Crypto Conversions Can Be Traced: US Customs

A “vulnerability” is created each time a cryptocurrency is converted to a government-issued money, according to a U.S. Immigration and Customs Enforcement (ICE) officer.

During an October 2 hearing before the US Senate Caucus on International Narcotics Control, Matthew Allen, an assistant director of domestic operations with ICE’s Homeland Security Investigations (HSI) branch, emphasized the significance of cryptocurrencies in drug trafficking.

Allen talked on the growing pandemic caused by opiate and fentanyl usage. According to current investigations, the narcotics may have originated in China and made their way to the United States through postal carriers or commerce with Mexico. These transactions are common on the dark web, which are illegal markets that predominantly trade in cryptocurrency. The dark web’s high levels of secrecy and simplicity of anonymous money transactions benefit criminal merchants. As the ICE-HSI Cyber Crimes Division attempts to control the flood of opioid medications, these dark net marketplaces have become major monitoring sites.

(See also, Opioid Stocks Threatened by FDA Steps.)

How Cryptocurrency Conversions are Tracked?

According to Allen, cryptocurrencies such as Bitcoin and Monero are often utilized in transactions related to illegal operations on dark web markets. HSI has had “some amount of success” in identifying criminals, since cryptocurrency recipients must still convert their virtual tokens to fiat dollars. This conversion assists in tracing the parties involved.

“By combining traditional investigative methods like surveillance, undercover operations, and confidential informants with financial and block-chain analysis, ICE-HSI is able to disrupt criminals and dismantle [transnational criminal organizations], as well as cryptocurrency exchangers who typically launder proceeds for criminal networks engaged in or supporting dark net marketplaces,” Allen explained.

Investigators to Target Unregistered Exchanges

Allen has called out a few cryptocurrency exchanges, particularly “peer-to-peer” exchanges, for failing to follow the needed regulatory processes of registration or the essential compliance regulations. Participants in peer-to-peer interactions may also stay anonymous. While there are several legal and registered cryptocurrency exchanges, users who use cryptocoins for unlawful reasons often avoid utilizing registered exchanges to disguise their identities. Instead, they engage in illegal or unregistered transactions that do not involve or request personally identifying information.

(See also,The Five Most Private Cryptocurrencies.)

Both national and international authorities are preparing candidates to investigate cryptocurrencies and their connected transactions. “We teach detectives… to dissuade groups from laundering money or utilizing bitcoins to support the acquisition of fentanyl/opioids or other drugs,” he said.

(See also, The Future Of Cryptocurrency.)

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