Why The DEA’s Recent Remarks On Cryptocurrency-Related Crime Are So Stunning

September 4, 2018
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Almost since its inception, opponents of cryptocurrency have made various attempts to undermine its potential and legitimacy. Top commodities gurus have written cryptocurrency off as a market for criminals and millennials. Leading news outlets almost exclusively focus on cryptocurrency-related crime and fraud, with headlines mostly focused on how many billions in cryptocurrency end up in the hands of thieves and hackers.

But here’s the kicker: Despite all of the fear-mongering from gurus and news outlets, cryptocurrency-related cybercrime is actually down. By a lot.

The U.S. Drug Enforcement Administration (DEA) recently confirmed that criminal activity in cryptocurrency has decreased dramatically over the past five years. In fact, it has dropped by a whopping 80 percent since 2013.

Make no mistake, this confirmation is a huge deal. It suggests that the cryptocurrency industry is increasingly and reliably self-regulating, and that law enforcers are getting increasingly sophisticated in their investigative ability — all of this is great news for the industry.

Let’s take a closer look at the DEA’s findings to determine what exactly they portend for the industry.

What The DEA Actually Said

The big money quote comes from DEA Special Agent Lilita Infante:

“The volume has grown tremendously, the amount of transactions and the dollar value has grown tremendously over the years in criminal activity, but the ratio has decreased.”

Infante’s explanation of the administration’s findings provides us with three noteworthy points:

  • The number of transactions has increased by a significant amount over these last five years.
  • The amount of currency that is being traded has grown significantly.
  • The ratio of criminal activity to legal activity has decreased.

The fact that the ratio of criminal activity has decreased despite the industry’s growth is telling. It suggests that cryptocurrency businesses are enforcing standards that discourage and prevent criminal behavior. It also suggests that criminals have turned or returned to other more traditional methods of payment and stores of value.

This revelation also discredits claims which suggest that the cryptocurrency market is a hub for criminals. The cryptocurrency market has experienced tremendous growth since 2013, yet the ratio of criminal activity to legal activity has plummeted by 80 percent.

In other words, the cryptocurrency market isn’t the market for criminals that so many analysts claim it is. If this market was really so favorable to criminals, the numbers would be trending in the other direction.

Evolving Industry, Evolving Practices

As if we need to remind you again, many leading voices in our institutions openly doubt cryptocurrency’s legitimacy. They’ve been exceedingly vocal about the industry’s failings.

In doing so, they’ve failed to acknowledge the maturity the cryptocurrency industry has begun to show.

cryptocurrency-related crime - BitAML Blog
Photo by Kevin Ku from Pexels

Several cryptocurrency companies, for example, are already aware of the challenges of protecting consumer data. And they’re beginning to take some responsibility for the security of customers’ data.

But how?

Some cryptocurrency companies have realized the importance of KYC protocols. Though not all cryptocurrency businesses are up to speed, more are seeing the value in becoming more KYC-compliant.

Other cryptocurrency businesses are becoming increasingly sophisticated in identifying and catching cybercriminals before their fraudulent schemes come to fruition. These businesses are checking for suspicious transactions and monitoring consumer behavior. They’re accomplishing all of this by using special compliance tools and other resources.

In Cryptocurrency We Trust

Cryptocurrency insiders aren’t the only ones who have evolved over these past few years. Even law enforcement officials have begun to see the benefit in using blockchain technology to conduct business.

That is to say, law enforcers are actually using blockchain technology to catch criminals. This new reliance on blockchain technology is amazing when you consider how opposed to this tech law enforcers were several years ago.

And the most amazing thing about it all? Law enforcers have begun implementing this technology at multiple levels. Local law enforcement, for example, uses open-source websites like CoinATMRadar and have been opening dialogues with local operators.

But there’s more.

The United States government has been seizing cryptocurrency assets for years now. In 2017, for instance, the government owned more than $9 million worth of bitcoin. And there’s good reason to believe that the government doesn’t intend to stop there. It will easily be able to enforce civil asset forfeiture by relying on the blockchain infrastructure.

Given the extent of law enforcers’ commitment to using blockchain tech to their advantage, we’re not surprised to find that Special Agent Infante actually complimented blockchain as an investigative asset:

“The blockchain actually gives us a lot of tools to be able to identify people. I actually want them to keep using them.’’

Photo by fabio on Unsplash

Think about how huge Infante’s statement is. She is speaking on behalf of an official government agency, in fact, one of the premier law enforcement agencies in the country, not to mention the world, and explicitly stating that blockchain technology makes law enforcers’ jobs easier.

The bottom line:

When coupled with the DEA’s findings, these examples demonstrate what BitAML has been saying for a long time — that blockchain technology has become less friendly to criminals. Between the cryptocurrency businesses that are self-regulating and the law enforcers who are adopting the technology, cybercriminals are realizing that they’ll have to find a new haven.

Continuing The Trend

The DEA’s recent report has shown us that the cryptocurrency industry as a whole is making a strong effort to curb criminal activity. More importantly, it has shown that it’s capable of doing so without strict government intervention.

The steps industry insiders have taken has made cryptocurrency smarter and stronger. But as cryptocurrency becomes smarter and stronger, regulators will expect business owners and leaders in the space to continue becoming smarter and stronger.

If history is any indication, the industry is fully capable of rising to the occasion.

If you’re currently on the path to improvement or just need a compliance checkup, don’t hesitate to contact us. We’d like to help you continue thwarting cyber criminals and keep your business compliant.

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