Interpol, the world’s largest police body, is setting up a dedicated crypto crime unit in Singapore where the agency’s Global Complex for Innovation is based.
The announcement comes just week after Interpol issued a “red notice” to law enforcement agencies around the world for the arrest of Terraform Labs co founder Do Kwon.
According to Interpol Secretary-General Jürgen Stock, law enforcement agencies are currently ill-equipped to monitor and tackle crypto crime due to the lack of a legal framework.
“Huge developments in technology, internet of everything and digitalization – because of cryptocurrency – pose a challenge to law enforcement, because very often, they (agencies) are not properly trained and properly equipped from the beginning,” Stock told reporters at a press conference prior to Interpol’s 90th General Assembly held in New Delhi.
Crypto crime appears to be trending higher this year. Data from Blockchain analytics firm Chainalysis indicates that US$718 million has been stolen from DeFi protocols across 11 different hacks so far in October alone, taking the gross tally for the year past US$3 billion and putting 2022 on course to be the biggest year for hacking on record.
Chainlaysis also said that cross-chain bridges remain a target for hackers, with nearly US$600 million stolen, accounting for 82% of losses in October and 64% of losses since the start of the year.
While illicit activities involving cryptocurrencies can be easily flagged thanks to the transparent nature of public blockchains, a thorough understanding of blockchain data analytics and transaction monitoring is required to effectively curtail such crimes.
“In the case of an illicit activity, for example, a terrorist financing operation, it’s connected to the illicit activity part. Through the mapping of services on-chain, we can determine which ones are licit or illicit. We also make analysis of both direct and indirect exposure to these services,” said Ulisse Dell’Orto, managing director APJ (Asia Pacific & Japan) at Chainalysis, in an earlier conversation with Blockhead about on-chain analysis.
According to Dell’Orto, Chainalysis can then offer the data gathered to cryptocurrency exchanges or regulators.
“For example, a law enforcement agency can send a subpoena for information to a cryptocurrency exchange, and then the exchange, based on the request, can decide whether to share that information”, he said.
Interpol previously partnered with the cybersecurity firm Trend Micro to reduce cryptojacking (a cybercrime in which another party’s computing resources are hijacked to mine cryptocurrency) incidences within South-East Asia. The agency has also worked with the South Korean data intelligence startup S2W Lab to analyse dark web activity, including cryptocurrency transactions.