Webinar presenters Stacey Wright and Eugene Kipniss answered a number of your questions after their presentation, Cryptocurrencies: the Current Landscape (Part 2). Here are a few of their responses.
Audience Question: From a law enforcement investigator, as they're working a case where a third-party owner took all of the coins and nano-pooled. Do you know if I'm able to find out who owns the account that the currency went into?
Stacey Wright: This is not work we do because we are not directly involved with law enforcement. I can tell you law enforcement has some resources that may be able to assist. I'm assuming that you've tried just plain-old googling the wallet because a lot of times that can actually get you an answer. Believe it or not, people post their email addresses with their wallet IDs all the time. If that hasn't gotten you anywhere, please email us directly, I will put you in touch with the law enforcement resources I know of who are doing that type of thing on a daily basis and would be able to better help.
Audience Question: Do you know whether narcotics organizations are currently using bitcoin and other cryptocurrencies to hide their proceeds or do you think it would be done in the future?
Eugene Kipniss: There have been a lot of documented court cases and convictions such as those involving the silk road, an online brokerage for drugs and illicit activity where they have utilized cryptocurrency for digital payment structures and receipt of funds. That's actually been documented very well in that case. I suggest reading more into that. Again, it's the Silk Road, the website, it's a very big federal case.
Stacey Wright: From what I've heard and read online with these open-court cases, the arrests, quite a few criminal actors in drugs that are in a whole bunch of different things are using cryptocurrency in the hopes that they are more anonymous and harder for law enforcement to chase. That's why we kind of want to get the word out that there are some ways to do it, you have to be careful and you have to be a little bit good at it. It's easier to do that I think a lot of people think it might be.
Audience Question: Are people still using Second Life and World of Warcraft to illicitly transfer funds?
Stacey Wright: I can't speak to whether they're doing it today. I cannot imagine that they've ever stopped. I've seen enough transactions where that has occurred on those two platforms as well as the others and they still have millions of users. I can't imagine anybody has stopped using it.
Audience Question: Are there books that you would specifically recommend on this topic that maybe you've used as a resource for your own research and for this presentation?
Eugene Kipniss: From the basic stuff on blockchain and cryptocurrency most of the research out there is available online. You can actually read white papers or releases that describe the technology behind individual cryptocurrencies. They usually have a community or core website that will try to promote each currency. I know for Bitcoin, you can go out there and find the white paper. Ethereum, Dash, Monero. A lot of my research I even went to those sites, just right out there. They want to evangelize that information. Those resources I pointed to, I like NIST a lot, they're a trusted government resource that evaluates and creates standards for technology and I like to use their materials when possible. Their paper is only a draft paper at this point but it's a pretty nice comprehensive guide to the technology. I can't speak to the crime side as much.
Stacey Wright: I will say I attend law enforcement conferences so that's where I picked up some of the crimes, some of the stuff that we're doing here, that criminal side because we're seeing it come into the MS-ISAC. I listen to a lot of podcasts, it's really hard to stay current on this type of work if you're reading off of books because they don't stay just as current this environment. But there are some really great podcasts out there that talk about bitcoins and blockchains and all of them. And if you want to learn more about this, some of those podcasts and those 101 introductions are really great places too.
Audience Question: Was the other website that you mentioned blockgeeks.com?
Stacey Wright: Yes.
Audience Question: In the sextortion case was an anonymizer used prior to the consolidated wallet?
Stacey Wright: Not that we can tell. We have been able to follow it to an end wallet as far as we can tell. That data, the analyst polled today, this morning, about 11 AM Eastern time and you can still see that money sitting there.
Audience Question: Are there any best practices that agencies can adopt in terms of building up their own capabilities for investigating crypto-related crimes?
Stacey Wright: I'd start with the basics of finding someone to work it. Somebody who finds this interesting in the first place. Who is going to be willing to do some of the research that it takes to really become an expert at this or at least a little more knowledgeable? And there are resources, some of them are a little bit more restrictive, some of them are like blockchain alliance that is willing to work with law enforcement and they're trying to promote the better side of the community. You can get involved in resources like that. In terms of building it up within your own organization, I think once you have somebody dedicated to it, it's a matter of making sure they stay involved in the community and giving them the time and resources to actually make this part of their job, which I know for most departments is a really difficult thing to do.
Click Here to Watch a Recording of Cryptocurrencies: the Current Landscape (Part 2).