Crypto Industry Faces Systemic Risk From Bige Tech Firms

Crypto entrepreneur Balaji Srinivasan has described Google and Apple as systemic risks to the crypto industry.

The former Coinbase CTO tweeted this on May 19. According to him, these tech giants are major security threats because the federal government can weaponize them.

If that happens, the government could “backdoor iPhone and Android to exfiltrate private keys,” he said.

How These Tech Giants Threaten Crypto

Balaji noted that in a future where governments become bankrupt and turn to Bitcoin to fund their operations, the U.S. government could compel tech giants like Apple and Google to scavenge for private keys in the servers, browsers, and devices under their control.

This isn’t cyberterrorism, it’s cyberwar. It’s not some random hacker who manages to sneak out a file. It’s when the CEO of a company gives the lawful order to to hack their customers. This is similar to what happened to 140M Russians designated enemies of the state in early 2022 — every tech company turned on their former customers.

Most tech companies would be forced to comply in this dystopian future because they have no choice. He said the only safe option for crypto users would be the Linux operating system — even with its limitation.

Following Balaji’s statement, many noted that crypto might need its phone and recommended the recently launched Solana phone. However, others questioned why anyone would store their private keys on their phones. This is generally considered poor security standards because both Google and Apple stores are not end-to-end encrypted.

Governments Already Confiscate Illegally Acquired Crypto Assets

According to available information, the U.S. and Chinese governments hold one of the largest tranches of Bitcoin and other digital assets.

For context, the U.S. government holds over 200,000 units of BTC valued at roughly $6 billion. The government acquired most of this BTC by confiscating them from cases that included the Silk Road BTC seizure, the Bitfinex hack confiscation, etc.

Earlier in the year, the U.S. government seized $260,000 worth of digital assets from an NFT phishing scammer. The seized assets included two NFTs — Bored Ape 9658 and Doodle 3114 — valued at over $200,000.

Meanwhile, BeInCrypto previously reported that the Chinese government holds approximately 194,775 BTC valued at roughly $3.9 billion. As of November 2022, the Asian country’s government had $6 billion worth of cryptocurrencies, including Bitcoin, Ethereum, and others.

Like the U.S., China got most of its BTC holdings through its funds seizure of the PlusToken Ponzi scheme.