A new program has been implemented at the Lethbridge Police Service that will help trace cryptocurrency in the event of fraud.
Chainalysis Reactor is the new software program that can trace cryptocurrency from its initial starting point until it has been deposited in an exchange. The program will help police investigate criminal activity related to digital currency.
“Investigations involving cryptocurrency have been increasing over the past few years and as the technology advances and evolves so do criminals,” says trained and certified blockchain analysis investigator, Sgt. Kevin Talbot with the Economic Crimes Unit. “In cryptocurrency investigations, the only way to identify the exchange where the funds have been deposited, is through blockchain analysis.”
A blockchain is a decentralized and public ledger that records cryptocurrency transactions across a network of computers. It operates through a series of blocks that contain a list of transactions. the blocks are linked together in order, thus forming a chain.
Blockchain analysis is the process of looking into and interpreting data on the blockchain itself, tracking transactions and helping to identify the exchange of cryptocurrency being deposited. Once the exchange has been identified, police can seek judicial authorization to obtain the account holders information and transactional data to see where the cryptocurrency was sent after the exchange.
Cryptocurrency is used to commit various offences from money laundering to illicit transactions for firearms, drugs and human trafficking.
According to the Canadian Anti-Fraud Centre, in 2022, Canadians reported losses totalling more than $300 million in investment fraud. In 2021, losses totalled around $164 million. The majority of losses were investing in cryptocurrency after seeing deceiving ads.
“For LPS, the addition of Chainalysis Reactor as an investigative tool gives us the ability to fully investigate cryptocurrency crimes with the best chance at a successful conclusion,” said Talbot, who notes that previously LPS relied on help from the Calgary Police Service to perform the task.
According to a release from LPS, incidents that involve cryptocurrency are often unreported with victims believing that little can be done. With the addition of the Chainalysis Reactor, LPS believes this will change.
Any victims of cryptocurrency frauds are encouraged to call police at 403-328-4444.
LPS have also released some red flags and tips when it comes to cryptocurrency investing. This includes the age old manta, if it sounds too good to be true, it is, and the high-pressure tactics that fraudsters can use to have victims hand over their money quicker.