Posted on July 18, 2020 at 2:47 PM
The increased spate of money laundering within the crypto space is becoming alarming as many fraudsters are hiding under the auspices of the decentralized and privacy nature of crypto transactions to launder money.
As a result, law enforcement agencies are setting up platforms to curb the increased number of fraudulent transactions with Bitcoin and other cryptocurrencies.
This week, Bitcoin was the center of discussion in the financial sector as many hackers tried to steal people’s Bitcoin. To prevent this situation, some law enforcement agencies want to setup a system that will track Bitcoin and crypto transactions. Although the top cryptocurrency is difficult to track, it is not impossible.
As it stands, Blochchain, cryptocurrency, and Bitcoin analytics companies can use forensics to examine cryptocurrency transactions and find out exactly where transactions are made, when, and by whom.
Recently, a report revealed that a major Pentagon investigative entity is trying to hire a crypto analyst whose job will be to identify suspicious and fraudulent crypto transactions over the world.
The United States Army Criminal Investigation Division Command (USACIDC) wants to license an application that will enable the institution monitor illegal crypto transactions. This is reported in a statement published on the 10th of July.
“The contractor must provide worldwide web-based access to a reliable cryptocurrency investigation service,” the publication reads. Firms have been requested to submit their application for app development.
A web-based app to monitor crypto transitions
The publication further stated that the web-based app should be able to help law enforcement to monitor and prevent actors from carrying out their fraudulent transactions using crypotocurrencies. The criminal activities include money laundering, extortion, as well as fraud.
Additionally, the app must be capable of assisting users in conducting a comprehensive investigation into the crypto transaction source. It should also allow multi-currency analysis from Bitcoin to other major cryptocurrencies, the publication continued.
Also, the app should have a “link analysis tool” for facilitating data analysis, and be able to detect suspicious interactions with other parties and transaction patterns
This request for work is coming after the U.S. Army Contracting Command in New Jersey released a report and a pre-solicitation notification, looking for similar web app to assist law enforcement agencies in their investigation. The investigation will concentrate on people who are carrying out fraudulent transactions using cryptocurrencies.
Major crypto analytics firms touted as possible partners
Firms like London-based Elliptic and New York-based Chainanalysis are well versed in such project. Elliptic was recently awarded a contract by the IRS for similar project. Both firms have carved out a niche for themselves in the blochchain data analysis industry as they have provided blockchain data analysis to financial institutions, Bitcoin and Crypto exchanges, as well as government agencies.
Coinbase also interested
Coinbase, the biggest Bitcoin and cryptocurrency exchange in the U.S. was in the news recently, as the company licensed its blockchain software to the U.S. government.
However, the development raised concerns with some critics saying the new service will cause conflict of interest for the exchange.
In an email, Coinbase stated that the firm has been notified about USACIDC request for work, but it hasn’t made any decision yet regarding a bid. However, the company reiterated that it’s in its interest to always collaborate with law enforcements to combat illegal activities within the crypto space.
Intelligence agencies spying on crypto transactions
The recent crypto AG incident took the world by storm. It has awakened so many people to realize the dangers of secret backdoors in secure communications and encryption devices. Although the reputation of Crypto AG was made on a larger scale involving the CIA and top government institutions, the interest now is a bit different.
Apart from a backdoor in the encryption of a project, Blockchain forensic analysts are trying to deamonymize users who are taking advantage of the privacy presented by Bitcoin and other cryptocurrencies.
Recently, law enforcement agencies have been arresting people for making use of crypto-based mixers to launder money. Therefore, these agencies have increased interests around private transactions and privacy coins.
Companies like Ciphertrace and Chainanalysis utilize heuristics to make educated guess on how crypto coins such as Bitcoin move across the bloackchain.
However, privacy coins like Monero and cryptocurrency mixers obscure this information, which makes it more difficult for these blockchain analytics to effectively monitor transactions within the crypto space. But the law enforcements and investigative units are trying to use an app that will facilitate proper monitoring of crypto transactions to identify fraudulent ones.