about helping the North Korean people:
A donor would visit a cryptocurrency exchange website that has partnered with an international charity, such as Liberty in North Korea, which helps North Koreans escape the country to nations that provide asylum (Note: China is no safe haven because authorities there send escapees back to North Korea, where they often are punished severely). Any participating charity that aides North Korean escapees will need to make sure it strictly observes all sanctions guidelines. And the exchange should be a well-established business that has transparent ownership and maintains the highest standards in anti-money laundering and sanctions compliance.
In this campaign, once the user opens up an account at the exchange, he or she would then be given access to provide cryptocurrency funds to a specific “Rescue North Koreans” wallet. That wallet would belong to the charity. The donations could be set up as one-time or recurring. The wallet address would be visible on the blockchain, so the donor could see the balance of funds and the wallet’s ongoing activity.
This would be the backbone of a cryptocurrency charity campaign arrangement between exchanges, NGOs, and donors. But additional services could be built upon it. Developers could add third-party applications that offer deeper analysis of the transaction flows for participating charities. And charities could set up wallets for different operations and show when wallet funds are cashed out into regular currency. The “cash out” wallets should be specified and verifiable on the blockchain.
Of course these measures would not shine much light on how charities use their funds after cashing out, but the real-time insight gained into donations would provide much more accountability than current funding systems. At the same time, all this data transparency should not risk donor privacy. As with most custodial wallets at exchanges, a user’s originating wallet should be held within the internal wallet structure of the exchange so public blockchain analysis could not unmask individual donors.
The cypher-punks of crypto may not be interested in such a proposal. It lacks the danger and intrigue of venturing to Pyongyang in defiance of the U.S. State Department. It would be a practical use-case, taking advantage of the technology as it is available already to millions of people. It could bring new donors to legitimate organizations reaching the isolated and vulnerable.
A well-regulated cryptocurrency crowdfunding campaign would actually support long-standing U.S. foreign policy goals of pressuring the Kim regime and helping those who flee it. Also, the visibility into funding flows would assist tax authorities and other financial regulators in better understanding the financial landscape of tax-exempt organizations. In conventional finance, authorities rely mostly on self-reporting by nonprofits and financial institutions. Cryptocurrency donations would help regulators, “trust, but verify.”
Some cryptocurrency enthusiasts actually argue that crypto is most valuable for breaking laws and social constructs. It seems they have a point when much initial adoption involves illicit use. But early crypto use and its image have been shaped more by opportunism than any intrinsic nature of the technology. And the worldview of blockchain programmers like Griffith has driven the opportunities they have sought. Perhaps they have not found practical ways to help the world because they have not been involved in solving the world’s non-technological problems.
Opportunistic illicit use of cryptocurrency is not going away. So those in the crypto space who want to build legitimacy should spend more time away from the virtual space to see how the real world is working. Many people who are trying to bring freedom, economic empowerment, and good governance to those who need it could use their help.
