10. Legal Issues

THE CYPHERNOMICON: Cypherpunks FAQ and More, Version 0.666, 1994-09-10, Copyright Timothy C. May. All rights reserved. See the detailed disclaimer. Use short sections under "fair use" provisions, with appropriate credit, but don't put your name on my words.

10.2.1. Main Points

10.2.2. Connections to Other Sections

10.2.3. Where to Find Additional Information

10.2.4. Miscellaneous Comments

10.3. Basic Legality of Encryption

10.3.1. "Is this stuff legal or illegal?"

10.3.2. "Why is the legal status of crypto so murky?"

10.3.3. "Has the basic legality of crypto and laws about crypto been tested?"

10.3.4. "Can authorities force the disclosure of a key?"

10.3.5. Forgetting passwords, and testimony

10.3.6. "What about disavowal of keys? Of digital signatures? Of contracts?

10.3.7. "What are some arguments for the freedom to encrypt?"

10.3.8. Restrictions on anonymity

10.3.9. "Are bulletin boards and Internet providers "common carriers" or not?"

10.3.10. Too much cleverness is passing for law

10.3.11. "Is it legal to advocate the overthrow of governments or the breaking of laws?"

10.4. Can Crypto be Banned?

10.4.1. "Why won't government simply _ban such encryption methods?" + This has always been the Number One Issue!

10.4.2. The long-range impossibility of banning crypto

10.4.3. Banning crypto is comparable to

10.4.4. So Won't Governments Stop These Systems?

10.4.5. Scenario for a ban on encryption

10.4.6. Can the flow of bits be stopped? Is the genie really out of the bottle?

10.8.1. "What's the legal status of digital cash?"

10.8.2. "Is there a tie between digital cash and money laundering?"

10.8.3. "Is it true the government of the U.S. can limit funds transfers outside the U.S.?"

10.8.4. "Are "alternative currencies" allowed in the U.S.? And what's the implication for digital cash of various forms?

10.8.5. "Why might digital cash and related techologies take hold early in illegal markets? That is, will the Mob be an early adopter?"

10.8.6. "Electronic cash...will it have to comply with laws, and how?"

10.8.7. Currency controls, flight capital regulations, boycotts, asset seizures, etc.

10.8.8. "Will banking regulators allow digital cash?"

10.9. Legality of Digital Banks and Digital Cash?

10.9.1. In terms of banking laws, cash reporting regulations, money laundering statutes, and the welter of laws connected with financial transactions of all sorts, the Cypherpunks themes and ideas are basically illegal. Illegal in the sense that anyone trying to set up his own bank, or alternative currency system, or the like would be shut down quickly. As an informal, unnoticed experiment, such things are reasonably safe...until they get noticed.

10.9.2. The operative word here is "launch," in my opinion. The "launch" of the BankAmericard (now VISA) in the 1960s was not done lightly or casually...it required armies of lawyers, accountants, and other bureacrats to make the launch both legal and successful. The mere 'idea" of a credit card was not enough...that was essentially the easiest part of it all. (Anyone contemplating the launch of a digital cash system would do well to study BankAmericard as an example...and several other examples also.)

10.9.3. The same will be true of any digital cash or similar system which intends to operate more or less openly, to interface with existing financial institutions, and which is not explicity intended to be a Cypherpunkish underground activity.

10.10. Export of Crypto, ITAR, and Similar Laws

10.10.1. "What are the laws and regulations about export of crypto, and where can I find more information?"

10.10.2. "Is it illegal to send encrypted stuff out of the U.S.?"

10.10.3. "What's the situation about export of crypto?"

10.10.4. Why and How Crypto is Not the Same as Armaments

10.10.5. "What's ITAR and what does it cover?"

10.10.6. "Can ITAR and other export laws be bypassed or skirted by doing development offshore and then importing strong crypto into the U.S.?"

