Changes in the perception of intelligence agencies on crypto crimes will be the first step toward the success of a crypto investigation.
While the value of cryptocurrencies has varied wildly in the last year, this does not mean that it is less attractive to criminals. Many of them are moving their illegal activities underground and away from the sight from law enforcement. Because of the public nature of the majority of blockchains the rapid growth should not be of concern to law enforcement agencies. With the right tools and knowledge, following the proceeds of crypto-enabled crime isn’t as difficult as it appears.
However, intelligence agencies should be equipped with a crypto investigation plan that is equipped with the right devices to collect legal digital evidence as well as properly educated personnel to look into these types of crimes when they occur.
Digital intelligence (DI) is the result of two components: the data collected from digital sources and types of data (think smartphones, computers and the cloud), and the manner that agencies use, access, manage and gain insights from this data for effective investigations. In order for law enforcement agencies to investigate cybersecurity-related cyber-attacks, it must have the right tools and knowledge to drive these investigations forward. When the investigators understand what they’re looking for and are equipped with the right tools and know-how to follow and analyze those indications, crypto will look less like an “invisible” web and more like the DI investigations that the investigative teams employ to.
According to a report on cryptocurrency enforcement of the United States Attorney General’s Cyber-Digital Task Force within the Department of Justice, crypto-based crimes fall into three categories:
1. Making use of cryptocurrency to fund criminal acts
Bitcoin (BTC) became brought into the mainstream media as a result of a string of prominent, international criminal trials linked to the darknet in 2013. The time was when Bitcoin was the only kind of currency available on the dark web. Following several successful government seizures, anti-regulatory computer developers created Monero (XMR), Dash, Zcash (ZEC) and other privacy coins that are designed to obscure the public ledger. This makes it more difficult for law enforcement to track and seize assets.
Most legitimate businesses do not use the darknet to sell goods or services, but this doesn’t mean that the products aren’t available in the darknet. Products that have been stolen, counterfeit items and copied software with stolen activation keys can easily be found with steep discounts.
Companies also have the threat of data theft. Selling the bank accounts of employees, employee records customer records, and other proprietary data is among the most lucrative ways that criminals earn money through the darknet. In 2019, the cryptocurrency intelligence company CipherTrace found the majority of the products and services offered by darknet companies throughout the year stemmed from the stolen payment products of financial institutions that were compromised.
The most efficient and fastest method to track down criminals is to use sophisticated crypto trackers as well as analytics programs.
2. The financial industry is a target for money laundering and concealing activity
If criminals earn money through illicit activities like the sale of drugs, fraud weapons trafficking or human trafficking They require a means to change the illegal money to appear legitimate. This process is referred to as “money laundering.”
Due to its ease of use and pseudo-anonymity, crypto-money laundering is quickly becoming a major method of moving and laundering money. Within a few minutes, cryptocurrency can be transferred across borders or converted into another cryptocurrency or traded in exchange for real assets.
3. Crypto-on-crypto crime
Certain crypto criminals prefer to concentrate their efforts on cryptocurrency customers and trading platforms.
In 2018, three North Korean military hackers — who were indicted in Feb 2021 successfully stole and extorted more than $1.3 billion of fiat and cryptocurrency from financial institutions and corporations. As Assistant Attorney General John Demers said:
“North Korea’s operatives, using keyboards rather than masks and guns, are the world market url‘s leading 21st-century nation-state bank robbers.”
In 2020, around $1.5 billion went missing as a result of fraud and misappropriation as per CipherTrace’s “2020 Cryptocurrency Crime and Anti-Money Laundering Report.” DeFi-related criminality is only increasing quarter-over-quarter.
These kinds of investigations create many challenges for both the private and public sectors. The technology that powers the cryptocurrency system is complex and is rapidly changing. As a result, police agencies struggle to keep current with the latest security patches as well as the necessary hardware needed to solve crimes.
Evidently, the usage of crypto is not just a passing trend, as the demand for cryptocurrency has dramatically been growing. Law enforcement may be tracking particular crypto wallets and addresses that could help identify a suspect behind the transactions. Recent developments in digital intelligence provide investigators with the ability to visualize transactions and trace digital paper trails that could reveal evidence about people who are involved in criminal acts.
Education and training is the crucial
One of the first problems for law enforcement officers when dealing with crypto is the perception. The field of cryptocurrency is constantly evolving and new, so people perceive it as complicated this means that the need for education and training is crucial. Investigators and agents must have the necessary skills to optimize methods and practices, however it may be difficult for police officers to appreciate the value of cryptocurrency-related training since these kinds of investigations are relatively new to law enforcement.
Agencies had to overcome the same obstacle 10 years ago, when top management didn’t think that investigations into cell phones were important. There were many teams that did not pursue mobile devices as they did not have the necessary tools and knowledge for properly with the data collected from mobile phones. In the present, almost every crime is linked to a cell phone. In the near future, virtually every financial crime will have some connection to cryptocurrency as crypto is the inevitable future of money.
New investigative tools
The third tier is made up of investigative tools. They are tools that use physical components to collect data from devices as well as software utilized to analyze the data gathered. To create the best tools for crypto analysts teams, teams must develop solutions around a broad blockchain search engine tool that can collect massive amounts of data points that can be used to track the cryptocurrency addresses of exchanges, dark markets and ATMs in crypto.
The latest solutions on the market allow teams to discover cryptocurrency artifacts in order to use for “leads” to start a blockchain study.
Technology advancements in cryptocurrency have brought experienced criminals underground, where police involvement is almost non-existent, and the chances of being captured are very low. Law enforcement must now prepare to create a complete end-to-end investigative strategy that focuses on information tools, services and tools. Digital intelligence is crucial to breaking down what went wrong and then preparing for the next incident and it is imperative for all DI strategies have contingencies supported by top-of-the-line tools designed for crypto.
Due to the increased use and popularity of cryptocurrencies the agencies should be looking to bring their DI expertise in-house and recruiting knowledgeable experts. This is a two-part approach -agencies require expertise and the right tools to be able to appropriately respond to crypto-related incidents. These are the fundamental elements of a robust DI strategy. Crypto is linked to a variety of types of crimes — from financial fraud to wildlife, drug and human trafficking making it a fundamental component of DI investigations. While it is becoming the latest form of money cryptocurrency, the technology behind it can help speed up the investigation procedures.
In order to tackle these new challenges, you need the advancement in law enforcement equipment, education and strategies built around DI as well as data analysis. The bottom line is that crypto is here to stay, and law enforcement agencies must make the necessary changes today to prepare for the increase in criminal activity involving crypto that is bound to increase in frequency as the popularity grows of cryptocurrency. It is, however, an instrument for criminals, as money has always been. But it must become an instrument for law enforcement agencies too.