Crypto scammers in the crosshairs

Binance has joined forces with the Royal Thai Police to fortify the latter’s forensic expertise in cryptocurrency, uniting to combat the surge in digital asset-related crimes.

“The cryptocurrency landscape continues to evolve rapidly, and with its significant growth comes the inevitable presence of bad actors,” said Jarek Jakubcek, head of law enforcement training at Binance, the world’s largest cryptocurrency exchange with more than 160 million registered users in 80 countries.

With the establishment of Binance’s investigation team, the company can enhance crime-fighting capabilities across jurisdictions and ensure a coordinated global response to threats posed by digital asset-related crime, he said.

“Investigation is definitely not an option anymore. It has become a necessity for many investigators to solve crypto crimes,” said Mr Jakubcek.

The exchange mandates users verify themselves through the know your customer (KYC) process. With its large user base, the company must combat bad actors on its own, collaborating with local law enforcement authorities.

In September, Binance launched the global law enforcement training programme designed to help agencies detect financial and cybercrimes, while assisting in the prosecution of bad actors who exploit digital assets.

Training focuses on how to trace blockchain transactions and interpret the transaction information.

“Blockchain is very transparent and we are taking advantage of this feature. Every time there is a transaction, we can see the money going from one address to another. We can see the amounts, dates and times of the transactions,” he said.

LONG ARM OF THE LAW

The company is also responding to investigation requests from law enforcement worldwide.

“Last year we received more than 47,000 requests from law enforcement agencies, and the number will be even higher this year,” said Mr Jakubcek.

Binance has assisted in all kinds of investigations, from ransomware and the dark web to sextortion. The most frequent crimes are fraudulent activities and basic scams.

Unfortunately, most of the scams today are pushed by organised criminal groups, which work professionally online and often make their traps look like legitimate investment websites, he said.

“Criminals use different narratives to lure investors,” Mr Jakubcek said.

Scammers typically discover the contacts of victims via social networks or unsolicited phone calls, then try to start a conversation that involves investment opportunities. This can include stealing the identity of other people.

Most of these investigations can be resolved through blockchain forensic analysis, he said.

“The success of the investigation depends heavily on close collaboration between law enforcement and exchanges because it’s not a one-way process to ask for and receive the data. It usually requires more clarification in most cases,” said Mr Jakubcek.

He said with the widespread availability of artificial intelligence tools, bad actors who might not have technical skills can develop a professional scam website to lure victims.

“We also focus on crime prevention and training to increase the capacity of investigations. Meeting each other personally greatly contributes to efficient cooperation and practical relationships,” said Mr Jakubcek.

“This relationship and increased capability allow the investigation process to be more efficient. Generally, law enforcement sends legitimate requests and Binance responds within five days. We are definitely one of the fastest international exchanges when it comes to response time.”

Pol Maj Gen Suwat Kerdkaew, deputy commander of technology crime inspection and analysis, command of technology crime detectives and the investigative police, echoed this sentiment.

“In the digital realm, crimes evolve rapidly. Law enforcement must adapt to keep pace with dynamic trends, especially in the cryptocurrency world,” he said.

Around 80% of crimes involve money or assets. Between March 1, 2022 and Nov 10, 2023, people notified police via an online channel of 361,655 complaints, including some scams, with damages tallying 49 billion baht.

“We trace and collect information, which takes time, following suspects until we are sure we have enough evidence for an arrest warrant. We work to apprehend criminals, complying with the law and international practice,” Pol Maj Gen Suwat said.

“The police are not heroes — we help people by collaborating with the private sector, law enforcement, prosecutors and courts, the Anti-Money Laundering Office and the National Broadcasting and Telecommunications Commission.”

Pol Col Thanathas Kanglermbutr, deputy director of news analysis and special tools of technology, crime investigation division 1, command of technology crime detectives and the investigative police, said of 14 types of online fraud, investment scams ranked fourth with nearly 30,000 cases and estimated losses of 15.3 billion baht.

Scams related to digital assets ranked 13th, incurring losses of 2.73 billion baht.

“Digital assets or cryptocurrency are often used for money laundering by criminal gangs or for illicit activities,” Pol Col Thanathas said.

He said with crypto investment scams, criminals meticulously monitor and profile potential victims. They create fake social media accounts, engaging victims in conversation to build a sense of trust before persuading them to invest in a targeted cryptocurrency.

These schemes have resulted in victims losing from 10 million baht to 100 million baht, said Pol Col Thanathas. Such criminal activities often involve organised groups, and some victims are in countries such as the US and the UK.

PIG BUTCHERING

Hybrid investment-romance fraud, commonly known as “pig butchering” scams, primarily prey on novice investors. The perpetrators utilise an array of tactics to cultivate trust, enticing the victims to deposit assets into fraudulent investment platforms. Once the victims are reeled in, the scammers display fictitious profits on the platform to induce further investments by the victims.

“We have been working with Binance for three years, with the majority of the team consisting of ex-law enforcement professionals. This shared background instils a service mindset and a mission to help victims and pursue the recovery of funds,” Pol Col Thanathas said.

“The triangle of victims, criminals and opportunities is interconnected. Educating more people about financial knowledge and preventing scams reduces the window of opportunity for criminals,” said Pol Maj Gen Suwat.

Pol Col Thanathas cited the “Trust No One” operation involving the Cyber Crime Investigation Bureau and the Binance investigation team, which cracked a criminal ring behind a major pig butchering scam that affected thousands in Thailand.

The operation led to the arrest of five principal members of the group and the confiscation of assets valued at 10 billion baht, which included luxury cars, homes, land and other items.

The case had more than 3,200 victims coming forward to seek compensation.

Pol Col Thanathas warned crypto users not to electronically store their digital wallet’s private keys, as hackers can potentially access them. Instead, they should write them down on a piece of paper.