• Head of Secret Service’s investigations office says cracking a crypto case is often like ‘house of mirrors’
• Investigators found criminals convert stolen cryptocurrencies into stablecoins
The US Secret Service is cracking down on illegal digital currency transactions and has seized over $102 million in cryptocurrency from criminals in connection with fraud-related investigations.
Best known for protecting US presidents, the Secret Service also conducts financial and cybercrime investigations.
In an interview with CNBC, inside the Global Investigative Operations Center, known as the “GIOC,” at the agency’s headquarters in Washington, where agents and analysts track cryptocurrency transactions worldwide, David Smith, the assistant director of investigations, said agents and analysts actively track the flow of Bitcoin and other cryptocurrencies on the blockchain, similar to an old-fashioned surveillance.
“When you follow a digital currency wallet, it’s not different than an email address that has some correlating identifiers,” Smith told CNBC.
“And once a person and another person make a transaction, and that gets into the blockchain, we have the ability to follow that email address or wallet address, if you will, and trace it through the blockchain.”
Seizing crypto and busting down criminal networks
The seizure of over $102 million in digital currencies has occurred in 254 cases since 2015, the report said, citing statistics compiled by the agency, including a fraudulent scheme that the agency investigated with the Romanian National Police in which 900 victims across the US were targeted by posting false ads on popular online auctions and sales websites for luxury items that did not exist.
The Secret Service said that the perpetrators converted the victim’s money into digital assets by engaging in a money-laundering scheme.
In another investigation, the agency busted a ransomware operation tied to Russian and North Korean criminals in which US companies paid the criminals in Bitcoins to stop the attacks.
“One of the things about cryptocurrency is it moves money at a faster pace than the traditional format,” Smith told CNBC, which makes digital currencies attractive to both American consumers and criminals.
Crypto transactions are easy to track down
“What criminals want to do is sort of muddy the waters and make efforts to obfuscate their activities. What we want to do is to track that as quickly as we can, aggressively as we can, in a linear fashion.”
The report said once the Secret Service tracks down the illegal activity, it works to “dig a little deeper into those transactions and deconstruct [them],” Smith said.
“You send me something bad on an email, I know there’s some criminal activity associated with that email address, I can deconstruct, find whatever tidbits of information that you used when you initially logged in or signed up for that email address.”
Investigators also found criminals convert their stolen Bitcoin and other cryptocurrencies into stablecoins, which are almost all the time pegged to a stable asset.
To track criminal activity, the agency watches the market. “Because, you know, the criminals, they’re humans too. They want to avoid some of that market volatility associated with some of the major coins,” he said.
Picture Credit: Bitcoin News
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