Making crypto conventional by improving crypto crime investigations worldwide

When times are tough — as in the pandemic — enterprising human nature goes into overdrive. People seek out alternative ways to make money. That could be one of the reasons why cryptocurrencies skyrocketed in popularity in the last few years, driven in part by large numbers of people sitting at home wondering how to beat low-interest rates and rising inflation.

Where there’s cash, however, there are also criminals. Bad actors are experts in human behavior and see building momentum and increased crypto traffic as a huge opportunity, knowing that many newer investors may not do their homework. Investors might not apply the same level of scrutiny to crypto as they would their pensions or other investments, and there’s not a lot of regulatory oversight globally. So, a simple splash page or message on a forum can quickly lead a lot of new investors to fall into scams.

We’ve also seen an increased proliferation of scams connected to the pandemic such as pretending to sell fraudulent medicines, vaccines or testing, or offer business loans and grants, for instance, have a crypto element, and law enforcement is having to turn on a dime to react to these new threats. That, in turn, creates a growing headache for policymakers tasked with protecting consumers. We also hear loud and clear from the crypto industry that regulation often feels behind the curve and not fit for purpose.

What’s needed is better education. Better education at every level, from teaching and educating law enforcement to policymakers and regulators. Knowledge sharing across the crypto ecosystem to support investigations. And, the resources and appetite for creating smarter regulation that will both protect consumers and give the industry the clarity it needs to continue to innovate and flourish.

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

A fresh approach to law enforcement

Centuries-old investigative methods need more than adaptation to meet the demands of a crime involving digital assets. As new types of crime emerge, the crypto industry has a duty to educate every member of law enforcement about this new world and fast. Crypto’s main “players” tend to be young digital natives compared to law enforcement. Worldwide, the vast majority of officers may find crypto very foreign, intimidating or puzzling, making them somewhat resistant to the technology. This has its impacts, as law enforcement is often first at crime scenes, collecting evidence on a search warrant. But, would they know how to look for a Bitcoin wallet, for instance? If you don’t understand the crime, how can you police it?

After education, the biggest struggle is resources. In the United States, crypto crime is viewed as a subset of cybercrimes like ransomware. By specifically resourcing crypto, investigators can take advantage of its benefits in uncovering the immutable proof of transactions stored on the blockchain, but often the resources and knowledge sit with Federal law enforcement. This means that local crypto-related crimes are taken out of local law enforcement’s hands, creating a huge backlog at the Federal level.

In the United Kingdom, law enforcement is catching up to crypto crime. A quarter of U.K. police forces have played a part in seizing $450 million, or around £322 at the time of writing, in cryptocurrency in the last five years. Diving deeper into the numbers, we can see that 99.9% of seizures are Bitcoin (BTC), suggesting that police are able to easily trace illegal activity using public blockchains but face problems tracking privacy coins like Monero (XMR) and Dash (DASH).

Greater Manchester Police say that U.K. police forces are “just getting their heads around” the technology behind crypto; they are recruiting civilian staff with relevant experience to train detectives. And, forces face an additional legal hurdle when seizing cryptocurrency since it…