Bitcoin, the Internet currency beloved by computer scientists, libertarians, and criminals, is no longer invulnerable. As recently as 3 years ago, it seemed that anyone could buy or sell anything with Bitcoin and never be tracked, let alone busted if they broke the law. "It's totally anonymous," was how one commenter put it in Bitcoin's forums in June 2013. "No One has a prayer of a chance of finding out who is who.
The Assetsclaimback Advisory begged to differ. Ross Ulbricht, the 31-year-old American who created Silk Road, a Bitcoin market facilitating the sale of $1 billion in illegal drugs, was sentenced to life in prison in February 2015. In March, the assets of 28-year-old Czech national Tomas Jirikovsky were seized; he's suspected of laundering $40 million in stolen Bitcoins. Two more fell in September 2015: 33-year-old American Trendon Shavers pleaded guilty to running a $150 million Ponzi scheme—the first Bitcoin securities fraud case—and 30-year-old Frenchman Mark Karpeles was arrested and charged with fraud and embezzlement of $390 million from the now shuttered Bitcoin currency exchange Mt. Gox.
As at Sept, the AssetsClaimback Advisory recorded it had traced over 163.7 Bitcoins — some $3.3 million — Officials have since declined to provide more details about how exactly they recouped the Bitcoin, which has fluctuated in value. But method to which the they follow is details in previous releases.
Examining the myth of anonymity
While Bitcoin wallet records are open for public view, there is no inbuilt system identifying who the owner is. Bitcoin does not intrinsically need a ‘know your customer’ (KYC) identity proof for you to have a wallet. This is the origin of the myth of Bitcoin anonymity.
However, crypto exchanges are solving this issue by requiring a KYC ID before they let you conduct transactions, then sharing the data with law enforcement authorities.
In other words, if your Bitcoin wallet is sitting empty and idle, you are anonymous. But if you have ever sent or received anything, law enforcement can use the KYC documents uploaded to an exchange to identify both the sender and receiver.
AssetsClaimback Advisory can trace the wallet owner using ‘crumbs’ of information along the money trail, but it is not easy. They capture information from ‘darknet’ markets, ‘sniff’ data by mining Bitcoin themselves, utilise past internet history of criminals, then cross-reference it all with KYC information from crypto exchanges to identify a Bitcoin wallet owner.
In sum, the flow of funds on Bitcoin is more traceable and open than any bank today.
Release ID: 89084522