Survey Qualifies Crypto Investigations as Complex


by Oskar Trotman

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Criminal activities involving cryptocurrency are rapidly becoming a new challenge for law enforcement agencies. Estimates for 2023 reveal that globally, at least $1.7 billion worth of crypto has been stolen through scams and hacks. A new survey Tackling Crypto Crime conducted by TRM Labs, including over 300 law enforcement officers from the United States and international agencies, estimates that about 40% of their investigations involve crypto. According to the respondents, the average amount of stolen crypto funds is $295,000.

The respondents in the survey revealed that they are starting to encounter cases requiring specific knowledge of blockchain technology more frequently. Seven out of 10 respondents claimed their crypto investigations are complex, but about 60% of crypto cases start without any obvious blockchain components, only highlighting the need for better training.

The survey was conducted during October and November of this year. Every participant in the survey had at least one year of law enforcement experience and investigated at least one offense involving cryptocurrency in the past year.

Lack of Preparedness for Future Challenges

The study predominantly targeted U.S. law enforcement, with 93% of respondents coming from the United States. Most surveyed officers are employed by federal agencies, while the other half work for various state and county police agencies.

The survey shows that about 50% of federal agencies are working with tools for blockchain analysis. That technical approach is significantly lower on the state level, with only 11% indicating they possess such technical resources. The worrying fact is that 61% of the surveyed group have said they do not have sophisticated tools to tackle crypto crime at their disposal.

Additionally, most officers believe that their crypto investigation will spike in the upcoming years, rising from the current estimate of 40% up to 51% by 2027. Most polled law enforcement professionals do not feel prepared to resolve future challenges with crypto crime.

Types of Crimes Encountered

The study touches upon types of crypto crime. About 62% of respondents said most cases involve money laundering, and 55% pointed toward fraud, scams, and phishing. One big issue for law enforcement professionals is criminals’ capacity to innovate by diversifying their activities. Criminals are starting to transfer assets through different blockchains and hide the trail of their stolen funds with cross-chain swaps.

Law enforcement agents said they face three big challenges in their crypto investigations. Working on cases involving several jurisdictions, with 60% saying the cross-border aspect adds complexity. The speed of crypto assets is not matched by technical or formal cooperation between international agencies. Requesting legal assistance can be time-consuming and hamper investigation.

Equally challenging is tracking the movement of tokens over different blockchain networks, an opinion shared by 65% of respondents. The biggest problem with 73% consensus is novel obfuscation techniques. Over half of the participants in the survey identified a shortage of expertise and funding as the main obstacles to successfully resolving crypto crime cases, and 80% of respondents think investing in blockchain analytics should be a high priority.

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