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Google resolves lost criminal crypto exchange data with DOJ

Google

TL;DR Breakdown

  • Google and DOJ finally settle the 6-year dispute over BTC-e data
  • The current settlement changes how DOJ tries to access data stored by third parties
  • The illegal use of crypto remains a concern to regulators

The U.S. Department of Justice and Google have reached a deal to resolve a six-year-long dispute over the advertising giant’s refusal to turn over warrant-requested documents. The problem? This information was lost prior to the case being resolved.

Google has promised to enhance its legal compliance program following the loss of data relating to BTC-e, an illegal cryptocurrency exchange shut down by the FBI in 2017 for alleged money laundering.

Google settles with DOJ

In 2016, Google received a request from the Department of Justice (DoJ) to provide information on the Russia-based cryptocurrency exchange BTC-e. At that time, BTC-e employees were detained for laundering almost $4 billion in black money. Google was compelled by the Stored Communications Act (SCA) to comply with the search warrant request.

From 2011 through 2017, BTC-e operated in the United States and processed around $9 billion in Bitcoin transactions. According to the Justice Department, its operators enabled users, many of whom were criminals, to engage in anonymous Bitcoin transactions and money laundering.

A court of appeals, however, ruled that search warrants obtained under the SCA do not extend to material maintained outside the United States. Thus, Google only supported the Department with data stored in the United States and attempted to develop new mechanisms to prevent the data from being repatriated.

In 2017 and 2018, whether Google was required to comply with requests for data kept abroad was litigated. Congress ruled on the issue in 2018: Congress clarified that the SCA does indeed apply to data that U.S. providers chose to keep abroad.

However, in a setback to the DoJ’s case, the material they sought from the warrant was “lost” due to the time it took to evaluate if it could be handed to the government.

Google to update legal compliance 

The operator of the search engine Google, Alphabet Inc., has committed to enhancing its legal compliance process. As part of the settlement, Google committed to “reform and strengthen its legal process compliance program to ensure timely and thorough responses to legal process such as subpoenas and search warrants,” as required by relevant legal authorities.

In the filed stipulation, Google represented to the court that it spent over $90 million on additional resources, systems, and staffing to implement legal process compliance program improvements.

DOJ

In the future, the tech giant will “ensure prompt and thorough replies to legal process like as subpoenas and search warrants,” according to a Department of Justice press statement.

The Department of Justice stated that Google must ensure it answers subpoenas and warrants promptly and comprehensively. In addition, it must hire a third-party independent compliance professional to guarantee that the mega-corporation complies with applicable and necessary regulations.

A third-party, independent compliance expert will also be hired to ensure Google’s adherence to its obligations. Additionally, the corporation must provide reports every six months so that the government can monitor its progress.

Google’s revenue for Q3 fell short of forecasts as the media giant battled to compete with social media upstart TikTok and posted earnings of $69 billion on Tuesday. In after-hours trading, the company’s stock sank by 5%.

How does this outcome affect data storage companies?

The settlement between Alphabet Inc.’s Google and the federal government might alter how the Department of Justice attempts to access data maintained by third parties and the repercussions for corporations if they fail to provide warrant- or subpoena-related data.

The settlement could signal other third-party providers regarding compliance and the need to alter their procedures. Jennifer Beidel, a former assistant U.S. attorney for the Southern District of New York, claims that if these corporations do not comply, they could face a similar fate as Google.

What’s new here is the fact that they’re going after a third party custodian of records in a criminal case, which is fairly unusual. The fact that they even went after them on this issue shows a concern that’s larger than this particular case. This is an effort by the Department of Justice to try to say, you know, we’re trying to investigate crimes here and we’d like you to come to the table and help us with that.

Jennifer Beidel

Less complex organizations may not suffer the same data storage and loss obstacles as Google in this instance. However, the agreement suggests that the DOJ expects corporations to be able to comply with warrant requests in criminal investigations.

In previous settlements involving the law known as the Stored Communications Act, no explicit remedy was included, as is the case with Google. This provides companies with guidance on how to comply with valid warrants.

With this case in mind, compliance officials are more motivated to review their company’s warrant response plan. Allocating more resources to improve warrant request response may provide long-term benefits to the corporation by decreasing the legal risk of mistakenly disclosing unnecessary private data and preventing the loss of sought information.

Florence Muchai

Florence Muchai

Florence is a crypto enthusiast and writer who loves to travel. As a digital nomad, she explores the transformative power of blockchain technology. Her writing reflects the limitless possibilities for humanity to connect and grow.

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