Cryptoconundrum: The Pros and Cons of Decentralized Money for eDiscovery

The most promising approach to ediscovery of cryptocurrency transactions, for now, is through traditional digital forensics: imaging a hard drive and accessing the user’s wallet files and transaction history directly. Alternatively, some ediscovery professionals have subpoenaed users’ master keys.

Extract from article by Corporate eDiscovery

The central problem with cryptocurrency when it comes to eDiscovery is its masking of user identities. How can users be identified as the individuals involved in litigation? And then how can lawyers succinctly and comprehensibly explain that identification process in court? The IRS has had some success — though not unfettered — using “John Doe” summonses to investigate cryptocurrency exchanges and transactions.

Even once a user identification can be linked to a specific individual, how are transactions established? Blockchain evidence — a conglomeration of out-of-court statements offered for the truth of the matter that those transactions occurred — is likely inadmissible hearsay.

The most promising approach to eDiscovery of cryptocurrency transactions, for now, is through traditional digital forensics: imaging a hard drive and accessing the user’s wallet files and transaction history directly. Alternatively, some eDiscovery professionals have subpoenaed users’ master keys. Whether users will be able to evade even this accountability by establishing multiple cryptocurrency accounts or by switching cryptocurrencies remains to be seen.

Whether you’re ready to invest in cryptocurrency or are digging another hole in the backyard to bury some good old cash for safekeeping, these new forms of money aren’t going away. As eDiscovery professionals, it’s time to figure out how we’re going to deal with them.

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