Understand cryptocurrencies to promote an ever more stable and secure ecosystem

Cryptocurrencies have taken over the financial world over the past year, but many law enforcement organizations, in particular at local authorities, do not yet have the tools or data necessary to investigate effectivelyOn crimes related to cryptocurrencies.

If our research and the available data indicate that the vast majority of transactions are carried out for legitimate purposes, cryptocurrencies exercise a particular appeal on certain malicious actors and we expect to see more criminal cases involving cryptocurrencies asof their adoption in the world.In addition, these assets already appear in cases relating to all types of crime.This means that law enforcement organizations, at all levels, must improve their knowledge of cryptocurrencies and develop effective survey strategies.Here are three things that any organization should know.

Cryptocurrency is not anonymous

Skeptics and civil servants have expressed concerns about the anonymity of cryptocurrencies, but this is a false idea.Cryptocurrencies are actually pseudonymous.Cryptocurrencies and user transactions history is associated with unique addresses - materialized in the form of long letters of letters and numbers, generally generated by a digital cryptomonnaie wallet with many addresses - and are easily viewed on thepublic blockchains.

In this way, this type of transactions is more transparent than ordinary financial transactions.Once recorded on the blockchain, the registers of transactions remain permanently and can be consulted at any time, even years later.

However, what is not immediately visible on the blockchain is the real name of the person or the entity that makes a transaction.This does not mean that cryptocurrency is anonymous, but that investigators must take additional measures to determine who is at the origin of a suspicious transaction.The vast majority of cryptocurrency transactions are carried out with addresses hosted by cryptocurrencies and other services similar to conventional monetary service companies (ESM).Some companies offer services to establish correspondence between these addresses and the specific services that host them - making this information easily available by the police.

In addition, it is quite possible for investigators to identify the individual service where a user performs a suspicious transaction.In most jurisdictions, these cryptocurrency services are regulated in the same way as financial institutions, which means that they too must collect information on customers, carry out customer knowledge checks (KYC - Know Your Customer) to all users and report any suspicious activity.When investigators identify an address hosted by a service engaging in a suspicious or criminal activity, they can go to this service and quickly know the identity of users at the origin of the activity by following the standard legal procedures.

Cryptocurrencies are involved in the main criminal activities

Despite the small share of transactions associated with criminal activity, most illicit activities that concern the police are using them more and more.This trend is explained in particular by the fact that many crimes are motivated by financial reasons.Criminals have always been early enthusiasts of technology and cryptocurrencies are no exception.Here are some forms of criminal activity regularly involving cryptoactifs:

The police must quickly acquire the expertise, the data and the tools necessary to investigate crimes related to the cryptocurrencies in order to anticipate threats.

The cryptocurrency is there for good

Some predict the disappearance of cryptocurrencies for more than a decade, but it has still not happened.Uncertainty and volatility are common in the face of the emergence of any new asset class, however, a growing number of public officials and financial leaders have recognized the importance and the potential role of cryptocurrencies in the future.

A recent crypto report.com estimated that in January 2021, around 106 million people held cryptocurrencies, an increase of 77 % compared to the previous year.A large part of this growth is reflected in the volume of cryptoactive transactions.Our data notably indicate that the weekly volume of cryptocurrency transactions increased from around $ 8.9 billion at the end of December 2018 to more than $ 591 billion in early May 3, 2021.It is crucial for the police to pay attention to these volumes of transactions, but also in places where the use of cryptoactives is the most active.For example, in 2021, Vietnam, India and Pakistan are the countries where the use of cryptocurrencies is the strongest.The traction of the market in these key regions suggests that the use of cryptocurrencies will continue to grow as the world population and the number of users of mobile phones and the Internet increase.

As governments, financial institutions and businesses are involved in the cryptocurrency economy, we will probably see greater stability and transparency of this market.

Nevertheless, criminals still follow the money.We are likely to attend an increase in scams, fraud and other cybernetic extortion involving cryptocurrencies.There is also a good chance that criminals will use the blockchain more sophisticated to move funds instantly beyond the borders in order to escape detection, taxation and engage in whitening.

The police must acquire the necessary skills

Cryptocurrency is not only an issue of cybercrime or a subject of which only a few highly qualified investigators should be concerned in the context of complex affairs of financial fraud.It is a global phenomenon and an increasingly used tool by criminals of all types.It is therefore essential to promote cryptocurrencies at all levels of ordering organizations.Otherwise, investigators who have no knowledge of cryptocurrencies may find themselves quickly outdated and lose the advantage on the cybercriminals which have them.

Organizations can increase their knowledge and develop effective processes for cryptocurrency surveys by learning to use blockchain analysis tools.This is the first step to be able to identify, follow and seize the illicit funds in cryptocurrencies, ensuring both the safety of the cryptocurrency market in the broad sense as well as the consumer protection.