Jurat network draws controversy after it locks sanctioned accounts

There’s a popular saying in crypto: not your keys, not your coins.

What it means is that if you don’t control the private keys to the wallet that holds your tokens, the tokens are not necessarily yours. After all, only by controlling the private keys could you be completely sure that only you, and only you, have control over the wallet and the transactions involving the wallet.

But now, it seems that even if it’s your keys, it’s not necessarily your coins.

Jurat- the next step in civilising crypto

Earlier this month, A US District Court used Jurat’s on-chain enforcement tool to lock several sanctioned individuals out of their crypto accounts. These individuals had previously been identified as being involved with money laundering and ransomware use, in order to benefit North Korea’s weapons program.

How Jurat works is that each party provides the court with a competing hash for what they want the court to do, and when a ruling is made, the hash is pasted and software nodes execute the order autonomously.

Naturally, this seems to fly in the face of the spirit of blockchain technology and cryptocurrency. Censorship resistance and the right to transact has long been a key part of the ideology of the Web3 world, and Jurat’s compliance with law enforcement to sanction wallets will almost certainly draw criticism from those still aligned with the original mission of cryptocurrency.

In fact, Jurat’s founder Mike Kanovitz acknowledges as much, admitting that “some people are going to claim to be philosophical purists and hate on it. I get that.”.

However, Kanovitz also argues that such technology could bring protections for digital assets, which will be the key to mainstream adoption.

“Some of the people who currently think that there should not be effective law enforcement on-chain would feel differently if they got hacked, defrauded, or lost their private keys. Then they would be relieved that they can recover their property.”

And he has a point. The Web3 space is rife with scams, phishing attacks, and rug pulls.

Chainalysis’ mid-year crime report noted that criminals are increasingly making headway when it comes to ransomware attacks. At the time of the report’s publication, Chainalysis stated that this year alone, ransomware attackers have already extorted US$449.1 million.

Additionally, Chainalysis noted that while crypto crime was on the decline, this decline was because of increased law enforcement pressure and the efforts of crypto businesses to protect users from scams and hacks.

Until Jurat, law enforcement in the Web3 world has primarily involved tracing the path of stolen cryptocurrencies, and cooperating with law enforcement agencies that have jurisdiction where the criminals are based.

Now, however, courts will be able to enforce their judgements with greater ease, and consistently be able to freeze wallets without necessarily having to wade through intricate mazes of red tape.

This could potentially be a huge win for the blockchain industry. Transparency is already built into blockchain technology since transactions are public.

But the technological innovation that Jurat presents would also mean that law enforcement or even private blockchain companies will not have to painstakingly track down private key holders of wallets and force them into the open before getting back stolen funds.

It could mean instant recovery of funds for those who have unwittingly fallen prey to scammers or phishing attacks, and make it more difficult for anyone trying to carry out rugpulls.

After all, what is the point of stealing cryptocurrency if the transactions are reversible without the thief’s digital signature?

In this way, cryptocurrency companies will also be able to guarantee greater security for their clients.

And since Jurat would require judicial input for the enforcement action to be carried out, cryptocurrency companies will also be better able to convince regulators and law enforcement agencies that they are willing and able to comply with enforcement actions.

Cause for celebration, but not elation

But, we should also recognise that there are still potential limitations on what can be achieved.

Courts and enforcement agencies do have jurisdictional disputes, and the legitimacy of judgements can also be called into question when one or several parties to a case are absent.

Additionally, there is a question of what happens if courts rule differently, for example during an appeal process or if a parties to a case file suits with different courts.

But these are not issues of principle, but rather of procedure, and can be ironed out. Legal systems around the world are already becoming increasingly involved in the crypto space.

Several cases are already being held up as landmark cases for the Web3 world, particularly those that declare that NFTs and cryptocurrencies can be considered private property and afforded legal protections under the law.

The expansion of legal principles and judicial institutions into the crypto space is one that will continue- but as the philosopher Thomas Hobbes mused, it is not wisdom, but authority that makes a law.

A law that is not enforced, and therefore one that is not obeyed, can hardly be put on the same level as one that is widely known because it is regularly enforced.

As the Web3 space develops and judicial institutions expand their reach into crypto, Jurat provides what has thus far been sorely lacking- a means of effective and efficient enforcement action.

While Jurat may draw controversy now, it is almost certainly a necessary step in ensuring that the Web3 space becomes a safe space for retail investors, because it functions as a powerful tool to crack down on criminal activity and provide redress to victims.