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Europol Nabs 11 in Crypto Drug Money Laundering Case

Europol has shut down a drug trafficking ring that used cryptocurrencies and credit cards to launder more than €8 million through a Finnish crypto exchange, it announced on Monday.

The investigation was coordinated by Europol and executed by Spain’s Guardia Civil in conjunction with Finnish authorities and the investigative arm of the U.S. Department of Homeland Security, and resulted in eleven arrests, according to a statement. The funds were laundered from Spain to Colombia through an unnamed cryptocurrency and credit cards.

Roughly 137 individuals were investigated, and the suspects used a total of 174 bank accounts, according to the statement, which continued:

“The criminals based in Spain were contacted by drug traffickers to launder money obtained from their illegal activities. They picked up the illicit proceeds in cash, which were then split into small quantities to be deposited into hundreds of third bank accounts.”

With the cash “circulating in the financial system” the alleged criminals first used credit cards to withdraw the money in Colombia, but fearing discovery, they subsequently shifted to converting the funds into cryptocurrency and then into Colombian pesos through the Finnish crypto exchange.

Europol’s statement noted that the unnamed exchange cooperated with Finnish authorities by sharing the suspects’ information.

The EU law enforcement agency said it plans to strengthen its efforts to police criminal activities carried out with cryptocurrencies.

“Europol will continue to coordinate across EU Member States and beyond, to effectively respond to this rising threat,” its statement read, adding that it has implemented “specialized training courses to assist law enforcement officers in identifying the use of cryptocurrencies by organized crime networks.”

Europol has previously issued reports on the illicit usage of cryptocurrencies, most recently warning that zcash, monero and ether are increasingly implicated in cybercrimes in addition to bitcoin.

Spanish patrol car image via Shutterstock

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Europol: Zcash, Monero and Ethereum Follow Bitcoin in Cybercrime

Europol, the law enforcement agency of the European Union (EU), has warned that the virtual currencies Zcash, Monero, and Ethereum are increasingly being used in the digital underground market. The agency, however, reiterated that the leading cryptocurrency Bitcoin is still the preferred currency in cybercrime.

In its 2017 Internet Organised Crime Threat Assessment (IOCTA) report, Europol stated that the darknet landscape is rapidly evolving. The agency concluded that Monero is fast gaining darkweb popularity because of its “additional security and privacy features” making it one of the easy cryptocurrency choices for criminals.

Part of the report reads:

“Cryptocurrencies continue to be exploited by cybercriminals, with Bitcoin being the currency of choice in criminal markets, and as payment for cyber-related extor on a empts, such as from ransomware or a DDoS attack. However, other cryptocurrencies such as Monero, Ethereum and Zcash are gaining popularity within the digital underground”.

The report further detailed the main reason why cryptocurrencies are becoming a favorite among criminals:

“Transactions cannot be attributed to any particular user/address, all coins used in a transaction are ‘hidden’ by default, and transaction histories are kept private.”

Other highlights of the IOCTA report

In its report, Interpol focuses on the popularity of digital currencies on darknet marketplaces. As an example, it cites the case of a Monero-focused ransomware called Kirk that was launched in early 2017.

In the case of Ethereum, the report claimed that smart contracts based on the cryptocurrency could be utilized to legalize payments between crime service providers. It also presented a case of a proposed decentralized darknet market that is designed to operate on the Ethereum Blockchain.

Meanwhile, the document clarified that Zcash is yet to be the subject of a law enforcement investigation. However, the virtual currency is reportedly being eyed by darknet marketplaces due to its privacy features, which hide both the transaction recipient and the transaction amount.

The case of AlphaBay

The biggest darknet market AlphaBay was shuttered by Europol in early 2017. The closure was part of a globally coordinated crackdown on underground markets. However, prior to its shutdown,  AlphaBay had already added Ethereum and Monero as payment options, and previously had plans to include Zcash.

While any currency can be associated with any criminal activities, such security issues with cryptocurrencies provide an easy excuse for governing bodies to continually be skeptical about the possible value and security of digital currencies.

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Europol Warns Zcash, Monero and Ether Playing Growing Role in Cybercrime

European Union law enforcement agency Europol has for the first time released a cybercrime report examining the growing role of zcash, monero and ether on the darknet.

In the 2017 Internet Organised Crime Threat Assessment (IOCTA), Europol states that, although bitcoin is still the preferred currency in cybercrime, the landscape is beginning to evolve, with “monero, ethereum and zcash … gaining popularity within the digital underground.”

The research document analyzes the differing desirability of these cryptocurrencies for cybercriminals, and concludes that monero is increasingly popular due to the “additional security and privacy features it offers.”

The document explains:

“Transactions cannot be attributed to any particular user/ address, all coins used in a transaction are ‘hidden’ by default, and transaction histories are kept private.”

Europol also mentions the cryptocurrencies’ popularity on darknet marketplaces, and decribes the first known case, earlier this year, of a monero-focused ransomware named Kirk.

Discussing ethereum’s ether token, the assessment restates Europol’s earlier concerns that smart contracts could be used to formalize payments between crime service providers. Further, it documents a case of a decentralized darknet market planned to operate on the ethereum blockchain.

The document goes on to say that zcash “has yet to feature in any reported law enforcement investigations.” However, due to its privacy features, which involves “obscuring both the transaction recipient and transaction amount,” darknet marketplaces are interested in the currency. 

Although since disbanded, the largest darknet market AlphaBay added monero and ethereum as payment options in the year prior to its closure, and had plans to implement zcash.

Europol shutdown AlphaBay earlier this year as part of an internationally coordinated darknet crackdown.

An investigative document stated at the time that authorities had seized large quantities of bitcoin, ethereum, zcash and “an unknown amount of monero” from the site administrator. Monero enthusiasts celebrated the statement on social media as proof of the resilience of the currency.

Disclosure: CoinDesk is a subsidiary of Digital Currency Group, which has an ownership stake in Zcash Company, the for-profit entity that develops the Zcash protocol.

Underground passage image via Shutterstock

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