Observers note that cryptocurrency scams and hacks have skyrocketed, but investigations remain the exception and still rarely result in convictions or compensation for victims.
Therefore, the online detective known as ZachXBT was very surprised when the Paris prosecutor’s office last week announced the indictment of five people thanks to their investigations.
In a blog post titled “Scammers in Paris” published in August, he did detail the theft of several million dollars worth of NFTs, these digital object-related certificates of authenticity based on blockchain technology, or “blockchain”, also based on cryptoassets. .
“It’s great that they recognize my contribution,” ZachXBT cheered on Twitter, where he has over 305,000 followers.
An internet user who claims to have been investigating a theft of $250 million worth of cryptocurrencies, however, told AFP that to his knowledge this crackdown was the first.
For European and American authorities, the fight against cryptocrime is mainly related to terrorist financing, money laundering or sanctions circumvention.
U.S. regulators also report revealing cases, such as the case of a New York couple charged with attempting to launder $3.6 billion worth of bitcoin treasures, or more recently, the case of TV star Kim Kardashian fined for covertly promoting cryptocurrencies.
But smaller, lesser-known crimes often go unnoticed.
In the United States, the Department of Justice unit responsible for investigating cryptocurrency fraud and manipulation only charged eight suspects between January and June.
Several police agencies in Europe and the US contacted by AFP did not provide data on the extent to which they solved cryptocrime cases.
– Lack of resources –
According to Chainalysis, more than $3.5 billion was lost worldwide due to cryptocurrency scams and hacks between January and July, according to Chainalysis.
American reality TV star fined for hidden advertisement of cryptocurrency (AFP/Archive – Jean-Baptiste Lacroix)
This company sells analysis and investigation tools on the “blockchain”. Among his clients are law enforcement agencies that lack resources and experience.
At a recent conference hosted by Chainalysis, former NYPD Chief Terry Monahan explained that when he was in office in 2020, officers faced an average of three cryptocurrency scams per day. , but most of the files were closed due to lack of resources.
“Victims have nowhere to go,” he said, noting that federal agencies prefer to focus on high-profile cases.
Some people turn to ZachXBT, who claims to have helped victims recover some of their funds.
“The law has very little application in the world of cryptocurrencies,” said an online detective who points out that China is particularly immune to his investigations.
According to him, the US authorities are paying more attention to the scams of the daily newspaper, in particular after the July bankruptcy of the Celsius cryptocurrency investment platform, which owed $4.7 billion to its clients.
Many of the affected investors were small-time savers — retirees, mothers, teachers — betting everything on quick and easy profits.
Their testimony to US regulators opened the face of the victims of the cryptocurrency scam.
– “My data” –
A more effective fight would be to end anonymity on blockchains, the databases that store transactions, says Omid Malekan, who teaches at Columbia Business School.
“Once one participant is exposed, their blockchain history becomes a mine of data to track their entire network,” says Malekan.
But some experts believe it will be difficult to undo the damage caused by years of lethargy.
“I think the lack of enforcement encourages scammers and strengthens their resolve,” says engineer Molly White, who documents some of the most serious cases of cryptocurrency fraud and theft in her Web3 Just Goes Great project. doing great).
“It helped reinforce the notion that cryptocurrency hacks are basically risk-free and very lucrative, like many of them are,” she adds.
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