The United States Secret Service is cracking down on illegal digital currency transactions, seizing more than $102 million in cryptocurrency from criminals as part of fraud-related investigations.
According to David Smith, assistant director of investigations, agents and analysts actively track the flow of bitcoin and other cryptocurrencies on the blockchain, much like traditional surveillance. The Secret Service is best known for protecting presidents, but it also conducts financial and cybercrime investigations.
“When you follow a digital currency wallet, it’s no different than following an email address with some correlating identifiers,” Smith explained during an interview at the agency’s headquarters. “And once a person and another person make a transaction, and that transaction is recorded in the blockchain, we have the ability to track that email address or wallet address if you will.”
According to statistics compiled by the agency, more than $102 million in cryptocurrency has been seized in 254 cases since 2015.
Among those cases is a joint investigation with the Romanian National Police in which 900 victims from across the United States were targeted. This scheme involved posting false ads on popular online auction and sales websites for luxury items that did not exist, as well as delivering invoices allegedly 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 victims’ funds were converted into digital assets.
Other investigations focused on a Russian cybercrime syndicate that used a cryptocurrency exchange to launder funds, as well as a ransomware operation linked to Russian and North Korean criminals, in which bitcoin payments were made by US companies to halt the attacks were sent to the suspects’ crypto wallets.
“One of the things about cryptocurrency is that it moves money at a faster pace than traditional formats,” Smith said, adding that the fast pace of transactions appeals to both American consumers and criminals. “Criminals want to muddy the waters and make efforts to conceal their activities. What we want to do is track it as quickly and aggressively as possible, in a linear fashion.”
Smith was interviewed in the agency’s Global Investigative Operations Center, or “GIOC,” where agents and analysts track cryptocurrency transactions around the world in a secure room at the agency’s headquarters. He likened the illicit digital money trail to a “house of mirrors.”
Once the illegal activity is identified, the Secret Service works to “dig a little deeper into those transactions and deconstruct [them],” Smith said. “You send me something bad in an email, and I know there’s some criminal activity associated with that email address; I can deconstruct and find whatever tidbits of information you used when you first logged in or signed up for that email address.”
According to investigators, thieves will convert stolen bitcoin and other digital currencies into stablecoins. 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 people. They want to avoid the market volatility that has been associated with some of the major coins “He stated.