Under the headline “Paris Scammers,” an online scammer named ZachXBT published a blog in August detailing how a young couple stole millions of dollars worth of cryptocurrencies. .
To his surprise, French police announced last week that they had acted on his word and charged five people.
ZachXBT told AFP it was the first time his actions had resulted in police action, despite investigating $250 million worth of crypto scams and thefts and recording them for 300,000. his Twitter followers.
One explanation for the lack of action is that low-level scams are not a priority.
Authorities in the European Union and USA — leaders in crypto policing — have relentlessly focused on aspects of crypto crime related to terrorist financing, money laundering, and sanctions.
Federal arrests are rare in the US – the Justice Department’s dedicated unit charged just eight suspects in the first half of this year.
Federal agencies in the United States often focus on controversial suspects like Heather Morgan, an amateur rapper nicknamed “Razzlekhan.” Who was accused money money laundering in February and more recently reality TV star Kim Kardashian, who was fined this month for illegally promoting cryptocurrencies.
However, specialist crypto firm Chainalysis says more than $3.5 billion was lost to scams and hacks between January and July.
AFP has contacted police departments and crime agencies in Europe and the United States, but no country has been able to provide clear rates or fees for crypto-related crimes.
– ‘Afraid of Cryptocurrencies’ –
The sheer scale of the crime makes it difficult for law enforcement agencies that already lack the resources for financial crime.
Chainalysis is one of a number of companies rushing to fill the gap in expertise, selling its tools and services to resellers including New York police.
Former New York police chief Terry Monahan told a recent Chainalysis event that before he resigned last year, officers would face three electronic money cases every day.
But they have no way to investigate, so the cases will be closed.
“Victims have nowhere else to go,” he said, pointing out that federal agencies are only interested in multimillion-dollar cases.
Another part of the problem is the top-down direction.
The focus on terrorism and sanctions comes as regulators struggle to decide if cryptocurrencies are securities or commodities.
If they buy securities, crypto companies will face so many regulations and fines that the sector could be in decline.
Omid Malekan, a professor at Columbia University, said the maneuver of WE dealers can be seen as “their fear of what a crypto-centric future could mean for WE power at home and abroad”.
If decentralized cryptocurrency networks revolutionize finance, US politicians will no longer be able to project power the way they do with dollars and banks.
– Execution ‘very little’ –
With Washington and Brussels focus on high-value targets, victims of low-level fraud are often left high and dry.
Some ended up asking ZachXBT for help and he got their money back.
“I would say there is very little law enforcement in the crypto space,” he said, adding that China particularly unresponsive to its investigations.
But he said US authorities are at least paying more attention to lower-level scams.
Scams have become harder to ignore since crypto lender Celsius went bankrupt due to $4.7 billion in debt to investors.
Many of the losers are folk who often sell with the idea of making a quick and easy profit.
Their testimony to regulators – pensioners robbed of them life savings, remaining small investors contemplating suicide, ranchers losing their livelihood – resetting the image of a typical crypto scam victim.
– ‘Storage’ –
Monahan and Malekan both think law enforcement is getting a grip.
Monahan praises the tracking technology offered by the likes of Chainalysis for allowing some of the funds to be refunded.
“At least we got something back for (the victims), we didn’t just take that case and throw it in the trash,” he said.
And Malekan says increasingly sophisticated tools are helping to unmask scammers despite the much-vaunted anonymity of blockchain – digital ledger where all transactions are stored.
“Once a single participant is exposed, their online history becomes a treasure trove of data to track down their entire network,” Malekan said.
However, the damage of years of lax enforcement will be difficult to remove.
“I think the lack of enforcement will encourage and incentivize scammers,” said Molly White, whose “Web3 is going great” project said. , documenting some of the most horrific scams and thefts in the crypto world.
“I think it has contributed to the perception that crypto hacks are essentially risk-free and high-reward, which many of them have been.”
