In connection with fraud-related investigations, the US Secret Service is cracking down on illegal digital currency transactions, seizing more than $102 million in cryptocurrency from criminals.
Agents and analysts actively track the flow of Bitcoin and other cryptocurrencies on the blockchain, similar to old-fashioned surveillance, according to David Smith, assistant director of investigations. The Secret Service is best known for protecting presidents, but it also conducts financial and cybercrime investigations.
In an interview at the agency’s headquarters, Smith said that following a digital currency wallet is “no different than following an email address with some correlating identifiers. And once a person and another person make a transaction, and that gets into the blockchain, we have the ability to follow that email address or wallet address, if you will, and trace it through the blockchain.”
The seizure of more than $102 million in crypto has occurred in 254 cases since 2015, according to statistics compiled by the agency.
Among these cases is one involving the Romanian National Police, which targeted 900 victims across the United States. This scheme involved posting false ads for luxury items that did not exist on popular online auction and sales websites, as well as delivering invoices ostensibly from reputable companies to make the transactions appear legitimate. According to the Secret Service, the perpetrators then engaged in a money-laundering scheme in which the victims’ funds were converted into digital assets.
Other investigations focused on a Russian cybercrime ring that used a cryptocurrency exchange to launder money, as well as a ransomware attack linked to Russian and North Korean criminals, in which Bitcoin payments made by US companies to stop the attacks were sent to the suspects’ cryptocurrency wallets.
“One of the things about cryptocurrency is that it moves money at a faster rate than traditional formats,” Smith said, adding that the speed of transactions appeals to both consumers and criminals in the United States. “Criminals want to muddy the waters and obfuscate their activities as much as possible.” What we want to do is track it as quickly as possible, as aggressively as possible, and in a linear manner.”
Smith was interviewed in the CIA’s Global Investigative Operations Center, or “GIOC,” where agents and analysts in a secure room at the agency’s headquarters track cryptocurrency transactions around the world. He likened looking at a “house of mirrors” to looking at the illicit digital money trail.
Once the illegal activity has been identified, the Secret Service works to “dig a little deeper into those transactions and deconstruct [them],” according to Smith. “You send me a bad email, and I know there’s some criminal activity associated with that email address. I can deconstruct that email address and find whatever tidbits of information you used when you first logged in or signed up for it.”
Thieves are transferring stolen Bitcoin and other digital currencies into stablecoins, according to investigators. As a result, they are keeping an eye on the market in order to keep track of this activity. “Because, you know, criminals are also humans.” “They want to stay away from some of the major coins’ market volatility,” he explained.