On May 14, 2024, the India-based Future Crime Research Foundation (FCRF) hosted a webinar titled “Tackling Crypto Crimes through Blockchain Forensics” in collaboration with Crystal Intelligence.
Beneficial for government officials, financial regulators, legislators, law enforcement agents, crypto exchange operators, compliance officers, and investigators, the webinar aimed to:
- enhance the understanding of the crypto ecosystem
- empower attendees with strategies to counter illegal blockchain activities
- introduce the latest tools for combating crypto crime
- provide actionable intelligence and insights into the future of crypto industry security
The participants in the panel discussion, delivered partly in Hindi, partly in English, were:
- Shashank Shekhar, Managing Editor at CloudSEK and co-founder of the FCRF.
- Prof. Triveni Singh, Ex-Indian Police Service (IPS) & current Chief Mentor at the FCRF.
- Jitendra Singh, Assistant Commissioner of Police (ACP), Indian Cybercrime Coordination Centre (I4C).
- Sanjeev Shahi, Associate Director of Sales at Crystal.
- Navin Gupta, Chief Executive Officer (CEO) of Crystal.
- Nicholas Smart, Director of Intelligence at Crystal.
How do Indian police tackle crypto crime through blockchain forensics?
Mr. Shekhar opened the discussion by highlighting the launch of the FCRF’s Future Crime Warrior initiative (a part of the Police Technology Mission), which intends to equip all individuals with the comprehension, tools, and skillsets to combat cybercrime in India.
He then introduced Professor Triveni Singh, who gave a Hindi-language presentation titled ‘Misuse of Distributed Ledger Technology (DLT) by Cybercriminals.’
Professor Singh discussed fraudulent schemes targeting India through bulk SMS messages. These schemes falsely advertise well-paid home-based, part-time, and online jobs from reputable companies like Amazon and Flipkart. The scheme involved fooling individuals into sending money to the fraudsters using the Mobishastra bulk communications platform with the promise of high returns and employment.
The Indian Cybercrime Coordination Centre (I4C) was informed of the typology in 2021 when a victim who had been duped out of ₹2.2 Lakhs ($2,6K) complained to the cyber police of the north Indian province of Uttar, which launched the still ongoing investigation.
While the full scale of the losses and the number of victims keep growing as follow-up investigations continue, Professor Singh’s presentation and an FCRF report on the case in April 2022 noted that the criminals were converting the funds received into cryptocurrencies and cashing out at various exit points.
Professor Singh went on to explain that while Indian citizens were targeted, most of the fraudulent wallets—which used popular and established exchanges such as Binance—emanated from outside the country: China featured most prominently, followed by Malaysia and the Philippines.
Crystal’s role in fighting crypto crime through blockchain forensics
Crystal CEO Navin Gupta spoke next, also in Hindi, explaining the origins and capabilities of Crystal Intelligence. Their journey began in 2016 with two years of crypto crime data collection and research, leading up to the current services provided to customers worldwide, particularly law enforcement agencies and governments. Crystal Intelligence leverages its comprehensive database to offer actionable blockchain intelligence.
He then discussed the impact of the Covid-19 pandemic on Southeast Asian countries such as Cambodia, Myanmar, and Laos, which struggle with illicit gambling infrastructure in border regions. The human movement restrictions imposed caused them to migrate many of their criminal activities into online gambling, cybercrime, investment scams and love crime (also known as romance scams). This inevitably impacted the crypto asset trading industry as fraudsters tried to move and access their proceeds without detection.
How I4C is tackling crypto crime through blockchain forensics
ACP Jitendra Singh of I4C then gave an illuminating presentation that provided insights into India’s vast size and the high volume of crypto crime, which is increasing both nationally and globally. He mentioned the importance of appropriate tools, international cooperation and regulation to combat crypto crime locally and globally in a way that best addresses the challenges the industry faces now and will face in the future.
ACP Singh first introduced the Indian government’s online crypto crime intelligence gathering mechanism, the National Cybercrime Reporting Portal (NCRP), which Indian citizens use to lodge complaints and report suspected crimes.
