AFP reminder: Bitcoin and dark web purchases are not invisible

Posted: 17 April 2018 12:45 pm
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Authorities are getting comfortable with bitcoin, but anonymous crypto might pose a bigger threat.

A 32-year-old Brisbane woman has been charged with drug importation and trafficking offenses after a joint investigation between the Australian Federal Police (AFP) and Australian Border Force (ABF). The investigation started with the 22 December 2017 detection of a small amount of MDMA in a parcel consignment from the United Kingdom to an address in Brisbane. A few weeks later, on 4 January 2018, a package of fentanyl was detected going to the same place.

The ABP referred the issue to the AFP who got a search warrant and went to the Brisbane address to see what they could find. There, they found further quantities of MDMA, along with several other drugs.

The buyer, said ABF QLD regional commander Terry Price, had made the purchases on the dark web and paid with bitcoin. Price reminded Australians that they shouldn't assume the depths of the Internet, or bitcoin purchases, are invisible.

"Through close collaboration with our law enforcement partners, we are able to detect imports purchased through these sites," he said. "We continue to refine our targeting and testing to make sure this deadly drug doesn’t make its way into the hands of Australian users but people ultimately need to take responsibility for their own health and wellbeing."

AFP commander Justine Gough said the investigation was a clear example of how the border force and federal police will work together to detect drugs entering the country.

"The appeal of these illicit drugs is a serious concern to the AFP, and we want to remind the public that taking these substances, often from an unknown origin, can be extremely dangerous for your health with potential serious side effects, even death," Gough said. "These detections and the subsequent investigation is a clear example of how our agencies will continue to work together to combat the supply of illicit and dangerous drugs into our communities."

An arms race.


Law enforcement has always been in an arms race against criminals, with the law by definition playing catch-up most of the time. Cryptocurrencies in particular have proven to be an especially popular tool for crime.

The main problem, as shown by this arrest, is that authorities in Australia and New Zealand might only just now be getting their heads around bitcoin. It wasn't until 2016 that Australian crime researchers started arguing that bitcoin was no longer a fringe techie thing. Any law enforcement agency that's only at the bitcoin phase these days is probably well behind the curve.

This is because tracking bitcoin is (usually) extremely easy. As an added bonus, bitcoin also creates a permanent and immutable record of transactions, which saves police a lot of time and effort. Good criminals don't want to end up on the blockchain, and bitcoin-happy drug traders arguably aren't very good criminals.

This is not a new problem. Criminologists have often lamented that they can only study the criminals who were dumb enough to get caught, which naturally skews subsequent research-based law enforcement strategies towards catching sub-par crooks who use outdated methods.

There are signs that this is what's happening with cryptocurrency. Dark web researchers have noted that bitcoin is still the most widely available option on these illicit Internet marketplaces, but reckon this is probably because it's a legacy payment system, integrated years ago. Given a choice, many users would prefer to pay with something else, and it's obvious that many of them favour additional security and anonymity.

Researchers reached this conclusion by looking at convenient online polls, put up by developers to see which cryptocurrencies their user base wanted more support for. Here, bitcoin was among the least popular options, with the most popular varying by location.

In Eastern Europe, where dark web users are apparently feeling relatively safe, the new coin preferences were mostly divided between Litecoin, Bitcoin Cash and Dash. All of these are best-known as quick-transfer, low-fee cryptocurrencies. Elsewhere, where buyers and dealers were feeling real police pressure, there was overwhelming demand for Monero, which is 100% focused on private and anonymous transactions.

The anonymous coins might not have done much good for the recently-arrested Brisbane resident, whose drug deliveries were tracked from Australia's borders to her doorstep. But law enforcement agencies probably don't want to get too complacent at the bitcoin stage now that anonymous altcoins are quickly becoming the discerning crook's choice in this particular phase of the endless law vs crime arms race.

Disclosure: At the time of writing, the author holds ETH, IOTA, ICX, VEN, XLM, BTC and NANO.

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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