Despite the UK government’s massive investment of £100 million into a so-called “crypto task force,” efforts to properly police digital currencies have been hampered by a lack of funding, overstretched resources, and the difficulty of convincing top talent to resist the financial might of the private sector.
This week, detective head Alan Gould asserted in a parliamentary discussion that the United Kingdom’s police department is equipped to deal with crypto crime since a national crypto task force has been established. However, he acknowledges that limited resources, a lack of financing, and strained police resources impede their efforts.
There has been an increase in cryptocrime in the UK. An FOI request revealed that 20% of UK fraud occurred on the cryptocurrency exchange Binance, while the National Crime Agency (NCA) has reported a “substantial surge” in ransomware campaigns.
As a result, there is a growing need for individuals with cryptographic competence, and now Gould is concerned that police officers and investigators with the necessary training are being poached. We won’t be able to keep up with them. Currently, that is one of our greatest dangers in this sector. He said a 200-thousand-dollar offer from the private sector awaited one of his sergeants.
The United Kingdom presently employs the digital asset custodian Komainu to hold any seized cryptocurrency. However, Gould is concerned that the expensive equipment used by UK authorities to trace down crypto could be used for something else. One of the vendors presently offers quotes between $60,000 and $80,000 per license. He added, “That’s impossible or untenable in the police.
He mentioned that in recent years, the British police have been able to confiscate cryptocurrency worth hundreds of millions of pounds.
However, he said: “it is getting harder and harder to do when it comes to seizing crypto. The assets themselves are becoming more diverse and more technically complex, so our officers are in an arms race trying to keep up.”
However, Gould does acknowledge that the Financial Conduct Authority’s efforts to regulate illicit exchanges have shown “promising” results and that there “has been a clean-up of the market in that arena,” all of which are beneficial developments.
US feds lose seized crypto
Even US law enforcement agencies occasionally have trouble using encryption. The disappearance of 713 BTC (about $5 million) from a device already seized by the authorities included the crypto bro brothers Larry Harmon and Gary Harmon.
Larry was arrested, and his Bitcoin was confiscated when investigators discovered his connection to a dark web business that used the cryptocurrency coin mixer Helix. Even when authorities seized the hardware wallet, they discovered BTC was still being sent.
Larry, who has already laundered $311 million using crypto, told the authorities that his brother, not he, was responsible for the BTC transfers. Gary could withdraw the Bitcoins from the hardware wallet because he knew the device’s private key and seed words.
The police eventually coerced Larry into giving up his seed words, and he made a deal to cooperate with them in exchange for a reduced sentence. Gary was arrested not long after he attempted to conceal his use of coin mixers by transferring BTC from the frozen account to new addresses.
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