Digital platform in recent years has become a platform for cybercrimes such as malware, hacking, drug trafficking, phishing, money laundering, fraud, extortion, Ponzi schemes, scams and so forth. One such platform which is threatened by cybercrimes is cryptocurrency space. Since it is an anonymous platform with no central authority, regulations and law enforcement involved with cryptocurrency, the occurrences and conditions of cybercrimes are susceptible. 

The Silk Road incident is one of the most infamous cases ever occurred in the cryptocurrency space and many such crimes be it of any length assumingly occurs every day. Eventually, cryptocurrency became the favourite platform for the dark web. However, law enforcement was able to shut down the dark web of Silk Road. 

Charles Delingpole - founder of ComplyAdvantage told Hard Fork, “The most famous mistake made by a cryptocurrency criminal is to de-anonymize oneself. When running Silk Road Ross Ulbricht did this by using aliases that were identifiable and traceable back to his real-world identity.”

Also Read, The Cryptocurrency Wallet Heist and Measures to Secure

In this blog we are going to discuss the methods law enforcement implies to catch crypto criminals:

Cryptocurrency is based on blockchain technology which is pseudo-anonymous, immutable, time-stamped, it is a data ledger meaning all the transactions ever made on a blockchain will exist and cannot be altered. These attributes of the technology enable law enforcement to study the patterns that look suspicious, trace and follow the transactions. 

Also, companies and start-ups are collaborating with law enforcement to aid in finding the cryptocurrency criminals. Many of them have helped various law enforcement agencies such as FBI, DEA, Department of Homeland Security and Europol. ComplyAdvantage and Elliptic are one of the platforms that collaborate in the crypto crime space.

Elliptic - a London based company facilitates blockchain analytics for crypto businesses and financial institutions. They monitor the blockchain and screens the transaction to know whether it is associated with any criminal activities. Tom Robinson - the founder stated, “Our focus is on preventing money laundering rather than tracking down criminals,” “To achieve this, we provide tools to businesses such as cryptocurrency exchanges and financial institutions, that allow them to screen cryptocurrency transactions for links to criminal activity.” “By making it harder for criminals to launder their proceeds in cryptocurrency, we help discourage the illicit activity in the first place.”

Also Read, 10 Use Cases For Blockchain Technology And Law Enforcement

ComplyAdvantage founded in the year 2014 is an award-winning AML data and technology that empowers financial crime fighters.

Delingpole told Hard Fork, “We [ComplyAdvantage] help file suspicious activity reports directly to FINCEN and other regulators around the world. We liaise closely with regulators to understand the latest patterns of criminal behavior and then ensure that our clients can then detect and prevent those typologies.”

Katherine Haun - a cryptocurrency investor and the Department of Justice prosecutor investigates prison gangs, mafia and corrupt officials. One of her most extensive cases has been investigating the white-collar crime and public corruption wherein the government agents exploited the early adopters of cryptocurrency.

Agencies like the FBI - US Federal Bureau of Investigation is also working on the cryptocurrency investigations. US President Donald Trump has even signed an executive order that enables in creating a task force focusing on the cryptocurrency fraud investigations.

EUROPOL - The European Union Agency Law Enforcement Cooperation is also working on cryptocurrency-related crimes. In June 2019, over 300 cryptocurrency experts from the private sector and law enforcement has attended the sixth Cryptocurrency Conference which is also stated to be the largest cryptocurrency event in Europe. The meeting involved in opportunities to cooperate and partner in order to detect and prevent cryptocurrency-facilitated crimes and to assist the asset recovery.

Law Enforcement is working on the methods to de-anonymize suspects and detect the unusual patterns. The work is about examining the blockchain activity closely and it is heavily focused on observation, monitoring and surveillance of the transactions.

When Satoshi Nakamoto created Bitcoin, he had an innovative plan to revolutionize the currency space - an environment that is decentralized and secure. The cryptocurrency was meant for the higher and betterment purposes which also led to being exploited for illicit activities. 

Crypto criminals pose threat to cryptocurrency and its authenticity while law enforcement is buckling up to adapt the technology and catch the technological threat.