Organized crime: the Bitcoin generation

A series of kidnappings is worrying the crypto scene: Bitcoin millionaires and their relatives have been caught in the focus of organized crime, with the perpetrators demanding millions not in euros – but in Bitcoin & Co. for their release. The popularity of the oldest cryptocurrency and its drastic price increase in the past year have led to it also being used by criminals outside of cybercrime. In organized crime, this is also due to a generational change, says Salih Altuntas, Director of Investigations for Central Europe at blockchain specialist Chainalysis, to heise online.

Criminal networks have existed for decades in many areas, from drug trafficking, human trafficking and arms trafficking to protection rackets. As they have been active for a long time, they have already established ways of covering up financial flows and laundering money. The business is running, so there is no immediate need to switch to cryptocurrencies. If new groups come together in the area of member-based organized crime or if the next generation enters the business of family-based organized crime, knowledge and experience from the youth will also be transferred to the groups. For example, on Bitcoin and other cryptocurrencies. A welcome addition to the existing methods: "There will probably never be a trafficking ring that only relies on bitcoins," says Salih Altuntas, who formerly worked as head of cybercrime and organized crime at the Federal Criminal Police Office.

Cheaply laundered

Of particular interest to criminals is the fact that money laundering with cryptocurrencies happens virtually in real time and costs practically nothing compared to traditional methods. "It doesn't matter whether you transfer one euro or a million euros via Bitcoin, the costs are the same." The transfer fee for such crypto transactions is often just a few cents or a few euros. In the Hawala financial system, which is banned in Germany and consists of an international network of trustees, the fees are not only dependent on the transfer amount. The cash must also be handed over to the trustee in person. So someone has to give up their anonymity. Even pricier and, above all, more time-consuming are traditional methods in which the money to be laundered is fed in via restaurants or other businesses with a high volume of cash: Losses of 25 to 50 percent of the amount received are common here.

In contrast, transfers of crypto money via various exchanges are a bargain. However, even if many criminal networks are otherwise highly professional, there is still a lack of sophistication when it comes to cryptocurrencies: "As criminals often make mistakes and do not use sophisticated concealment methods, we can observe the transactions and make wallet connections visible. This means that illegal money flows can often be traced". Investigators are therefore by no means without a chance of catching the perpetrators simply because cryptocurrencies are used instead of cash.

Bitcoin in focus

Bitcoin & Co. have not only arrived in organized crime, dealing with cryptocurrencies has also become part of everyday life for ordinary criminals. For owners of crypto assets, this means that they are now – the focus of criminals in the same way as ordinary rich people – because they have recognized the (monetary) value of cryptocurrencies. For example, there have recently been several kidnappings of crypto investors or their relatives in France, with no connection to cybercrime or darknet drug trafficking. You should therefore carefully consider who you tell about any Bitcoin assets to avoid being caught in the crosshairs.

(mid)