He noted that in 2023, the NCRP received over 100,000 complaints from across India and that 10,000 first incident reports (FIRs), or criminal complaints, were filed. Meanwhile, from January 1 until April 23, 2024, 394 FIRs worth more than one Crore ($120K) in fraud losses were reported. He estimated that 25,000 Crores (almost $3B) had been lost in the last three years to date.
He added that 46% of the estimated losses in India were to scams originating elsewhere in Southeast Asia, with Cambodia, Myanmar, and the Philippines featuring prominently in I4C’s investigations. He further stressed that India is only one of numerous countries targeted by cybercriminals from the region, as victims of crypto hacks and scams from Europe, Middle Eastern countries, and the UK also fall prey to scams emanating from Southeast Asia.
How Crystal supports the I4C in tackling crypto crime through blockchain forensics
Crystal Associate Director of Sales Sanjeev Shahi concurred with ACP Singh’s views on the importance of using the right tools to fight crypto crime and the challenges the I4C faces. He emphasized that combating crypto crime is important to preserve national security and protect India’s private citizens from being victimized now and in the future.
He then affirmed Crystal’s commitment to investing in India. He mentioned that Crystal focuses on local Indian cases and geo-specific crypto crime trends and activities. He further welcomed the I4C to reach out to Crystal if it requires support for its investigations.
How Crystal undertakes crypto asset investigations to tackle crypto crime
Crystal’s Director of Intelligence, Nicholas Smart, spoke about effective crypto asset investigations, highlighting some of the field’s principles and techniques. He demonstrated how the Crystal Expert platform works and took the panel through several case studies.
He started by explaining that Crystal’s solutions not only draw on a vast amount of evidence from proprietary data sources and monitored blockchains, but also make this evidence easily available, easily understandable, and actionable for its clients.
He added that investigative findings can and should stand up in court in the event of prosecutions and/or legal action.
He then highlighted investigation practices, such as fund backtracking, and explained some of the challenges his team faces, including uncooperative crypto trading exchanges, instant swap services, and, more recently, cross-chain bridges.
Case studies of crypto asset investigations
Human Trafficking: fraud compounds.
Nick referred to the January 2024 UNODC report on potential large-scale fraudulent operations, often in southeast Asia, involving illegal cryptocurrency schemes such as pig butchering and romance scams. They are allegedly staffed by forced laborers who have been tricked into traveling to the compounds with offers of lucrative jobs and opportunities. Once there, these victims risk appalling abuse and torture, and being held for ransom to secure their release.
Elon Musk Bitcoin doubler scams
There are well-established fraudulent schemes that use the likeness and voice of Elon Musk, the South African-born founder of Tesla and SpaceX and now X owner, to trick victims into sending Bitcoin to fake wallets via social media platforms. The scammers promise that the victims will double their money, but once the Bitcoin is sent, the cybercriminals withdraw the balances of multiple deposits, leaving the victims out-of-pocket.
Russian policeman arrested and charged for extorting Bitcoin from hackers
In mid-2023, a Russian criminal investigator, Marat Tambiev was arrested by authorities for defrauding hackers whom he himself had apprehended in 2022. The members of the Russian cybercrime group, the Infraud Organization, claimed that he had accepted a bribe of 2006 Bitcoin to not divest them of all their crypto when he arrested them, but that Tambiev only declared 1,032 Bitcoin to authorities as confiscated. Crystal stepped in and has been able to trace much of the missing 983 Bitcoin, but the case remains under investigation, and further information is currently confidential.
The webinar ended with a Q&A session, during which the highlight was Smart discussing an investigation that Crystal is currently conducting to illustrate the transnational nature of crypto crime. This particular case involved a theft from a Bitcoin wallet that occurred in East Asia, but the funds were cashed out in North Africa, highlighting the global scale of the issue. Mr. Shahi also answered a question about the investigative training courses offered by Crystal. Find out more here.
