Can A Crypto Conversation Be Traced? US Official Says Yes

Dawid Paluch
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According to Matthew Allen, assistant director of domestic operations with Homeland Security Investigations (HSI) division of Immigration and Customs Enforcement (ICE), investigators are able to track down every secret conversation on blockchain. HSI has a method to trace blockchain criminals.

Yesterday we wrote a story about selling confidential information on Darknet. Today we have another piece of news regarding special law enforcement trying to fight crime in blockchain technology.

USA fight with Darknet criminals

Matthew Allen explained the role of cryptocurrencies in drug trafficking. Before hearing of US Senate Caucus of International Narcotics Control, Allen prepared a special statement regarding this issues. He said:

We conduct proactive investigations that focus on the key payment system which support illicit procurement of opioids: cryptocurrencies. On Darknet marketplaces and other “unindexed” websites, purchases are often paid for with cryptocurrencies such as Bitcoin or Monero, among many others “.

Allen pointed out when criminals are most vulnerable. He thinks that the moment of the monetary exchange is crucial. That’s the time when crooks are most prone to get caught by ‘law enforcement means and methods’. When felons convert cryptocurrencies into fiat, or vice-versa, that’s the time for hunting. ICE-HSI is able to track down lawbreakers with the traditional approach using an investigation coupled with an blockchain analysis.

How it’s done

Legitimate exchanges are registered with the U.S.’s Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). FinCEN requires transfers to abide by the regulations from Money Service Businesses (MSB). The protocols have an anti-money laundering clause.

However, those who use blockchain for illegal purposes usually stay away from registered transactions. Instead, they prefer to use forbidden ways that don’t require any personal information. Often crooks use a Peer-To-Peer (P2P) form of exchange. P2P Exchangers use websites like or even Craigslist to post ads with a desire to buy or sell cryptocurrency. Some P2P exchangers follow regulations,but most of them don’t.

The second type of criminal practice requires access to Darknet. These P2P exchangers often lower their prices and sell virtual currency the below market value because they need traditional money.

How to catch a blockchain criminal

HSI has some success in tracing criminals who use cryptocurrencies to launder money from drug deals.

Targeting P2P exchangers is not easy, though. It requires interviews along with the analysis of computers, phones, and other electronics, as well as using the advanced blockchain tracing tools.

ICE trains investigators from national and international agencies in crypto-investigations. It’s much easier to track a criminal with the support of the government data holdings, social media information, phone records, IP address activity, and email search warrants. Only with help from other organizations law enforcement may be successful in catching criminals.

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