The shift in the perspective of an intelligence agency regarding crypto-related crimes could be the next step towards a successful crypto investigation.
While the value of cryptocurrencies has fluctuated dramatically over the last year, this has not diminished crypto’s attractiveness to criminals. Many of them are transferring their illegal activities underground and away from the eyes by law enforcement. Because of the public nature of many blockchains however, this fast-paced movement isn’t a big concern for law enforcement authorities. With the right tools and knowledge, following the proceeds of crimes that are fueled by crypto isn’t as hard as it might seem.
However, intelligence agencies should have a strategy for investigating cryptocurrency that is equipped with the right tools for lawfully collecting digital evidence, as well as the equipped personnel to conduct investigations into these types of crimes when they are discovered.
Digital Intelligence (DI) is the result of two components: the data gathered from digital sources as well as data types (think smartphones computers, computers and the cloud) and the way agencies can access, manage and gain information from the data in order to efficiently conduct investigations. To help law enforcement investigate crypto-related security incidents, it is essential to have the proper tools and expertise for these investigations. If investigators are aware of what they’re looking for and have the right tools and expertise to analyse and follow indications, crypto will appear more like an “invisible” web and more like the DI investigations that the investigative teams employ to.
According to an investigation into the enforcement of cryptocurrency issued by the United States Attorney General’s Cyber-Digital Task Force within the Department of Justice, crypto-based crimes are classified into three categories:
1. The use of cryptocurrency as a way to pay for crimes
Bitcoin (BTC) was pushed into the global media because of a number of significant, international criminal investigations that were linked to the darknet during 2013. At that time, Bitcoin was the only kind of currency available on the dark web. Following several successful government seizures anti-regulatory computer programmers created Monero (XMR), Dash, Zcash (ZEC) and other privacy coins designed to obscure the public ledger, which makes it difficult for law enforcement agencies to track and take assets.
Legitimate businesses typically do not make use of the darknet to market items and services, but that does not mean products that are legitimate can’t be sold via the darknet. Items stolen from stores, counterfeit goods and software copied with stolen activation keys can easily be located with massive discounts.
Companies also have the threat of theft of personal information. Selling employee records, bank accounts data, customer records, and other confidential data is among the most lucrative methods criminals use to earn money from the darknet. In the year 2019, the crypto intelligence company CipherTrace discovered an average of 66% products and services offered by darknet sellers throughout the year stemmed from stolen payment instruments of financial institutions that had been compromised.
The quickest and easiest way to locate criminals is through sophisticated crypto trackers and analytics software.
2. Laundering money and concealing financial business
When criminals earn money by unlawful activities like sales of drugs, fraud, human trafficking or the trafficking of weapons, they need a way to convert the illicit funds to make them appear legitimate. This process is known as “money laundering.”
Due to its ease of use, and pseudo-anonymity crypto-money laundering is fast becoming a significant method for transfer and laundering of money. In just a few seconds, cryptocurrency can be transferred across borders, converted into any other currency, or traded to trade for real assets.
3. Crimes involving crypto and crypto
Certain crypto criminals prefer to focus their efforts on cryptocurrency customers and trading platforms.
In 2018 Three North Korean military hackers -that were indicted in January 2021 obtained and stole more than $1.3 billion of fiat and cryptocurrency from banks as well as companies. As the Assistant Attorney General John Demers said:
“North Korea’s operatives, using keyboards rather than masks and guns, are the world’s leading 21st-century nation-state bank robbers.”
In 2020, about $1.5 billion went missing because of fraud and misappropriation According to the report of CipherTrace’s “2020 Cryptocurrency Crime and Anti-Money Laundering Report.” The DeFi-related criminality is only increasing quarter over quarter.
These kinds of investigations create many challenges for both the private and government sectors. The technology behind the cryptocurrency system is complex and constantly evolving. As a result, police agencies have a difficult time keeping current with the latest security patches and hardware to successfully solve cases.
It is evident that the use of cryptocurrency isn’t a passing trend, as interest in cryptocurrency has significantly been growing. Law enforcement may be tracking certain crypto wallets , or addresses that could help identify a suspect behind the transactions. Recent developments in digital intelligence provide investigators with the capability of visualizing transactions as well as follow virtual paper trails that can reveal evidence about people who commit criminal acts.
Education and training are the key
One of the main challenges for law enforcement agencies when dealing with crypto is perception. Cryptocurrency is still in its early stages and changing Therefore, many people view it as a complex subject and therefore, education and training are essential. Investigators and agencies need the necessary skills to optimize techniques and procedures, but it can be challenging for police command staff to appreciate the value of training on cryptocurrency since the types of investigations that are available are not new to police officers.
Agencies faced the same hurdle at the time of the war, when the command staff did not feel cell phone investigations were crucial. There were many teams that did not pursue mobile devices because they were not equipped with the necessary tools and knowledge to do an accurate analysis of cell phone data. Nowadays, almost every crime has a connection to a cell phone. In the near future, virtually all financial crimes will be linked to a connection to cryptocurrency, as cryptocurrency is the future of money.
New investigative tools
The third tier is made up of investigative tools. These are devices that are used to collect information from devices, as well as software utilized to analyze the information gathered. To develop the most effective tools for crypto-investigators teams require solutions built around a broad blockchain search engine software which collects massive quantities of data points in order to trace crypto addresses in exchanges, dark markets, and ATMs in crypto.
New solutions entering the market provide teams with the ability to discover cryptocurrency artifacts in order to use as “leads” to start a blockchain research.
Advancements in cryptocurrency technology have pushed experienced criminals underground which means that law enforcement involvement is minimal, and the odds of getting captured are very low. Law enforcement must now prepare to create a complete end-to-end investigation solution that is based on knowledge tools, services and tools. Digital intelligence is key in breaking down the causes of an incident and in preparing for the next incident, and it is crucial to ensure that DI strategies include contingencies backed by world market url-class tools specifically designed for crypto.
With the increasing use and popularity of cryptocurrencies and blockchain technology, agencies must be working towards bringing their DI expertise inside and hiring knowledgeable experts. It’s a dual-step solutionagencies require expertise and the appropriate tools to effectively respond to incidents involving crypto. These are the essential elements for a strong DI strategy. Crypto is linked to various criminal acts ranging from financial fraud to wildlife, drug and human trafficking making it a fundamental element in DI investigations. And while becoming the new kind of currency the technology behind cryptocurrency will aid in easing the investigation procedures.
To tackle these challenges, it is necessary to the evolution in law enforcement equipment, education, and strategies that are based on DI and analytics of data. The final word is that the cryptocurrency will be around for the long haul, police and other law enforcement organizations must adopt the appropriate steps now to be prepared to deal with the escalating number of criminal activity involving crypto that is bound to grow more commonplace due to the growing popularity of cryptocurrencies. But crypto is just an instrument for criminals, just as money has always been. However, it is a tool for police agencies too.