Bits + Bips: Is Crypto Privateering Even Legal?

The central debate in this episode is whether a presidential memorandum authorizing crypto privateering is legal, effective, and wise. Paul Rosensweig, former DHS Deputy Assistant Secretary, called it a bad idea and said participation would quite likely violate international law prohibitions on piracy. One speaker dismissed that constraint, arguing the US has roughly a hundred years of precedent ignoring international law in military contexts, making it a weak check in practice.

The scale of the problem motivating the policy is significant. Crypto-related crime totaled approximately 21 billion dollars last year, and proponents argued the status quo government approach has clearly failed to stop that volume, making private sector speed, efficiency, and scale a compelling alternative. Pig butchering operations were described as large professional criminal organizations resembling corporations rather than individual hackers, conducting romance scams, investment fraud, hacking, SIM swapping, and money laundering including for Iranians, and taking in money from crypto, the regular banking system, and cash. Chris noted the memorandum appears to have extended its scope beyond purely crypto-related crime to cover this broader activity.

The misattribution risk was identified as the sharpest operational concern. Michael Garcia, former CISA policy official, warned that misattributing an attack could produce nation state level consequences. Chris countered that the main targets are North Koreans and transnational criminal rings, which reduces that risk, and that blockchain transparency makes it possible to trace activity and run advanced analytics to identify who is responsible for on-chain crimes. Erica Lonergan from Columbia raised the concern that the memorandum creates a slippery slope enabling broader private sector offensive cyber operations against nation state adversaries.

The legal status of participants was another contested point. Jake Williams, formerly of NSA, warned that Americans participating in these operations could be classified as non-uniformed combatants if traveling overseas. One speaker raised the further implication that if hackers are treated as combatants rather than criminals, it could theoretically open the door to treating them as military targets, including drone strikes. Chris argued the memorandum targets criminal activity rather than state actors, which he believes threads the needle on that concern, and maintained that crypto hackers should be treated as criminals regardless of the legal framing debate.

On the constitutional question, Austin Campbell noted that the power to issue letters of marque is enumerated in Article One Section Eight as a congressional power, raising questions about why this came through a presidential memo rather than Congress. He observed the memo does not explicitly call itself letters of marque and appears to occupy a gray area between Article One and Article Two authority. Campbell noted that clarity legislation has already been passed, meaning the executive is not operating in a complete vacuum, and argued that critics who accept prior executive military actions including Iraq, Afghanistan, and drone strikes but object to crypto privateering are drawing an inconsistent line. Both Campbell and Chris disclaimed being constitutional scholars on the war powers question.

Chris noted that historical privateering used prize courts and bonds to hold privateers accountable, and that the current memorandum adopts a similar accountability framework including million dollar bonds. He also argued that crypto is broadly good for national security because it reveals where money is flowing, a transparency advantage that traditional finance does not offer.

Campbell and Chris Perkins both endorsed the position that the status quo is a demonstrably bad outcome given that pig butchering scammers and crypto thieves have destroyed lives, caused suicides, and ruined businesses. Their shared conclusion was that critics of the privateering approach should propose a concrete alternative rather than simply opposing it.