Fighting cryptocrime starts with fighting the many misconceptions that have built up around it.
Like the idea that cryptocurrency transactions are untraceable and anonymous, for example, and that the blockchain industry doesn’t care enough to investigate bad behavior or take action to prevent it.
Neither is true, said Matthew Price, head of intelligence and investigations for America at Binancethe world’s largest crypto exchange.
“There’s a perception out there that exchanges just don’t care, that crypto is the Wild West and that nobody wants to cooperate with law enforcement — and that’s just patently untrue,” Price told Decrypt.
Price, a former IRS agent who also spent time as a CIA operative, is one of many recent government recruits to join Binance’s growing investigative team, including longtime IRS Special Agent Tigran Gambaryan, now Global Head of Intelligence and Investigations at Binance .
When Price and Gambaryan were with the government, they would routinely work with crypto exchanges, including Binance, to share information and shut down crypto-related fraud.
Now that they’re on the inside, they and their colleagues are using their expertise to train law enforcement agencies around the world on how to deal with cryptocrime, including everything from money laundering and nation-state hacking to ransomware and romance scams.
#Binance has collaborated with law enforcement and institutions globally to strengthen market understanding and efforts to prevent, investigate and combat cybercrime.
Binance has hosted workshops on crypto and blockchain technology for law enforcement across the US and Europe, Canada, Brazil, Argentina, the Philippines, Singapore and Sweden, with future workshops planned in Columbia and Mexico.
“As a former police officer, it’s encouraging to see this kind of willingness to work together between the public and private sectors,” Price said. “Cooperation and sharing information back and forth is the only way you can fight these things, given how quickly technology – and criminals – are evolving.”
Follow the money
Although the amount of cryptocurrency-based crime has fallen by around 15% so far this year – a bear market will do – crypto exchanges and law enforcement are not resting on their laurels.
Criminals are “always looking for the most efficient ways to do things,” Price said, and the fact that cryptocurrency streamlines and facilitates cross-border transactions is a double-edged sword.
“There’s the perception that crypto is the Wild West, that nobody wants to cooperate with law enforcement — and that’s just patently untrue.”
—Matthew Price
What is a ransomware attack but the 21st century version of mafia extortion? What is a pig slaughter scheme if not a modern adaptation of the Nigerian prince email scam.
But while the means have evolved, the motive remains the same in most cases: money. And it’s easier to follow the money when you happen to have a fixed ledger of everything that happens.
Crypto transactions can be tracked on the blockchain, giving investigators a leg up in the fight against crypto crime.
Nowhere to hide
Cash that disappears into a Swiss bank account is not public. But everything that happens on the blockchain is.
If you went to Bank of America and asked them how much exposure they have to criminal marketplaces, they couldn’t tell you, at least not definitively, Gambaryan said.
“But I can go right now and see exactly how much exposure we have to these entities, which is unheard of in the financial sector,” he said. “We’re teaching investigators and regulators how to exploit this, and we’re demystifying cryptocurrency to lose the image people have that it’s anonymous.”
“No one, including Binance, wants criminal activity on its platforms.”
—Tigran Gambaryan
Forensic accountants can use the tools offered by blockchain analytics firms like Chainalysis and TRM Labs to see how crypto moves through the blockchain and then link it to information stored by entities like Binance, including a user’s IP address and transaction records.
Still, catching cryptocriminals is still a cat-and-mouse game, which means the industry needs to help law enforcement become sharper.
“No one, including Binance, wants criminal activity on the platforms,” Gambaryan said. “We are empowered to do our part to stop it, but we are only part of it.”
Building blockchain expertise
The challenge is that not enough members of law enforcement have blockchain forensics expertise to tackle a crypto-related criminal investigation.
But experienced investigators like Gambaryan, Price and their colleagues – including Jarek Jakubcek and Nils Andersen-Röed, both former Europol agents who now lead intelligence for Binance in APAC and EMEA respectively – can educate detectives and regulators about the mechanics of cryptocurrency and how to identify and handle crypto issues.
The training Binance offers varies depending on the market and the sophistication of the audience. In Canada, for example, where law enforcement already has some crypto experience, the training is more focused on topics such as advanced investigative techniques and preventive measures, while in other countries it makes sense to start with the basics, as a primer on what kind of information Binance has and what steps are involved in freezing an account.
Over time, the more investigators who are out there and who know what to look for, the cleaner crypto will be for everyone, Gambaryan said.
Beyond intro sessions, Binance is also sometimes called in to provide more specialized training.
The team was recently invited to a conference in Brazil where they were asked to explain how cryptocurrency can be used to aid in human trafficking-related crimes. During his time at the IRS, Gambaryan worked on a case that led to the 2019 takedown of the world’s largest darknet child sexual abuse website, which was achieved by tracking Bitcoin payments. The site’s administrator was arrested and 24 children were rescued.
“It’s a real impact,” Gambaryan said. “If someone ever tells me that Bitcoin is bad, I always keep in the back of my mind that if Bitcoin didn’t exist, these kids would still be abused.”
Make a difference
There are also several examples of the real-world impact Binance’s workshops have had for law enforcement agencies around the world.
In a recent kidnapping case in a major Brazilian city, the perpetrators demanded a large ransom in cryptocurrency. One of the investigators in the case had attended Binance’s training program and was able to track down the criminals and find out who they were. The victim was saved, and the kidnappers prosecuted.
The Binance research team is also frequently contacted by people they have trained with requests for help or advice on a matter.
The week after hosting a workshop in Canada, Binance began receiving calls from the Royal Canadian Mounted Police and from regional and provincial agencies looking for a consultation.
“From there, we’re able to help victims get money back, and it’s the same story everywhere we’ve done these presentations,” Price said. “Based on the number of requests we’re getting — which has skyrocketed — this is definitely making a difference.”
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