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Over the years, cryptocurrencies have gradually become a prevalent way of value exchange in various criminal activities. For example, in May 2017, the NHS was brought to a halt for a couple of days following the WannaCry outbreak. During this cyber-criminal act, the attackers demanded to be paid in Bitcoin to decrypt the encrypted files.

The UK police are currently urging the government to introduce a new crypto law that will let them freeze cryptocurrencies. The Scotland Yard detectives, for instance, are inquiring support from the local government to permit them to freeze cryptocurrency assets. The United Kingdom police made this initiative because of the growing number of cryptocurrency criminals.

Overview of Cryptocurrencies

In simple words, cryptocurrency is a virtual or digital currency that has progressively become popular since Bitcoin's invention in 2009. These currencies utilise distributed ledger technology (DLT) to authorise transactions, which are then included in a permanent digital wallet. Blockchain, which Bitcoin mainly uses, is among the top digital wallets.

How Cyber Criminals Use Cryptocurrencies to Conduct Crimes

According to the International Compliance Association, the amount lost due to hacks, frauds, and crypto thefts totalled $1.38 billion. In general, cryptocurrencies come with various features that entice cyber attackers. They include:

Decentralised Nature

Cryptocurrency exchanges are mostly centralised and needed to sign-up with the Financial Conduct Authority (FCA) through the United Kingdom regulation. Nonetheless, the cryptocurrency industry is a decentralised network and isn’t administered. Due to this, there is no clear crypto law enforcement for accountability.

Market Volatility and Technical Complexity

Most customers have minimal knowledge about the involved concepts and might be lured to invest in ‘get rich quick schemes, which makes them susceptible to scams.

The Ability to Allow Cross-border Payments

This feature may represent a lucrative opening for worldwide cybercriminal groups that need borderless financial channels.

Anonymity

While the public blockchain records cryptocurrency transfers, it is worth noting they are all associated with phoney users. All in all, the law enforcement authority can use several forensic tools and methods to scrutinise illicit cryptocurrency flaws.

Top Types of Crypto Attacks

Ransomware (Extortion)

Cryptocurrencies have made it easy for cyber attackers to use ransomware as a type of extortion. The leading crime entails encrypting an individual’s files. In such a situation, these people can’t access and decrypt the files unless one pays a given amount to the attacker via crypto.

Although some attackers don’t decrypt the documents after payment, most often adhere to their promises. This type of attack poses devastating impacts to institutions that use outdated technology. Cryptos offer a means for cybercriminals to obtain untraceable payments from people through the internet.

Pump and Dump Schemes

It is a distinctive form of market manipulation where attackers buy several low-cost stocks and then exaggeratedly inflate the cost before parting with the holdings. It also occurs in the crypto world where phoney actors buy low market-capitalisation cryptos and then tries to inflate the cost by spreading false information about price rise.

Generally, this scam targets the people’s fear of missing out on huge profits. While pump and dump schemes are highly ranked for feasibility, profitability, and difficulty to defeat, they could be dangerous to the integrity and confidence of the target market.

Money Laundering

Bitcoin ATMs enable individuals to buy cryptos in a physical location, with prospectively illegally generated money. These ATMs either prints out a receipt containing a QR code or scans a QR code on the individuals’ phone, which they need to use to move the cryptos into their wallets.

Although these ATMs are not essentially criminal, there is a worry that they can allow money laundering. Some Bitcoin ATMs require users to provide proof of identity, but they are still vulnerable to criminal use.

Fake Cryptocurrency Wallets

A secure wallet provider streamlines crypto use by handling a user’s private and public keys, making crypto sending and buying effortless. A reliable wallet provider allows users to manage their keys and validate their identity before use.

However, some fake wallets exist, and they can steal clients’ coins. People should, thus, check the crypto wallet’s reputation to avoid signing up at scam sites.

UK Stopping Crypto Criminals Actions through Law Enforcement

As of now, there is a vast knowledge disparity across the UK law prosecution concerning cryptos and expertise in recognising cryptos activities, both digitally and physically. Police on crypto investigation often use Police and Criminal Evidence (PACE) and Proceeds of Crime Act (POCA) laws to seize money from attackers.

However, cryptocurrency seizure is rare because most officers do not know what cryptos are and what to look for. Consequently, GMP’s Paul Taylor and Phil Larrat created a four-page booklet to help police officers distinguish crypto activities easily.

It is worth noting that the first United Kingdom crypto law enforcement meeting happened in February 2017. Experienced police on crypto investigations from across the country attended this meeting. They identified crucial issues and officers now use the accrued experience to offer advice to financial examinations, live crimes, and frontline officers.

The Recommended Tactical Training to Police on Crypto

A study indicates a considerable skill gap among the UK frontline staff, national agencies, and law enforcement. A recent estimation by Europol shows that 3% of the world’s money laundering occurs through cryptocurrency. As a result, officers require much more coordinated training.

When it comes to the UK stopping crypto criminals, the authority recommends a four-tier training programme to equip police on crypto law enforcement. Listed below are the tiers.

Tier 1: Bitcoin Experts

The experience, knowledge, and skills of the Bitcoin working team need to be formal. Staffs, on the other hand, need to be skilled as expert witnesses. The evidence acquired by investigators shows that some officers are paying private organisations to give professional witness evidence and statement regarding Bitcoin examinations. Police officers could realise substantial savings by equipping an in-house team.

Tier 2: Regional/National Cyber-Crime Units

It’s essential for the police officers at regional and national cyber-crime units to access the private industry trace and track tools. This way, their ability to inspect Bitcoin transactions and related activities will improve.

Tier 3: Digital Media Investigator (DMI) Network

DMIs need to be upskilled via custom training events and continuing professional development sessions. In the end, this will allow the investigators to use open-source tools to find and track Bitcoin activities.

Tier 4: Frontline Investigators and Officers

Police officers in the country need to undertake an obligatory Bitcoin e-learning package regarding how to recognise Bitcoin activities and the authorities or people to contact for additional advice.

What is the Way Forward?

Considering the above risks, the UK government needs to deep into the cryptocurrency crime implications. The police, for instance, need to assess money laundering and new crypto-related inventions, including the probability of Bitcoin satellite vaults.

Another project that needs to be analysed is to recognise crypto fraud on a large scale and formulate prevention measures. This type of work is essential in ensuring that cybersecurity and transaction observation systems are adequately equipped to spot new threats.

Above all, authorities should prosecute the culprits of foiled and successful crypto crimes. Due to the high rate of technology advancement, legal precedents and cryptocurrency-crime evidence collection processes aren’t perfectly established.

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