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In the world of online crime, anonymous cryptocurrencies are the chosen mode of payment. But someday, virtual transportation will have to become hard money. Enter “Treasure Men.”
Finding the treasure man is easy if you know where to look. They are listed for rent in Hydra, the largest dark web market based on revenue, a portion of the Internet that is not visible to search engines and requires specific access software.
“They will literally leave a bunch of money somewhere to pick you up,” said Dr. Tom Robinson, a senior scientist and founder of the Elliptic team that monitors and analyzes cryptographic transactions. “They bury it underground or hide it behind a bush, and they will tell you the coordinates. There is a whole profession. ”
Russian Hydra offers criminals many other ways to collect cryptocurrencies, such as exchanging bitcoin through gift vouchers, prepaid debit cards, or iTunes vouchers, for example.
The ability to hold cryptocurrencies without revealing your identity has become increasingly attractive to criminals, and especially to hackers who demand a ransom after entering companies.
In 2020, they paid at least $ 350 million in cryptocurrency ransoms to hacker groups such as DarkSide, the group that closed the Colonial Pipeline earlier this month, according to a Chainalysis research group.
But at the same time, all transactions in a cryptocurrency are recorded in an immutable blockchain, leaving an impressive mark on anyone with technical knowledge.
Several crypto court companies have been set up to monitor criminal law enforcement groups by examining where currencies are heading.
These include Chainalysis in New York, which grossed more than $ 100 billion earlier this year, Elliptic in London, Wells Fargo among its investors, and the U.S. government-sponsored CipherTrace.
Dark exchanges
In total, in 2020 illegal entities received $ 5 billion in funds and illegal entities sent $ 5 billion to other entities, representing less than 1 percent of cryptocurrency flows, according to Chainalysis.
In the early days of cryptocurrency, criminals were charged using major cryptocurrency exchanges. Elliptical estimates that between 2011 and 2019 large exchanges have contributed to the knowledge of between 60% and 80% of bitcoin transactions.
Last year, when exchanges began to become more concerned with regulation, many of them strengthened their anti-money laundering (AML) and know-your-customer (KYC) processes and the fee was reduced to 45 percent.
Stricter rules have led some criminals to engage in unlicensed exchanges that typically do not require KYC information. Many operate outside jurisdictions with such stringent regulatory requirements or are outside extradition agreements.
But Michael Phillips, head of claims at the Resilience cybersecurity group, said these exchanges tend to have less liquidity, making it harder for criminals to transfer cryptocurrencies to fiat currencies. “The goal is to put more cost into the business model,” he said.
There are other cracks in the conversion of Fiat currency. The analysis conducted by Chainalysis suggests, in particular, that over-the-counter intermediaries help facilitate some of the largest illegal transactions, with only a few operations specified for this purpose.
Meanwhile, smaller transactions pass through 11,600 crypto ATMs that have been created with little regulation worldwide or through online gaming sites that support cryptocurrencies.
Court companies
Against this backdrop, forensic cryptography companies use technology that studies blockchain transactions, along with the human mind, to determine which cryptographic portfolios belong to criminal groups and to capture a picture of interconnected criminal crypto ecosystems.
Seeing how criminals move their money, research has made it clear, in particular, how hackers rent their rescue software to affiliate networks.
Kimberly Grauer, head of research at Chainalysis, added that hackers are increasingly paying for other criminals ’support services, such as cloud hosting or victim login credentials, with crypto, giving researchers a more complete picture of the ecosystem.
“Actually, you have to charge less money to sustain your business models,” Grauer said. This means “we can see that the rescue is paid for, and we can see how to distribute and go to the different actors in the system.”
Losing footprint
But cybercriminals are increasingly using high-tech tools and techniques to muddy the cryptographic footprint they leave behind.
Some criminals do so-called “chain-skipping” – jumping between different cryptocurrencies, often in quick succession – to lose followers or use “privacy coins” with “extra anonymity” cryptocurrencies such as Monero.
One of the most common tools for researchers to get rid of perfume is containers or mixers, which mix third-party services with illegal cryptocurrencies before redistribution. In April, the Department of Justice arrested and charged a Russian-Swedish national double, which operated a thriving mixing service called Bitcoin Fog, moving $ 335 million in bitcoin over the past decade.
“It’s possible to break up coins,” said Katherine Kirkpatrick, a partner in the King & Spalding law firm who specializes in anti-money laundering. “But it’s very technical and needs a lot of processing power and data.”
According to Eliptic, in 2020 it was “the preferred tool of obscurity,” which in that year facilitated 12% of all bitcoin laundering, with highly sophisticated “privacy portfolios”.
“They’re basically an unreliable version of a mixer and everything is done within the software,” Robinson said, noting that an open source project called the Wasabi Wallet was the main player in the space.
What comes next?
Authorities must “modernize confiscation and freeze assets” to make it easier for law enforcement to detect cryptocurrency exchanges, said Tom Kellermann, head of VMware’s cybersecurity strategy and a member of the U.S. Secret Service’s cyber investigation advisory board.
Individual exchanges can be provided today in the services of forensic companies that will report suspicious activities according to intelligence.
But experts have in the past claimed to have shared blacklists of wallets used by bad actors – a sort of Interpol alert, exchanges, analytics groups and the government openly share information from their research to make this possible.
“Perhaps this is a good time to reconsider some of these policy initiatives,” said Kemba Walden, chief adviser to Microsoft’s Digital Crimes Unit.
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