18 | New Scientist | 8 January 2022
News Insight
BitcoinDAN^ KITWOOD/GET
TY
IMAG
ESPOLICE forces across the UK
have seized bitcoin and other
cryptocurrencies valued at almost
a third of a billion pounds during
criminal investigations, New
Scientist can reveal. But this figure
may be only a tiny fraction of the
illicit funds being used in the UK,
because police face significant
technological and legislative
hurdles when investigating crimes
involving cryptocurrencies.
Freedom of information (FOI)
requests made by New Scientist
show that 12 of the UK’s 48 police
forces have seized cryptocurrency
in the past five years, totalling
more than £322 million according
to their value at the time of seizure.
The true amount seized may be
far higher because 15 forces didn’t
respond to requests or refused the
request to provide information.
Bitcoin represented over
99.9 per cent of the value of seized
cryptocurrencies in the UK,but small amounts of Ethereum,
Dash, Monero and Zcash were
also confiscated.
Cryptocurrencies are
decentralised by design, so there
is no authority that police can turn
to for information when looking
for transaction records, nor is
there any central authority that
can be made to hand over funds
at the request of the state.They also provide seamless
transfers almost instantaneously
and at very low cost across
borders, making them an
ideal tool for laundering
and transferring the proceeds
of crime around the world.
Detective chief inspector Joseph
Harrop of the economic crimecan be very difficult to find.
Although police can easily search
all UK bank accounts for a certain
name or address, a cryptocurrency
wallet can be a tiny, nondescript
file on a computer, or a string
of text in an email, written down
on a scrap of paper or simply
memorised so there is no
physical evidence to find. Police
investigating a drug, fraud or
money laundering case may
never find a sign that there are
connected cryptocurrency wallets.
Even if wallets are found, there
are legal hurdles to acquiring
them. The UK’s Proceeds of Crime
Act 2002 gives police the ability
to seize cash if there is a suspicion
that it was gained from criminal
activity, even if there has been
no conviction. Powers to seize
non-cash property, including
cryptocurrencies, are narrower
in scope and require a conviction,
even though cryptocurrency
funds are essentially used as cash.
The final, and most significant,
problem is that cryptocurrencies
are protected by extremely strong
encryption, meaning that police
might discover a wallet but still
find it impenetrable without an
encryption key that suspects are
unlikely to reveal. “If we recover
laptops, USB sticks, they might
have a level of encryption on and,
yes, there’s a difficulty in getting
inside it,” says Harrop – unless
suspects have written down their
password, which happens more
often than you might think.
“As daft as it sounds, sometimes
people do leave golden nuggets
or strong evidence where they
might literally have the stuff
that we need written down
on a piece of paper.”
Harrop says that large police
forces like Manchester’s are
further along the process than
many, but that they are “just
getting their heads around”Follow the money
UK police forces are seizing cryptocurrency during criminal investigations,
but it is an incredibly difficult challenge, reports Matthew SparkesBitcoin has no
physical form,
so is hard to trackunit at Greater Manchester Police
says that the adoption of
cryptocurrencies by criminals was
unexpectedly fast, and forces are
scrambling to gain new skills to
deal with cases and seize funds.
His strategy has been to recruit
civilian staff with relevant
technical experience in
cryptocurrencies and train
them to work with detectives.
Police face three large problems
when dealing with criminals
who have stashed money in
bitcoin or other networks:
discovering whether a person has
cryptocurrency in the first place,
getting legal permission to take
it, and then having the technical
ability to actually do so.
Cryptocurrency funds leave
minimal digital fingerprints and“ If you’ve got fraudsters
with bitcoin, and a load
of drug dealers with cash,
it’s a perfect storm”