10.11. Regulatory Arbitrage

10.11.1. Jurisdictions with more favorable laws will see claimants going there.

10.11.2. Similar to "capital flight" and "people voting with their feet."

10.11.3. Is the flip side of "jurisdiction shopping." wherein prosecutors shop around for a jurisdiction that will be likelier to convict. (As with the Amateur Action BBS case, tried in Memphis, Tennessee, not in California.)

10.12. Crypto and Pornography

10.12.1. There's been a lot of media attention given to this, especially pedophilia (pedophilia is not the same thing as porn, of course, but the two are often discussed in articles about the Net). As Rishab Ghosh put it: "I think the pedophilic possibilities of the Internet capture the imaginations of the media -- their deepest desires, perhaps." [R.G., 1994-07-01]

10.12.2. The fact is, the two are made for each other. The untraceability of remailers, the unbreakability of strong crypto if the files are intercepted by law enforcement, and the ability to pay anonymously, all mean the early users of commercial remailers will likely be these folks.

10.12.3. Avoid embarrassing stings! Keep your job at the elementary school! Get re-elected to the church council!

10.12.4. pedophilia, bestiality, etc. (morphed images)

10.12.5. Amateur Action BBS operator interested in crypto...a little

bit too late

10.12.6. There are new prospects for delivery of messages as part of stings or entrapment attacks, where the bits decrypt into incriminating evidence when the right key is used. (XOR of course)

10.12.7. Just as the law enforcement folks are claiming, strong crypto and remailers will make new kinds of porn networks. The nexus or source will not be known, and the customers will not be known.

10.13. Usenet, Libel, Local Laws, Jurisdictions, etc.

10.13.1. (Of peripheral importance to crypto themes, but important for issues of coming legislation about the Net, attempts to "regain control," etc. And a bit of a jumble of ideas, too.)

10.13.2. Many countries, many laws. Much of Usenet traffic presumably violates various laws in Iran, China, France, Zaire, and the U.S., to name f ew places which have laws about what thoughts can be expressed.

10.13.3. Will this ever result in attempts to shut down Usenet, or at least the feeds into various countries?

10.13.4. On the subject of Usenet possibly being shut-down in the U.K. (a recent rumor, unsubstantiated), this comment: " What you have to grasp is that USENET type networks and the whole structure of the law on publshing are fundamentally incompatiable. With USENT anyone can untracably distribute pornographic, libelous, blasphemous, copyright or even officially secret information. Now, which do you think HMG and, for that matter, the overwhealming majority of oridnary people in this country think is most important. USENET or those laws?" [Malcolm McMahon, malcolm@geog.leeds.ac.uk, comp.org.eff.talk, 1994--08-26]

10.13.5. Will it succeed? Not completely, as e-mail, gopher, the Web, etc., still offers access. But the effects could reach most casual users, and certainly affect the structure as we know it today.

10.13.6. Will crypto help? Not directly--see above.

10.14. Emergency Regulations

10.14.1. Emergency Orders

10.14.2. Legal, secrecy orders

10.14.3. Can the FCC-type Requirements for "In the clear" broadcasting (or keys supplied to Feds) be a basis for similar legislation of private networks and private use of encryption?

10.15. Patents and Copyrights

10.15.1. The web of patents

10.15.2. Role of RSA, Patents, etc.

10.15.3. Lawsuits against RSA patents

10.15.4. "What about the lawsuit filed by Cylink against RSA Data Security Inc.?"

10.15.5. "Can the patent system be used to block government use of patents for purposes we don't like?"

10.16. Practical Issues

10.16.1. "What if I tell the authorities I Forgot My Password?"

10.16.2. Civil vs. Criminal

10.16.3. the law is essentially what the courts say it is

10.17. Free Speech is Under Assault

10.17.1. Censorship comes in many forms. Tort law, threats of grant or contract removal, all are limiting speech. (More reasons for anonymous speech, of course.)

10.17.2. Discussions of cryptography could be targets of future crackdowns. Sedition laws, conspiracy laws, RICO, etc. How long before speaking on these matters earns a warning letter from your university or your company? (It's the "big stick" of ultimate government action that spurs these university and company policies. Apple fears being shut down for having "involvement" with a terrorist plot, Emory University fears being sued for millions of dollars for "conspiring" to degrade wimmin of color, etc.)

