Facebook’s Cryptocurrency
15 Jul 2019
To: Chairwoman Maxine WatersRanking Member Patrick McHenryU.S. House of RepresentativesCommittee on Financial Services2129 Rayburn House Office BuildingWashington D.C. 20515
Fr: Gretchen Peters and Professor Amr Al-AzmThe Alliance To Counter Crime Online
Re: Concerns Facebook’s Proposed Cryptocurrency Will Facilitate Crime and Terror
Dear Chairman Waters and Ranking Member McHenry,
As the House Committee on Financial Services prepares to question David Marcus, Calibra’s Chief Executive Officer about Facebook’s proposal to launch a cryptocurrency, we want to express our concern that Facebook’s various platforms are infested by criminal syndicates and terror groups, and the firm has been grossly negligent both in monitoring and removing them, and in collaborating with law enforcement to counter these threats.
We want the committee to understand that the world’s largest social media company does more than just connect people. One-third of the world’s population logs onto Facebook platforms, benefitting from a digital space for shared ideas and a network for global activism. But those same platforms have also become ground zero for organized crime syndicates to connect with buyers, market their goods, and move money, using the same ease of connectivity enjoyed by ordinary users.
Facebook and its family of platforms are also used by terrorist groups as a megaphone for propaganda, for recruiting new members, and even to fundraise. This illegal activity often occurs out in the open through Facebook groups and pages, two staple features of the platform.
Instead of acknowledging that their technology is being used for illegal purposes and fixing the problem, Facebook CEO Mark Zuckerberg has clung to immunities he claims to be provided under Section 230 of the Communications Decency Act of 1996, which courts have interpreted to mean that tech firms shouldn’t be held liable for content posted by third parties.
There is a huge problem with this approach. The algorithms Facebook has touted to connect the world have connected criminals and terrorists faster than Facebook’s own beleaguered moderators can delete them. The impact of this illegal activity is affecting our communities, our cultures, and our environment, and it’s happening in the same digital spaces where our children play, our families connect, and our companies advertise.
Facebook has contributed to sex trafficking, both in the United States and abroad. A Texas woman who was lured into prostitution at age 16 by another Facebook user is currently suing the platform for allowing traffickers to “stalk, exploit, recruit, groom, recruit and extort children.”
Rare and endangered species from tigers to reptiles are also widely trafficked on Facebook. More than 80% of the ape trade is now on social media, and multiple tons of elephant ivory are being sold monthly across Facebook.
The platform’s black markets are not limited to crimes affecting the living, they also affect the dead. Groups trading in human remains on Facebook and Instagram exchange macabre items of questionable legality and origin ranging from Tibetan skull caps to babies in jars.
Archaeologists investigating the illegal antiquities trade on Facebook have recorded tens of thousands of artifacts trafficked from conflict regions including Syria, Iraq and Yemen - a war crime. ATHAR Project is monitoring almost 2 million regular users who log onto a collective 95 groups serving as digital black markets for priceless artifacts plundered from across the Middle East and North Africa.
Investigators at the Global Health Policy Institute have tracked illegal drug sales - everything from prescription opioids like Oxycontin Fentanyl-laced pills - that are widely available on Instagram and Facebook. Facebook itself admitted to finding and removing more than 1.5 million listings for illegal drug sales, including heroin, cocaine and meth, within the past 6 months. The narcotics marketplace on Instagram is targeted to teenagers. Its scale remains unknown.
To put this scale in perspective, the notorious dark web platform called the Silk Road never posted more than 250,000 ads at any given time; Facebook is hosting six times that much. In other words, Zuckerberg has succeeded in bringing the Silk Road to Main Street.
In light of all this, Zuckerberg’s announcement that he plans to alter Facebook to focus on groups - and also launch a cryptocurrency - are downright alarming.
There’s no reason to believe these changes will make user data any more secure. After all, Facebook hasn’t changed its fundamental business model. But the changes will make it harder for authorities and civil society groups to track and counter illegal activity on Facebook. Groups are already the epicenter for black market activity on Facebook.
The firm’s continued negligence in the moderation of criminal content makes clear that the time for self-regulation has passed.
The challenge is that federal laws take time, something that human trafficking victims, drug addicts and endangered species don’t have. But there are other ways US regulators can address crime on social media. Facebook’s IPO may hold the key to effective regulation.
When Facebook went public in 2012, the firm voluntarily entered into a strict regulatory regime that negates CDA 230 immunities in the context of Facebook’s obligations under securities law. The firm’s lack of internal controls and effective compliance programs implicate potentially serious securities law violations. Your committee can influence immediate action by asking the Securities Exchange Commission (SEC) to utilize its existing regulatory power.
As a result of Facebook’s failure to establish appropriate internal controls, criminal activity has accelerated on its platform and continues to grow. Now is not the time to let Facebook launch a cryptocurrency. It’s time to make social media a safer place for all.
Chairwoman Waters and Ranking Member McHenry, we urge you to block Calibra from becoming a reality, and to press the SEC to act before it's too late.
Respectfully,
Gretchen Peters, Executive Director of the Alliance to Counter Crime Online
Dr Amr Al-Azm, co-founder of ACCO and Director of the Antiquities Trafficking and Heritage Anthropology Research (ATHAR) Project