‘Criminals see huge returns from jail’

Police across the UK have seized bitcoin and other cryptocurrencies valued at almost a third of a billion pounds during multiple criminal investigations.

A Freedom of information (FOI) request made by the New Scientist publication shows that 12 of the UK’s 48 police forces in Britain confiscated cryptocurrency in the past five years, totalling more than £322m, according to their value at the time of seizure.

Bitcoin represented over 99 per cent of the value of seized cryptocurrencies in the UK, but small amounts of Ethereum, Dash, Monero and Zcash were also confiscated.

The true amount seized may be far higher because 15 forces reportedly did not respond to requests or refused the request to provide information.

However, this figure may be only a tiny fraction of the illicit funds being used in the UK, because police face significant technological and legislative hurdles when investigating crimes involving cryptocurrencies, multiple experts have told City A.M. today.

Detective chief inspector Joseph Harrop of the economic crime unit at Greater Manchester Police said that the adoption of cryptocurrencies by criminals was unexpectedly fast, and forces are scrambling to gain new skills to deal with cases and seize funds.

His strategy has been to recruit civilian staff with relevant technical experience in cryptocurrencies and train them to work with detectives. Even if wallets are found, there are legal hurdles to acquiring them.

Digital probes

The UK’s Proceeds of Crime Act 2002 gives police the ability to seize cash if there is a suspicion that it was gained from criminal activity, even if there has been no conviction.

Powers to seize non-cash property, including cryptocurrencies, are narrower in scope and require a conviction, even though cryptocurrency funds are essentially used as cash.

The final, and most significant, problem is that cryptocurrencies are protected by extremely strong encryption, meaning that police might discover a wallet but still find it impenetrable without an encryption key that suspects are unlikely to reveal.

“If we recover laptops, USB sticks, they might have a level of encryption on and, yes, there’s a difficulty in getting inside it,” said Harrop, unless suspects have written down their password, which happens more often than you might think.

“As daft as it sounds, sometimes people do leave golden nuggets or strong evidence where they might literally have the stuff that we need written down on a piece of paper.”

Detective chief inspector Joseph Harrop, Greater Manchester Police

The UK’s National Crime Agency wouldn’t say how much cryptocurrency it has seized, and the organisation, like intelligence agencies MI5 and GCHQ, is exempt from FOI legislation.

“Police forces have come so far in digital investigations yet the final step of confiscation is simply too difficult to examine in many situations,” said Jake Moore, the former Head of Digital Forensics at Dorset Police who is now the Global Cybersecurity Advisor at ESET.

“The key design of cryptocurrencies is to keep them secure from interception from anyone, whether that be a threat actor or law enforcement plus they were not intended to have a back door for any reason,” Moore said.

“This naturally causes a problem for police forces wanting to seize through the original procedures they are all used to with old fashioned finances.”

“In some cases, criminals may be locked up without giving away access to their funds only to see huge returns on their release from jail.”

Jake Moore, Global Cybersecurity Advisor at ESET.

Moore pointed out that digital investigations still remain in their infant phase and require far more resources to improve fighting this growing criminality.

“Cybercriminals are very aware of the well documented evasion tactics available but policing is improving at a rate that will slowly catch up in time.”

“Deploying better surveillance techniques on known suspects, increasing intelligence and improving the profiling on those who are thought to be involved all helps build stronger evidence to recover and seize funds. However, the cost of this could potentially outweigh the amount that is recoverable in many cases,” he concluded.


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