One month earlier, Leicestershire police had seized 10 types of cryptocurrencies following a raid on the home of a drug dealer who was using digital assets to buy and sell Class A drugs. Both companies are pale in comparison with the record of the Metropolitan Police for encryption retrieval in the same year, worth 180 180 million. But all three, and many more, are part of a widespread crypto-crime wave unveiled today by a series of freedom of information demands. The Observer requested data from the 45 regional police services in the United Kingdom that requested an analysis of cryptocurrency seizures from 2017. Information sent by the 27 responding forces reveals a major change: there has been a significant increase in the number of raids, and a proliferation of types of digital currencies used by criminals to invest the proceeds of their activities. More than half of the responding forces seized cryptographic assets during 2021, seizing or restricting access to 22 different types of digital currencies. This was a significant increase from 2020, when four types of encryption were seized by eight police services. The number was even lower in 2019, when only two types of digital currencies were seized. While the most popular digital currencies, such as bitcoin and ethereum, have emerged more than any other, the data reveal the growing popularity among convicted and suspected criminals of much lesser-known rivals. “Bitcoin is still the key: it’s digital gold,” said Gurvais Grigg, who spent 23 years with the FBI and now works as chief technology officer for data consultancy Chainalysis, which helps private companies and law enforcement agencies. to detect the movement of cryptocurrencies. Have you seen this appearance of ethereum, “stablecoins” [cryptocurrencies pinned to a real-world asset] and a much more diversified market. “As a result, you will find more of these coins in the pockets of criminals, because they take them from people.” In the Leicestershire case, police showed up with assets such as Enjin Coin, Polkadot, Neo and even Chiliz, crypto-tokens sold to football fans to allow them to access privileges and vote for decisions in their groups. In Wales, South Wales Regional Organized Crime Unit seized eight crypto-assets, including one called Cake, while its Southwest counterpart seized seven, including a luxury coin. “It’s an emerging field that is coming at us like a tidal wave, and policing needs to adapt to the times,” said Phil Ariss, who coordinates the National Police’s response to cryptocurrency. “It’s a great learning curve, but we’re doing well.” He says 300 police officers have been trained in encryption, while hundreds more are to be instructed. But the scope of the challenge is even greater than that described by the Observer’s demands for freedom of information. Although some services have not made the same seizures, “most are involved in investigations,” he says, with officers working on cases with 35 to 40 types of coins. “It’s not just investment and theft, in some extreme cases it is terrorist financing. It could be buying child abuse images, laundering dirty money. “We see a huge range of cases throughout law enforcement,” he said. Most police services do not disclose the amount of cryptocurrency involved, fearing that other bad actors, armed with such detailed details, could identify when the seizures took place. Leicestershire police said they could give them a “warning” of an investigation that could affect them, allowing them to take action to hide illegal profits. However, Dyfed-Powys police, who patrol a predominantly rural area where Llanelli is the largest city, told the Observer that they owned 82 bitcoins in 2021 worth 2 2.5 million at the most recent price. When police seize such digital assets, they are not well equipped to store them themselves. Instead, explains Avon and Somerset police, they outsource this task, storing the bonus “in a safe wallet with a third party provider”. Big name: Matt Damon appears in a Crypto.com ad. They refuse to name the companies involved, citing security reasons. there is a risk that employees will be targeted at cryptocurrencies. In 2017, Pavel Lerner, a UK-based exchange clerk, was abducted by men wearing balaclava in Ukraine. He was released only after a ransom was paid. Any police department that responded to the FoI’s requests cited this case as a reason why it would not disclose the holders of confiscated cryptocurrencies. “This is not the only case of its kind,” said Avon and Somerset police. Therefore, providing information to the general public about the volume of assets stored and where they are stored increases the risk of cyber attacks, internal threats and other hostile actions by those who may wish to penetrate either the supplier or the enforcement authorities. of law. Theoretically, the growing appeal of cryptocurrencies to criminals is obvious. Large sums of money can be quickly transferred across borders to jurisdictions that do not necessarily cooperate with UK law enforcement. According to Gregg, however, criminals should not be overconfident. Transactions made in the blockchain, by their nature, are recorded. This means that, with the right time and the right resources, the perpetrators can be identified and arrested, long after the crimes are committed. In the dark web, mixing services are available that allow criminals to launder their encryption, mixing it with other types of assets to disperse traces of paper and throw researchers out of their tails. But Gregg says determined, well-resourced researchers can still get there. “Detection tools have been improved and data availability is better,” he says. The growing number of seizures in the UK is not just a reflection of the bigger crime, he says, but of the growing ability of police to stop it. In addition, he points out, the legal encryption market has grown faster than the volume of crime-related transactions. Illegal encryption addresses received $ 14 billion during 2021, according to Chainalysis – a record but historically low share in total volume of just 0.15%. However, as the world of cryptocurrencies expands rapidly, the challenge of law enforcement will increase along with it. A separate revelation of freedom of information, reported to the Observer, reveals a significant increase in encryption fraud-related reports last year. There were 9,607 such reports on the National Action Fraud hotline last year, according to City of London police, up from 5,581 the previous year and 3,558 in 2019. The victims, who were disproportionately likely to be under 35 and men, were financially losses of more than 200 200 million. David Gerard, author of Attack of the 50 Foot Blockchain, says more encryption equals more crime. “More people are using things,” he says. There are small coins, known as “shitcoins”, for everything these days. “There will be a lot more scams because more people are promoting it. “Times are difficult, people are worried, so they are booty of false hopes and methods of enrichment.” But Ariss points out that the greater the public interest in encryption, the greater the awareness and understanding among police officers who try to prevent ordinary people from becoming victims. “THE [expansion] of encryption in the consciousness of the general public also affects the police. All you have to do is go to the tube and see ads. encryption companies sponsor sports teams. At Crypto.com you have Matt Damon supporting it. “There is an awareness that pervades, and in a way the challenge [of training officers] it’s easier now than ever. “ Ariss says British police are keeping up, so far. “We are in a good position compared to some partners in international law enforcement. “The wheels of justice are turning slowly, so some of this good news has not come out yet, but time will tell we are doing a very good job.”
