Doing crypto conventionally by enhancing crypto crime investigations around the world

In difficult times – like the pandemic – entrepreneurial human nature goes into overdrive. People are looking for alternative ways to make money. That could be one of the reasons why cryptocurrencies have become increasingly popular in recent years, in part because many people are sitting at home wondering how to overcome low interest rates and rising inflation.

But where there is cash, there are also criminals. Bad players are experts in human behavior and see the building momentum and increased crypto traffic as a great opportunity, knowing that many newer investors may not be doing their homework. Investors may not apply the same level of scrutiny to crypto as they do to their pensions or other investments, and there isn’t much regulatory oversight around the world. A simple welcome page or message in a forum can quickly lead to many new investors being scammed.

We’ve also noticed an increasing prevalence of scams related to the pandemic, e.g. For example, the pretense of selling fraudulent drugs, vaccines or tests, or offering business loans and grants that have a crypto element, for example, and law enforcement must turn in cents to respond to these new threats. This, in turn, is a growing headache for policymakers charged with protecting consumers. We’re also hearing loud and clear from the crypto industry that regulation often feels behind the curve and not fit for purpose.

What is needed is better education. Better education at all levels, from law enforcement teaching and training to policy makers and regulators. Sharing knowledge across the crypto ecosystem to support investigations. And the resources and desire for smarter regulation that both protects consumers and gives the industry the clarity it needs to continue to innovate and thrive.

Related: Mass adoption of blockchain technology is possible, and education is key

A new approach to law enforcement

Centuries-old investigative methods need more than just adaptation to meet the demands of a crime involving digital assets. As new types of crime emerge, the crypto industry has a duty to quickly educate every member of law enforcement about this new world. Crypto’s key “players” tend to be young digital natives compared to law enforcement. Globally, the vast majority of officials may find crypto very alien, intimidating, or confusing, making them somewhat resistant to the technology. This has its implications as law enforcement often gets to the scene first, gathering evidence for a search warrant. But would they know how to search for a bitcoin wallet, for example? If you don’t understand the crime, how can you monitor it?

After formation, resources are the biggest struggle. In the United States, crypto crimes like ransomware are considered a subset of cyber crimes. Targeted sourcing of crypto allows investigators to reap its benefits by uncovering the immutable evidence of transactions stored on the blockchain, but often the resources and knowledge lie with federal law enforcement agencies. This means local crypto-related crimes are being taken out of the hands of local law enforcement, resulting in a huge federal backlog.

Related: The US plans to monitor illegal crypto activities more adequately

In the UK, law enforcement is catching up with crypto crime. A quarter of the UK police force has assisted in the seizure of $450 million, or around £322 in cryptocurrency at the time of writing, over the past five years. Digging deeper into the numbers, we can see that 99.9% of the seizures are Bitcoin (BTC), suggesting that police are able to easily track down illegal activity using public blockchains, but struggle with privacy coins like Monero (XMR) and Dash (DASH) to track.

Greater Manchester Police Say UK Police Forces Are “Just Getting a Grip” on Technology Behind Crypto; They recruit civilian personnel with relevant experience to train detectives. And the armed forces face an additional legal hurdle when seizing cryptocurrency, as it is classified as property, not cash, under the Proceeds of Crime Act.

Related: In Defense Of Crypto: Why Digital Currencies Deserve A Better Rep

When we talk about crypto, law enforcement is beginning to move beyond rug pulls and silk road to grasp its vast potential in solving a crime, providing investigators with tools to track the movements of money around the world. In the UK, Her Majesty’s Treasury and Customs Authority (HMRC) seized three non-fungible tokens (NFTs) linked to suspected tax evasion, serving as a warning to those trying to hide money from authorities.

Reducing the “lag” on new regulations

Regulators are primarily concerned with protecting consumers and it is clear that they are struggling to keep up with a rapidly evolving industry. Regulation exists but feels fragmented. We will see more regulation this year through consultations and working groups, Her Majesty’s Treasury in the UK only recently announced oversight of financial subsidies, but we often hear that the industry sees emerging regulation as being decidedly behind the curve.


Regulators are striving to change this perception. In the European Union, for example, the Council of the European Union has passed the Framework for Markets in Crypto Assets (MiCA) and the Digital Operational Resilience Act (DORA), which could come into force later this year. MiCA provides clarity on the regulation of stablecoins, public offerings of crypto assets and the licensing of Virtual Asset Service Providers (VASPs). DORA covers digital operational resilience, ensuring organizations can withstand all types of technological risk.

The UK’s Financial Conduct Authority (FCA) is working hard and promising to put more resources into crypto. As a result, more companies will receive approval. Jurisdictions such as Switzerland and Singapore are seen as pioneers in providing clear and mature regulatory frameworks where crypto companies have clarity about their position, can adapt and thrive.

Related: The new HM Treasury regulations: The good, the bad and the ugly

Blockchain and behavioral monitoring tools are growing in popularity as crypto firms see improving compliance processes (and their relationship with regulators) as key to growing adoption. Overall, where we see regulatory clarity, we are seeing increasing industry efforts to improve compliance and encourage adoption, boosting the economy in that region and fostering innovation for the broader market. It may be tempting to think of the crypto industry as at war with its regulators, but I wouldn’t characterize it as controversial, but as symbiotic. Improving standards, if done well and in collaboration, will benefit everyone.

Have a seat at the table

There is much to be gained by inviting private blockchains, governments, exchanges and VASPs to the same table. Knowledge sharing across the ecosystem, particularly around behavioral data and new criminal typologies, could advance criminal investigations and enable better designed regulation and consumer protection. It’s a balancing act.

Related: The FATF includes DeFi in the guidelines for crypto service providers

More and more companies are approaching us who want to do the right thing beyond meeting current regulatory requirements. By improving compliance and implementing best practices, the sector can mature and ensure crypto companies operate safely, investors are protected and the door is opened to institutional investors.


In a world where you can create thousands of new addresses every day, blacklists just can’t keep up. This is where behavioral analytics comes in, to complement more traditional sources of information so businesses can make informed decisions about how to act.

Related: Bitcoin can no longer be viewed as an untraceable “crime coin”.

Education will finally make crypto grow up

Crypto cannot go conventional without wider awareness and understanding. The industry tells us that governments and regulators are always six steps behind when attempting to regain control of the chaos, rather than having a longer-term and less myopic view of policymaking. That was a big part of my role at the FBI, helping law enforcement get even a basic understanding of crypto. And we’re still fighting for better education. We provide our expertise to help regulators and governments update themselves in this changing and rapidly innovative industry to create relevant and effective policies. Because without awareness, knowledge and understanding, crypto can be widely known for crimes over legitimacy for some time.