Cryptocurrency Transactions are Traceable, Says DHS and ICE to US Congress
An official of the ICE has stated before the US Congress, that cryptocurrency transactions are traceable. According to the official, digital currency transactions make criminals vulnerable and an easy target for law enforcement.
Combating the Use of Cryptocurrency in Drug Trafficking
Assistant Director of domestic operations, a division of the ICE, Matthew Allen, said during a hearing before the United States Senate Caucus on International Narcotics Control, that transactions involving crypto to fiat or vice versa, can be traced.
According to an official pdf document, Allen stated that one of the ways drugs were trafficked into the US was through digital currency. The assistant director further listed Bitcoin and Monero, among others, used for illicit activities.
Furthermore, Allen said that unregulated cryptocurrency exchanges use Peer-to-Peer (P2P) exchange to enable drug trafficking. Users of P2P exchange advertise the amount they are willing to buy or sell cryptocurrency on selected websites. This category of illicit P2P exchangers charges a premium price for customer anonymity. They either sell above market value or buy below market value.
However, the ICE official positively states that illegal digital currency transactions can be traced, when users try to convert from fiat to cryptocurrency or vice versa. According to Allen, these exchanges create vulnerability and exposes criminals to law enforcement methods. Further emphasizing this point, Allen said:
Utilizing traditional investigative methods such as surveillance, undercover operations, and confidential informants, coupled with financial and block-chain analysis, ICE-HIS is able to disrupt the criminals and dismantle the TCOs, as well as the cryptocurrency exchangers who typically launder proceeds for criminal networks engaged in or supporting darknet marketplaces.
Apart from the use of the method mentioned above to combat drug trafficking, the ICE official also said that investigators are trained. The training helps curb the purchase of drugs using virtual currencies. Also, collaborations with domestic and international partners have contributed to fighting drug trafficking successfully.
Cryptocurrency isn’t Exactly Conducive for Criminal Activity
Several countries, financial institutions, regulatory bodies, and critics strongly see cryptocurrency as a viable tool for illegal activities. This is primarily because of the digital asset’s emphasis on anonymity. However, studies have shown that criminals don’t exactly find virtual currency appealing for illegal activities.
Recently, Lilita Infante, a US DEA special agent, said that speculative investors and not criminals dominate Bitcoin transactions. According to Infante, price speculations take the central stage in transactions, rather than criminal activities. The agent further noted that criminal activity reduced to about ten percent, but said that virtual currency remained the top choice for transactions in the dark web.
Infante’s statement, however, contradicts the claims made by cryptocurrency critics and government bodies that criminals dominate virtual currency transactions.