The Air Force Might Have To Protect Money Laundering in Space

A NASA astronaut goes on a spacewalk to repair a damaged solar panel on the ISS.


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A NASA astronaut goes on a spacewalk to repair a damaged solar panel on the ISS.

Burgeoning US space monitoring capabilities may one day be used to protect off-planet money launderers from Chinese rockets.

If you’re looking for the ultimate in physical security for your future assets, look up, way up. Growing fears about cybersecurity and the rapidly decreasing cost to access space has given birth to a new class of startups offering satellite-based data centers impervious to all physical hacking. What sort of information is so valuable that the average person needs to protect them in space? One answer: money. Even space vaults need guards, and in this case the brunt of that job will go to U.S. Air Force.

But putting digital money into space-based data centers not only puts it out of reach from thieves, it’s also out of jurisdiction from law enforcement. In other words, the Air Force could one day soon be on the hook to protect a hive of money laundering in space.

Bitcoin data servers in space sounds like a random mashup of tech buzzwords. In fact, it’s a real business model. Bitcoins are encrypted digital currency tokens. Jeff Garzik, one of only five people on the planet responsible for maintaining the core bitcoin codebase and founder of the space startup Dunvegan Space Systems, or DSS, announced this month that his company had partnered with Deep Space Industries to acquire craft to ferry 24 small satellites into space.

“Our company is pursing the financial side of things so you can store some of your Bitcoin encryption keys, some of your key backups, in space on our satellites,” Garzik said at the South by Southwest Interactive, or SXSW, technology conference in Austin, Texas, last week. “The legal and jurisdictional issues of space are really where the excitement is,” he said. “We can create new and interesting environments while not being bound to some of the earthly laws that we have constraining development … exploring new legal jurisdictions is also one reason why we need to go to space.”

These orbital safety deposit boxes would be beyond the jurisdiction (or easy capture) of any law enforcement agency, regulator or tax collector. And bitcoins have already been implicated in possible ISIS funding operations online.

“We have two revenue streams: First, selling satellites to customers in government, business and high net-worth individuals looking for the ultimate in data security or worldwide data broadcast … This is a turnkey, soup-to-nuts package,” he said. So, any individual with enough money can own their own digital safe in space.

Our company is pursing the financial side of things so you can store some of your bitcoin encryption keys, some of your key backups, in space on our satellites.
Jeff Garzik, founder of Dunvegan Space Systems

DSS’s second revenue stream will be derived from the continuous operation of a 24-satellite constellation related to data processing and storage.

Approximately $1 million buys one 10 cm CubeSat satellite – the discount rate offers 24 CubeSats for $19 million – and that covers launch, mission operations and direct access from a satellite transceiver or mobile phone.

The cost of getting CubeSats into space is about $300,000 per launch by some estimates. But the price is rapidly coming down. A company called Trisept, that runs a sort of ride-share program for satellites, is offering to get your CubeSat to space for $200,000. Small rockets from companies like Generation Orbit may drive the cost down further. Or, you could take a layover approach. A company called Nanoracks, which claims to be “the first company to own and market their own hardware on the space station,” is promising to send your payload into orbit from the ISS.

But do space banks really represent the ultimate in security for data? In a 2007 missile test, China destroyed a weather satellite to much international condemnation. Over the last few years, a sense of urgency about future threats to space infrastructure has risen among many experts.

“The capability to materially harm satellites in space is well within the abilities of multiple countries, including the United States, Japan, the countries of Europe, China, Russia and India,” said John C. Mankins, president of the space systems technology group Artemis Innovation.

Paul Szymanski, principal consultant at the Space Strategies Center, told Defense One, “I would estimate that China and Russia have at least rudimentary satellite attack capabilities currently, and [will have] more complete ‘warfighting’ capabilities in the next 3-5 years.”

Last year, the Council on Foreign Relations, in a special report on rising space incidents, highlighted space terrorism as a growing concern.

Garzik said the outsized role that the United States plays in space is the reason he chose to locate his business here. He needs protection.

Although we target an international market, DSS operates within the United States, protected by U.S. laws. Air Force Space Command has a strong presence in space, providing a sort of protective umbrella that reduces the risk of physical harm to DSS satellites,” he told Defense One.  

In particular he’ll be looking to the Air Force to provide protection for his business from emerging Chinese or Russian anti-satellite capabilities.

The capability to materially harm satellites in space is well within the abilities of multiple countries, including the United States, Japan, the countries of Europe, China, Russia and India.
John C. Mankins, president of the space systems technology group Artemis Innovation.

DSS’s mission also mirrors Space Command’s mission, albeit in the private sector: Provide resilient and affordable space and cyberspace-in-space capabilities for commercial customers,” he said.

Is the U.S. specially obligated to protect the property of every startup that wants to do off-planet business? The U.S. is party to various international agreements that govern the uses of space, the most famous of which is the Outer Space Treaty, but there are also international conventions on rescuing astronauts, liability, registering objects and the use of the moon and other celestial objects.

Those agreements do not state that the United States has a special duty to protect all space junk.

One watchdog body for policing private activity or protecting private property in space is the United Nations Committee on the Peaceful Uses of Outer Space and its secretariat, the United Nations Office for Outer Space Affairs. Theoretically, at least, the UN would take the lead in keeping commercial satellites safe from Chinese or Russian rockets.

But the UN doesn’t have its own military.

The United States is still, by far, the biggest player in space. Despite the U.S. abdication of manned space flight, worries about Russian engines and Americans hitching rides to the International Space Station on Soyuz rockets, some 75 percent of the global funding that goes toward space activity comes from the United States and 43 percent of the satellites currently active in space are U.S. owned.

“Should a private U.S. satellite be damaged by actions taken by some other state or non-governmental organization in violation of the treaties or understandings associated with the peaceful use of space, I believe the results would be similar to those we see today in the international response to piracy. The United States would work with other nations to identify the bad actor and collectively bring the weight of world opinion and collective action on them to eliminate the threat,” an official with the Pentagon’s Joint Staff told Defense One.

Air Force Space Command is committed to fostering the continued responsibility of space by both nations and commercial entities. Any action that would limit that use would be of specific concern,” said Air Force technical sergeant Mike Slater.

The United States, in other words, would play a role in prosecuting space crimes along with other nations and would do so under a UN framework. But the U.S. would likely be the only country that would bring any muscle to the fight. The Air Force has already launched two Geosynchronous Space Situational Awareness Program, or GSSAP, satellites, and will launch another two in 2016 in order to monitor potential ground-based rockets launched against space objects.

The fiscal 2016 budget allocates $243 million to a program called the Space Fence from Lockheed Martin. It uses a network of more than 400 ground based, S-band radars to hunt, detect and track objects in low earth orbit. The System is expected to be operational in 2017.

Like it or not, burgeoning U.S. space-monitoring capabilities could one day be used to protect orbiting money laundering satellites from Chinese rockets.

On the charge that he’s looking to run an off-planet tax dodge, Garzik says that he depends too much on the United States government to protect his assets to break any of our laws. “DSS and our satellites are bound by U.S. laws, and that includes a wide variety of anti-money laundering laws and regulations,” he told Defense One.

That doesn’t mean that every operator of commercial off-planet data centers will consider themselves beholden to U.S. tax codes and regulations, especially as the skies become more crowded.

“In the long term, when you look at settling humans into space stations, the moon and Mars, it is likely that — just like in American colonial history — settlers will create their own legal jurisdictions and laws,” Garzik said.

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