The eighth installment of CoinGeek Conference recently held in New York on October 5 to 7, 2021 has brought to the attention of audiences worldwide the importance of blockchain forensic tools in promoting regulatory compliance and preventing virtual asset providers from being involved with dirty money.
Director of Government & Strategic Affairs at Blockchain Intelligence Group William Callahan, who has also served over two decades as a Special Agent at the Drug Enforcement Administration (DEA), has spoken in detail about these tools on Day 1 of CoinGeek Conference.
What used to be done in the early days of cryptocurrency investigations by hand, excelspreadsheets was very time-consuming. I love it when I have a law-enforcement officer come to me and say, ‘What took me three or four weeks, I did it in two or three minutes with your tool.’ That’s rewarding because that’s more time spending chasing the bad guy who’s taking advantage of your platform,” Callahan said while explaining the blockchain investigative tool Qlue that they use to track, trace and monitor blockchain activities.
“Our intelligence, our open-source team is scraping away at the dark web, scraping away at the Internet, looking at public records for illicit transactions, for illicit hashes and putting it into the system so that you can quickly identify and realize, ‘Oh, maybe this is a gamer here that signed up as a gamer or signed up for the Metaverse, but is in contact with a terrorist organization,’ added.
The recent termination of the operation of cryptocurrency exchange Binance in Singapore due to the country’s central bank’s warnings is a clear example of things to come within the digital currency sphere. Stricter laws and regulations will be drafted and imposed by governments soon as digital currencies, which are built on blockchain, are being used for various criminal activities, such as money laundering, illegal drug sales, ransomware, and other schemes. “2020: 93,000 overdose deaths. I can’t say all of them were related to cryptocurrency, but I do know for a fact that we had a lot of investigations from the dark web involving cryptocurrency, peer-to-peer exchanges exchanging crypto for fiat,” Callahan explained.
According to the National Institute for Drug Abuse (NIH), Fentanyl “is a powerful synthetic an opioid that is similar to morphine but is 50 to 100 times more potent” that is being used to sell counterfeit pills that account for the 93,000 overdose deaths in 2020. And as Callahan says, this is the main reason why he is working to investigate criminal activities on blockchain—to try and prevent these deaths from occurring.
What they do is they kind of just split [the money] out a few more times until they can either park it safely somewhere, put it into a cold wallet, maybe take it off-chain or cash out. And that’s the beauty of the tool we provide. Hopefully, we find those on-and-off ramps, and then we can get law enforcement there, and get them to seize that money and at times, recoup money for victims,” Callahan revealed.
Following the money means ultimately being able to track down the criminals involved in these schemes—selling counterfeit pills is but one of the many crimes committed using cryptocurrencies. Virtual asset providers are vulnerable because they handle money, and they may inadvertently take part in laundering dirty money and become complicit in a crime— something that a reputable exchange or any entity dealing with virtual assets does not need.
