By Joseph Sembler
-Executive Summary-
Cryptocurrency is becoming more popular among criminals, and research on cryptocurrency has concluded that this rapidly evolving technology forms a significant part of the financial landscape.[1] Although cryptocurrency appears to be a key element of many cybercrimes, criminals increasingly use it in traditional crimes because they can convert it into conventional money. This evolution has given rise to cryptocurrency crime and pressured state and local law enforcement to identify and understand how to solve such offenses. This thesis shows that cryptocurrency is growing in popularity, but the U.S. government is not inhibiting its use in American commerce.
This thesis identifies cryptocurrency’s key characteristics or affordances and the ways in which criminals—including enemies of the United States, terrorists, transnational criminal groups, nation-state hackers, and domestic criminals—exploit them. Regarding law enforcement, this thesis provides guidance for state and local law enforcement in recognizing illegal cryptocurrency and formulating policies and procedures, as well as offers recommendations for what to do when it is encountered in a crime. It also identifies some drivers for organizational change, such as social identity and issue selling, to better prepare agencies for responding to and investigating cryptocurrency.
This thesis analyzes cases of another emerging technology, DNA analysis, to examine how law enforcement responded and adapted to it by creating policies and procedures, increasing knowledge, partnering with the educational and private sector, and acknowledging legal precedents. DNA analysis technology has moved from its infancy just 35 years ago to an integral role in securing convictions and exonerations in major crimes today.[2] Analyzing how law enforcement adapted to an evolving technology can inform recommendations for adapting and investigating crimes involving cryptocurrency.
This thesis outlines most questions decision-makers might have when trying to enhance an agency’s capabilities in dealing with cryptocurrency. Several resources can enable state and local law enforcement’s solutions in this complex criminal landscape. Adopting education and training programs in cryptocurrency for state and local governments is critical as is identifying cryptocurrency information in criminal investigations and populating intelligence-sharing databases with it.[3] With cryptocurrency and associated crimes increasing, state and local governments need to engage and create new policies where they do not exist.[4] This thesis recommends the following measures for law enforcement:
- Creating new policies and procedures to investigate cybercrimes effectively.
As Eric Rosner identified in his Naval Postgraduate School thesis, the federal government can no longer be solely responsible for investigating all technology-enabled crimes.[5] State and local law enforcement agencies in the United States need to equip their organizations to respond to and investigate crimes involving such evolving technologies as cryptocurrency.[6] This effort will require a complete understanding of how cryptocurrency connects to crime. Then, departments can design education and training for law enforcement that supports organizational policies and procedures.
[1] Eva Su, Digital Assets and SEC Regulation, CRS Report No. R46208 (Washington, DC: Congressional Research Service, 2021), https://www.hsdl.org/?abstract&did=855875.
[2] Celia Henry Arnaud, “Thirty Years of DNA Forensics: How DNA Has Revolutionized Criminal Investigations,” Chemical & Engineering News, September 18, 2017, https://cen.acs.org/analytical-chemistry/Thirty-years-DNA-forensics-DNA/95/i37.
[3] Police Executive Research Forum, New National Commitment Required: The Changing Nature of Crime and Criminal Investigations (Washington, DC: Police Executive Research Forum, 2018), https://www.policeforum.org/assets/ChangingNatureofCrime.pdf.
[4] Eric Rosner, “Cyber Federalism: Defining Cyber’s Jurisdictional Boundaries” (master’s thesis, Naval Postgraduate School, 2017), https://calhoun.nps.edu/handle/10945/56794.
[5] Rosner.
[6] Police Executive Research Forum, New National Commitment Required.
