UK police may have invested a massive £100 million into a so-called “crypto task force” but a lack of funding, overstretched resources, and difficulty in persuading top talent to resist the financial might of the private sector continue to hamper efforts to properly police digital currencies.
In a Parliamentary debate this week, detective chief Alan Gould claimed that police in the UK are capable of tackling crypto crime thanks to a now-nationwide crypto task force. However, he admits police capacity, overstretched resources, and a lack of funding are holding back their efforts.
Crypto crime in the UK is growing. The National Crime Agency (NCA) notes a ”significant growth” in ransomware campaigns, UK police are seeing an increase in crypto seizures, and a freedom of information (FOI) request found that Binance was used for 20% of UK fraud.
This increase is creating a demand for persons with crypto know-how and now Gould is worried that police staff with the required expertise are being poached. He said, “One of my sergeants has just been offered 200 grand to go to the private sector. We cannot compete with that. That is probably the biggest risk that we face within this area at the moment.”
Gould is also concerned that the tools police in the UK use to track down crypto can be costly, “One of the providers is currently quoting $60,000 to $80,000 per license. That is unachievable, or unsustainable, for policing,” he said. The UK currently uses digital asset custodian Komainu to store any seized crypto.
He pointed out that the UK police have been able to seize hundreds of millions of pounds worth of crypto over the past few years.
However, when it comes to seizing crypto, he said: “it is getting harder and harder to do. The assets themselves are becoming more diverse and more technically complex, so our officers are in a bit of an arms race trying to keep up.”
Gould does note that the work of the Financial Conduct Authority has helped to regulate illicit exchanges, saying the results of their crackdown have been “promising,” and that there “has definitely been a clean-up of the market in that space, which is positive.”
US feds lose seized crypto
US police also struggle with crypto from time to time. Crypto bro siblings Larry Harmon and Gary Harmon were involved in the disappearance of 713 BTC (~$5 million) from a device the police had already seized.
After an investigation linked Larry to a dark web enterprise reliant on coin mixer Helix, he was eventually arrested and his BTC seized. Authorities noticed that despite confiscating the hardware wallet, BTC was still being transferred.
Larry, who’s already laundered $311 million with crypto, promised the police that it wasn’t him who was shifting the BTC, but his brother. Gary had access to the seed phrases and pin of the hardware wallet and so could effectively take the BTC as he wished.
Police eventually forced Larry to hand over his seed phrases while striking a deal with authorities to earn him a lesser sentence if he promised to help in the investigation. Soon after, Gary was caught using coin mixers to cover his tracks after transferring BTC from the seized account, but the police linked his email to the crypto addresses and subsequently arrested him.