How long before "rec.guns" is no longer carried at many sites, as they fear having their universities or companies linked to discussions of "assault weapons" and "cop-killer bullets"? Prediction: Many companies and universities, under pressure from the Feds, will block groups in which encrypted files are posted. After all, if one encrypts, one must have something to hide, and that could expose the university to legal action from some group that feels aggrieved.

10.17.3. Free speech is under assault across the country. The tort system is being abused to stifle dissenting views (and lest you think I am only a capitalist, only a free marketeer, the use of "SLAPP suits"--"Strategic Lawsuits Against Public Participation"--by corporations or real estate developers to threaten those who dare to publicly speak against their projects is a travesty, a travesty that the courts have only recently begun to correct).

We are becoming a nation of sheep, fearing the midnight raid, the knock on the door. We fear that if we tell a joke, someone will glare at us and threaten to sue us and our company! And so companies are adopting "speech codes" and other such baggage of the Orwell's totalitarian state. Political correctness is extending its tendrils into nearly every aspect of life in America.

10.18. Systems, Access, and the Law



10.19. Credentials

10.19.1. "Are credentials needed? Will digital methods be used?"

10.19.2. I take a radical view. Ask yourself why credentials are ever needed. Maybe for driving a car, and the like, but in those cases anonymity is not needed, as the person is in the car, etc.

Credentials for drinking age? Why? Let the parents enforce this, as the argument goes about watching sex and violence on t.v. (If one accepts the logic of requiring bars to enforce children's behavior, then one is on a slippery slope toward requiring television set makers to check smartcards of viewers, or of requiring a license to access the Internet, etc.) In almost no cases do I see the need to carry "papers" with me. Maybe a driver's license, like I said. In other areas, why?

10.19.3. So Cypherpunks probably should not spend too much time worrying about how permission slips and "hall passes" will be handled. Little need for them.

10.19.4. "What about credentials for specific job performance, or for establishing time-based contracts?"

10.20. Escrow Agents

10.20.1. (the main discussion of this is under Crypto Anarchy)

10.20.2. Escrow Agents as a way to deal with contract renegging

10.21. Loose Ends

10.21.1. Legality of trying to break crypto systems

10.21.2. wais, gopher, WWW, and implications

10.21.3. "Why are so many prominent Cypherpunks interested in the law?"

10.21.4. "How will crypto be fought?"

10.21.5. Stego may also be useful in providing board operators with "plausible deniabillity"--they can claim ignorance of the LSB contents (I'm not saying this will stand up in court very well, but any port in a storm, especially port 25).

10.21.6. Can a message be proved to be encrypted, and with what key? .21.7. Legality of digital signatures and timestamps?

10.21.9. "What are the dangers of standardization and official sanctioning?"

10.21.10. Restrictions on voice encryption?

10.21.11. Fuzziness of laws

FinCEN triggers. The IRS may claim it is "capital flight" to avoid taxes--which it may well be. Basically, your own money is no longer yours. There may be ways to do this--I hope so--but the point remains that the rules are fuzzy, and the discretionary powers to seize assets are great. Seek competent counsel, and then pray.)

10.21.12. role of Uniform Commercial Code (UCC)

10.21.13. "What about the rush to legislate, to pass laws about cyberspace, the information superduperhighway, etc.?

10.21.14. on use of offshore escrow agents as protection against seizures

10.21.15. Can the FCC-type Requirements for "In the clear" broadcasting (or keys supplied to Feds) be a basis for similar legislation of private networks and private use of encryption?

10.21.16. Things that could trigger a privacy flap or limitations on crypto

10.21.18. "identity escrow", Eric Hughes, for restrictions on e-mail accounts and electronic PO boxes (has been talked about,

apparently...no details) .

Revision #1
Created 23 June 2022 03:53:13 by c0mmando
Updated 23 June 2022 03:53:35 by c0mmando