Cryptocurrency: criminals exposed thanks to fedpol
François* became a victim of a love scam. His online sweetheart, Annette*, asked him to send her money in bitcoin. fedpol supported the cantons in tracing the transactions that led to Annette’s real identity.
The love scams reported to the cantonal police often follow the same initial pattern: François* had an online relationship with Annette*. They met on a forum and immediately became friends. Their friendship quickly turned into a passionate romance. After a few months of chatting, Annette said she lost her job. Financial worries were piling up. She asked François for help.
Annette lived the high life, and François sent her significant amounts of money: CHF 1,000, then CHF 5,000, and CHF 10,000. At Annette’s request – she was a great fan of cryptocurrencies – François exchanged these amounts to bitcoin at an ATM and transferred the money to her. In the following months, he ended up paying his online sweetheart nearly CHF 200,000.
After an umpteenth request for payment, François realised that Annette’s interest in him had become exclusively financial. He notified the local authorities who handle love scam cases. This particular scam was unique in that it involved a cryptocurrency. That’s where fedpol comes in. The cantonal authorities requested support from fedpol’s specialists who helped trace the bitcoins to the offender.
Support for the cantons in cases involving cryptocurrencies
In 2020 and 2021, fedpol regularly supported the cantons in the search for scammers and swindlers that use cryptocurrencies. The goal is to analyse transactions in order to identify the offenders. The analysts use various tools and specialised knowledge to trace the transactions back to the ‘exchanges’ – the online financial institutions used to buy and sell cryptocurrencies.
Annette’s modus operandi has been tried and tested. Some payments were impossible to trace back to a financial institution. The offenders used techniques such as multiplying the flow of transactions and stalling some payments by the victim to cover their tracks. The investigators were looking for a needle in a haystack, a detail that could lead them to the criminals. The work was tedious, but the information provided by the canton, the expertise of fedpol’s specialists and the latest tools led fedpol to identify the exchanges used by the criminals, and to pass on their findings to the canton. fedpol lifted part of the veil on the case, exposing the criminals and paving the way for the canton to move ahead with the investigation.
Focus on cryptocurrency crime
Criminals don't just use cryptocurrencies for online fraud. The options are many, ranging from extortion and corruption to terrorist financing. The draw for criminals is the anonymous nature of cryptocurrency. This is fortunately somewhat of an illusion. With enough know-how and the right tools, it is sometimes possible to trace the transactions back to the people hiding behind the pseudonyms. One thing is for sure: given the increasing use of cryptocurrency by criminals, fedpol, and also increasingly the cantons, will continue to focus their attention on cryptocurrency crime.
*Names changed for privacy reasons.