What is the reality of crypto in crime?


In retrospect, the US Department of Justice (DOJ) may have named veteran cybersecurity expert Yoon Young Choi as the first director of the agency’s National Cryptocurrency Enforcement Team (NCET) in the winter of 2022, following the US government’s recent and Definitely the first pioneer. Antagonistic outlook towards the industry this year. The NCET enforcement team, which is now drawing a line on cyber and money laundering crimes in crypto, was tasked with ensuring that users remain safe “as the technology around digital assets grows and develops,” Choi, who previously served as a federal prosecutor. Southern District of New York, said at that time,

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Little did anyone know exactly what kinds of crimes would be revealed as the financial tide from crypto exposed all who were “swimming naked” (as Warren Buffett likes to say). Instead of major headline-drawing scandals like FTX and 3AC, Choi’s department seems focused mainly on relatively minor issues like social media scammers, darknet abuse and online fraud – activity that is rarely discussed openly. , but which exists as a backdrop of sorts for anyone spending time on crypto Twitter and discord. (As Paul Dylan-Ennis, a frequent contributor to CoinDesk, says Crypto’s “trash ditch,” Which seems to be discussed online anywhere crypto gets stuffed.)

See also: How Big Is Crypto Crime, Really?

While these types of scams often only net one victim at a time, it can still be big money. NCET, along with other agencies, busted six such US-based scams and booked over $112,000,000. The Federal Bureau of Investigation (FBI) estimates that $3.31 billion was stolen from the public through investment fraud in 2022, with crypto-related scams accounting for more than a third of that figure (~$2.57 billion). Worse than losing money, the proliferation of the confidence game – which requires bad actors to develop long-term relationships and build trust with their digits – has tarnished crypto’s reputation.

Any conversation about crypto and crime needs to reveal that, according to those with the data, less than 1% of total crypto transactions may be linked to illegal use – at least that’s what Chainalysis reports. It’s a noteworthy point, and one that advocates in the industry won’t let you forget. Most people using crypto are trading growing adoption In Countries “Weary of Inflation” Like Türkiye and Argentina, Reuters reported. But as much as people want to believe that Chainalysis has a god’s eye on crypto and crime, it seems more likely that the figure it cites is a conservative estimate based on the limited number of blockchain addresses that actually exist. May be associated with known persons.

See also: Don’t Blame Bitcoin for Ransomware , Opinion

in fact, on a Conference organized by Financial TimesChoi recently said that “we [the NCET] Looking at cryptocurrency and digital assets that really touch every aspect of the criminal activity that we investigate.” This includes things like ransomware exploits, trust games, and even sanctions-evasion, Choi said. Are. according to decrypt,

Considering the US Treasury Department isn’t all that concerned about using blockchain to evade the economic blockade on Russia, and an immutable ledger of transactions (i.e. a blockchain) is actually a deterrent to crime. For a terrible tool, it should probably be taken with a grain of salt. After all, Choi’s agency was set up to study crypto-related crime, so it shouldn’t be surprising that it’s finding crypto-related crime to be undetected — but the statement bears a reality check.

All of this is worth talking about because there is often a disconnect between the promises made about crypto and the reality on the ground. data can be “Only 1% of crypto usage is illegal,” But anecdotal experience would say otherwise. I know people who have SIM-swapped and rug-pulled and bought drugs with bitcoin – and chances are you do too. Choi said that one of the reasons people are falling victim to crypto fraud is because of the haze of misinformation surrounding the technology – such as “FOMO” and HypeBut at the same time, presumably, pretend blockchain isn’t used for crime.

Still, cryptocurrencies attract scammers and hype-men, which is why the technology is so essential. Crypto, being open-source, is open to abuse. Bitcoin is powerful because it is “money for your enemies”, and it would not be revolutionary if it were not. I believe it is a good thing that companies like Chainalysis broke the illusion That bitcoin is somehow personal is because it brings expectations closer to reality. Likewise, it’s hardly a bad thing that in a world with police officers, at least some of them direct their attention To survey the series. It’s open, it’s public, it’s bound to happen.

See also: ‘People Will Get Burned’: Matt Odell’s Long Road to Bitcoin Privacy

All that is left is for crypto insiders to get wise, and perhaps come up with a plan to ditch.

The views and opinions expressed here are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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