In retrospect, the U.S. Department of Justice will appoint veteran cybersecurity expert Eun Young Choi as the first director of the department’s National Cryptocurrency Enforcement Team (NCET) in the winter of 2022. The nomination may have been the first sign of the decidedly hostile approach the US government is now taking to the cryptocurrency industry.
petty crime trash
Choi, a former U.S. Attorney for the Southern District of New York, said NCET is tasked with keeping users safe as “technology around digital assets grows and evolves.” Currently, he is focusing on cracking down on cybercrime and money laundering crimes in the cryptocurrency industry.
What types of crimes will be uncovered when the crypto boom unravels (as Warren Buffett puts it) and those who were “swimming naked” are exposed? was little known to anyone.
Rather than headline-grabbing mega-scandals like FTX or Three Arrows Capital, NCET is mostly about social media scams, darknet exploits, and online scams that are rarely talked about, but cryptocurrencies. It focuses on relatively minor crimes that are almost a daily occurrence for those involved in wealth.
CoinDesk columnist Paul Dylan-Ennis calls it a “trash can” for cryptocurrencies, and you can find this trash wherever crypto is talked about online. will be overflowing
Related article: Garbage-filled waterways: When the media lies about crypto assets
Many of these scams only have one victim at a time, but the losses can be large. NCET and other authorities have cracked down on six U.S.-based scams that collectively cost $112 million.
According to an estimate by the US Federal Bureau of Investigation (FBI), $3.31 billion will be stolen from investment fraud in 2022, of which cryptocurrency-related fraud will account for more than a third. Beyond financial losses, the prevalence of credit fraud, in which criminals build long-term relationships with victims and build trust, has tarnished cryptocurrency’s reputation.
Only 1% related to illegal activities
Whenever we talk about cryptocurrency and crime, we have to say that less than 1% of all cryptocurrency transactions are related to illegal activity. At least that’s what the Chainalysis report says. This is a point worthy of attention, and is also emphasized by industry insiders.
The majority of people who use cryptocurrencies use them for trading, and Reuters reports that they are becoming more prevalent in countries with “infrastructure instability,” such as Turkey and Argentina.
But no matter how much people want to believe that Chainalysis knows almost everything about cryptocurrency and crime, the numbers can be tied to known individuals, a conservative estimate based on a limited number of blockchain addresses. Very likely.
In fact, at a Financial Times conference, Choi said, “Crypto and digital assets are becoming relevant to all aspects of criminal activity that the NCET is investigating.” These include ransomware attacks, credit fraud, and even sanctions evasion, according to Choi.
The DOJ says it is not too worried about blockchain being used to evade economic sanctions against Russia, and an immutable ledger of transactions (i.e. blockchain) is not at all good for crime. Given that it’s a tool, it might be better to take these remarks with a grain of salt.
NCET was created to investigate crypto-related crime after all, so it should be no surprise that it finds crypto-crime. But such statements can check reality.
There is often a gap between the promises and hopes spoken about crypto assets and reality, and it is worth considering it. Stats may say “only 1% of cryptocurrency use is illegal,” but the stories we hear tell us otherwise.
I know people who have been victims of SIM swaps, lag pulls, and bought drugs with bitcoin, and you know them.
One of the reasons people fall victim to cryptocurrency scams seems to be clouded by fake information around crypto technology, including FOMO (fear of missing out) and extreme excitement. Mr. Choi said that the But perhaps the claim that blockchain isn’t used for crime may also exacerbate the situation.
Destiny to be open and public
Yet the reason why cryptocurrencies attract scammers is also why we need cryptocurrency technology. Being open source, crypto assets are also open to those who abuse them.
Bitcoin is powerful because it is “a currency for enemies” (a currency that can be used without having to trust the counterparty), otherwise it would not be groundbreaking.
I think it’s good that blockchain research firms like Chainalysis have shattered the illusion that Bitcoin is private. Because it brings expectations closer to reality.
In a world that also has cops, it wouldn’t be a bad thing if at least some of them put their efforts into monitoring blockchains. It’s open and public, so it makes sense.
All that’s left is for cryptocurrency people to get smarter and come up with a way to clean the trash.
｜Translation and editing: Akiko Yamaguchi, Takayuki Masuda
| Image: Scott Rodgerson/Unsplash
｜Original: What’s the Reality of Crypto in Crime?