Reaching Within Silk Road: The Need for a New Subpoena Power That Targets Illegal Bitcoin Transactions

INTRODUCTIONIn the increasingly public digital age, virtual currencies, such as Bitcoin, have become very attractive to those seeking online privacy.1 Although some users purchase Bitcoin for the novelty value, others opt in because of the heightened confidentiality and security Bitcoin provides. 2 Bitcoin transactions are protected by electronic encryptions that ensure the user's identity is well hidden.3 This anonymity not only prevents exploitation of user information and online activity, but it also allows many individuals to partake in easy and untraceable illicit transactions.4 As a result, individuals who flock to Bitcoin use it for both legal and criminal purposes.5The government has struggled to eliminate illegal Bitcoin marketplaces.6 Despite shutting down Silk Road and arresting its operator, the government has been unable to reach the website's account holders. 7 Even though Silk Road has closed, other black market sites remain unfazed.8 In - deed, many other replacement sites have appeared to fill the gap left by Silk Road. 9 Black market websites will continue to operate and exploit Bitcoin until the government begins to target the individual Bitcoin users who sell and purchase goods and services using these sites.10To alleviate the problem of these illegal transactions, the U.S. Supreme Court and Congress must create a subpoena power that specifically aims to unmask the identity of individual Bitcoin users. 11 Without the ability to subpoena third parties to gain access to the documentation that identifies the Bitcoin users engaged in illegal transactions, the government will face difficulty in limiting the growth of illegal activity among Bitcoin users.12 But, because of the lack of e-discovery standards in criminal litigation, targeting individual Bitcoin users may lead to an overreach of government power.13 Therefore, it is also necessary to create a standard limiting this new power-a standard that is tailored to ensure that the constitutional rights of Bitcoin users who are not engaged in illegal activity remain intact.14In constructing a criminal subpoena standard, it is important to look to existing civil e-discovery rules, which address the use of electronically stored information.15 Parties can look to Rule 26 and Rule 45 of the Federal Rules of Civil Procedure for guidance on the use of e-discovery.16 Perhaps most importantly, these standards include limitations on e-discovery that rein in the moving party's ability to request a burdensome amount of information. 17 Furthermore, the Digital Millennium Copyright Act ("DMCA") sets aside specific subpoena powers that allow plaintiffs to obtain the identities of anonymous Internet users from third parties.18This Note argues that the U.S. Supreme Court and Congress should create a criminal subpoena standard to target Bitcoin users who abuse the virtual currency in illegal ways.19 This standard should be broader than the subpoena powers within § 512(h) of the Digital Millennium Copyright Act but more restrictive than overall criminal subpoena powers to prevent abuse of subpoenas duces tecum.20 Part I examines the development, functionality, and uses of Bitcoin as well as basic civil and criminal discovery standards.21 Part II explores developments in e-discovery and how civil and criminal procedural rules address electronically stored information.22 Part III argues that the U.S. Supreme Court and Congress should create a new criminal subpoena standard, modeled from current e-discovery laws, that targets criminal Bitcoin use but protects the constitutional rights of legitimate Bitcoin users.23I. THE NEW GOLD RUSH: THE RISE OF BITCOIN AND ITS USE AND ABUSE IN THE CRIMINAL WORLDThis Part discusses the rise of Bitcoin and its popularity in legitimate and criminal contexts.24 Section A explains how to obtain bitcoins as well as the security features that allow Bitcoin to protect the anonymity of its users.25 Section B addresses Bitcoin's various advantages and its increasing legitimacy. …