Danish Police Surveil the Blockchain to Make Arrests

Danish law enforcement have arrested drug traffickers after an investigation that included surveilling the blockchain, according to the regional publication Berlingske. The Danish police’s cyber crime unit NC3 claim they have made arrests based on criminal activity tracked via bitcoin transactions. 

Law enforcement officials are indeed working with blockchain surveillance software globally, and even warning against the use of digital currency mixers.

Also read: Basel Institute: “Take Action Against Digital Currency Mixers/Tumblers”

Danish Cyber Crime Unit Analyzes Blockchain to Prosecute Drug Traffickers

Authorities Are Prosecuting Criminals With Bitcoin Transactions
The headquarters of the Danish police’s cyber crime unit NC3.

The chief of the Danish cyber crime unit, Kim Aarenstrup, has revealed authorities in the region created a tracking system that analyzes bitcoin transactions. Aarenstrup details the tool has helped police with two narcotics convictions. One arrest took place in January when Danish police arrested a young man for purchasing ketamine, cocaine, and amphetamines on darknet marketplaces. (DNM)

“Bitcoin — and virtual currency in general — is used a lot for trafficking in weapons and drugs, ransom cases and extortion cases,” Aarenstrup said. “It has become a heavily used tool for criminals. — We are pretty much unique in the world at this point because they’re not really any others who have managed to use these trails as evidence.”

The Danish prosecutor who worked on the convictions, Jesper Klyve, explained their blockchain analysis worked because the drug traffickers had correlated bitcoin transactions. Many services that offer bitcoin purchasing platforms follow strict KYC policies and buyers typically have to verify their identification.

Aarenstrup told the press the new blockchain surveillance system was “ground-breaking.”

Blockchain Surveillance Rising

Authorities Are Prosecuting Criminals With Bitcoin Transactions
Last year, Chainalysis raised $1.6M from European investors and partnered with Europol.

The Danish cyber crime unit is not the only agency utilizing blockchain surveillance software to capture criminals. There are four known startups using bitcoin transaction analysis tools and collaborating with law enforcement worldwide. Companies utilizing blockchain surveillance software include Elliptic, Chainalysis, Numisight, and Skry. Both Elliptic and Chainalysis have been working with law enforcement agencies like the FBI, Interpol, Europol and KYC/AML platform providers.

Last summer, Chainalysis detailed that the company was working with global authorities to combat ransomware. Michael Gronager, CEO and co-founder of Chainalysis, said at the time, “Expect to see some arrests soon as law enforcement agencies wrap up their investigations into several ransomware operations.”

In January, the Basel Institute on Governance, Europol, Interpol, and officials from Qatar warned against the use of bitcoin transaction mixers.

“All countries are advised to take action against digital currency mixers/tumblers,” they explained.

Bitcoin Anonymizing Tools Increasingly Popular

Alongside the rise of startups and law enforcement deploying blockchain surveillance, software developers are also creating privacy-centric transaction tools and concepts for Bitcoin. Ideas like Tumblebit, Schnorr signatures, confidential transactions, and other protocols are being developed. There are also in-production mixing services like Joinmarket, and anonymizing wallets like Samourai.

The privacy activists behind the Samourai wallet recently introduced features like Ricochet, and reusable payment codes. Samourai rebukes warnings made by bureaucrats and law enforcement against privacy-enhancing tools. In a recent blog post called “The Bureaucrats Are Coming”, the privacy-centric wallet developers explain they are ready to fight the state.  

Samourai will not cower to these ivory tower elites — We will actively work to destroy the effectiveness of any legislation or policy that is produced.

What do you think about law enforcement officials tracking bitcoin transactions? Let us know in the comments below.


Images courtesy of Shutterstock, Danish Cyber Crime Unit, and Chainalysis.


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