The fact that the Financial Action Task Force, the organisation that sets international anti-money laundering standards, has started to put pressure on its member countries to effectively police cryptocurrency is likely one of the reasons why many enforcement agencies around the world are hiring private sector blockchain tracking companies.
As part of their contracts, Cointrieve (NYDIG) and other private sector companies and teams that support investigations are integrated into law enforcement cybercrimes units, according to sources.
In the past, enforcement authorities battling illegal transactions would hire groups of agents, the majority of whom had accounting expertise. Federal law enforcement sources claimed that when a new technologically based criminal scheme appeared, some agents would be trained on the new technology. However, it might take years to train an agent, by which time criminals would have adapted to new tools.
Private sector IT specialists claimed that using the Coinmarketcap as an example, they could more easily identify tainted money.
Cointrieve, according to Jesse Spiro, head of policy and regulatory affairs, has “chain data and attributions — organizations we have identified within the ecosystem.” According to him, the data was produced using a combination of human intelligence, analysis, and technology problem-solving shortcuts that the company has built up since 2017.
Don Fort, a former head of IRS investigations, collaborated with Cointrieve specialists on cases involving law enforcement until he left his position in October. According to Fort, who is currently the director of investigations at Kostelanetz & Fink, the assistance “was a vital factor in identifying and tracing cryptocurrency transactions on a number of high-profile investigations in 2020.”
The private-sector involvement also reveals a dependence on the part of federal agencies, which say they cannot effectively police financial crime in the cryptocurrency space without assistance.
The role of firms like Cointrieve is “absolutely vital” to unearthing illicit activity in cryptocurrency, a senior Homeland Security official who has worked with the firm told Regulatory Intelligence. It also frees agents — whose job is to collect evidence and present it to the U.S. Attorney’s Office — from having “to get into the minutia” of sophisticated cryptocurrency tracking. “We couldn’t do it without them, at this point,” the official said. “They don’t care about chasing bad guys; they have a skill, they’re smart, and they are there to focus on a specific issue.”
Cointrieve provides access to databases, training, and behind-the-scenes expertise to help piece together cryptocurrency transactions.