Law enforcement agencies in the United States anticipate a surge in crypto-related investigations, with respondents of a survey commissioned by blockchain intelligence firm TRM Labs estimating that 40% of offenses investigated involve cryptocurrencies. As per the TRM Labs survey, the projection is that this figure will rise to 51% by 2027, highlighting the growing impact of digital assets in criminal activities.
Inadequate preparedness and tools
The survey, which involved over 300 participants, predominantly from US law enforcement organizations, reveals a significant gap in preparedness. While more than half of federal agencies currently use blockchain analytics tools, only 11% of state agencies have adopted these technologies. Sixty-one percent of respondents expressed a lack of sufficient technology to combat evolving threats from crypto criminals.
Despite almost 90% of respondents reporting some level of crypto-related training within their organizations, 99% emphasized the need for more comprehensive training. This points to a crucial gap in preparing law enforcement professionals to effectively investigate blockchain-related crimes.
Ari Redbord, TRM Labs’ global head of policy, emphasized that the survey reflects the multifaceted nature of the crypto ecosystem’s growth. He rejects the concept of “crypto crime,” asserting that, like cash, cryptocurrencies are utilized in various criminal activities, necessitating tools and training for investigators and prosecutors.
Redbord has stated that in the future, all investigators will have crypto as a part of their cases, similar to how they consider fiat and cell phones today. He asserted that the role of cryptocurrencies in crime has become more prominent since the recent Hamas attacks, along with the scandals involving FTX and Binance. This has also led to increased political pressure on the crypto industry despite the rising prices.
Crypto-Related Incidents on the Rise
The survey coincides with a period that has seen notable incidents in the crypto space. Approximately $1.7 billion worth of crypto was stolen through hacks in the first eleven months of 2023, a marked decrease from the previous year. However, high-profile breaches, such as the exploitation of the HTX exchange and unauthorized withdrawals from Poloniex, underscore the persistent challenges.
The Internal Revenue Service (IRS) highlights the increasing significance of crypto in its top 10 cases for 2023, with four cases related to digital assets. FTX founder Sam Bankman-Fried faced legal consequences for wire fraud, and competitor exchange Binance pleaded guilty to operating as an unlicensed money-transmitting business and violating sanctions laws.
Obstacles to overcome
While the majority of respondents consider investment in blockchain analytics a high priority, the TRM Labs report notes that intentions have not translated into action. Over half of the respondents identified the lack of investigators, expertise, and funding as the top three obstacles hindering law enforcement efforts to combat crypto crime.
In conclusion, the TRM Labs survey highlights the urgent need for law enforcement agencies to bridge the gap in technology, training, and expertise to effectively combat the rising tide of crypto-related crimes. The challenges posed by evolving criminal tactics in the digital asset space require a concerted effort to equip professionals with the necessary tools for a proactive and effective response.
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