To catch a crypto criminal

TRACERS IN THE DARK: The Global Hunt for Cryptocurrency Crime Lords

Author:Andy Greenberg

Editor: Double day

pages: 366

Price: $32.50

Childhood discussions of morality often boil down to one question: what would you do if you knew no one would ever find out? In the age of Bitcoin, many people tried to test this scenario, thinking they might be hiding under a digital invisibility cloak. They were, as Andy Greenberg details, misinformed.

Greenberg, a writer who covers hackers, surveillance, and the more sordid areas of the Internet for Wired, among other things, deftly assembles a gallery of rogue characters who have fallen prey to this false sense of invulnerability: drug dealers, thick-necked federal agents, globetrotting libertarians, and (less fun) collectors of child pornography.

The misconception that Bitcoin transactions cannot be tracked has plagued cryptocurrency reporting since its early days and is based on a fundamental confusion between “anonymous” and “untraceable”. From a privacy perspective, paying with Bitcoin is pretty much like using cash – if, that is, the serial numbers for each invoice were dutifully recorded by each merchant. The heroes of Greenberg’s story are the programmers and number crunchers who learn to put together serial numbers, track money as it jumps between digital wallets, and create the trails of evidence that send criminals jail.

Some of this story, particularly the dramatic dismantling of the Silk Road and the capture of its creator, Ross Ulbricht, has already been told. Greenberg has less knowledge of specific criminal personalities, but that lack is made up for by his level of detail and the investigators’ absorbing narrative. Every key section of the book – the Silk Road story; the dismantling of its successor, AlphaBay; the massive theft of Bitcoin from the Mt Gox exchange; and, finally, the bust of the Welcome to Video child pornography empire – unfolds like a compact mystery.

The protagonists, too, would fit perfectly into a procedure. They are resourceful, morally upright, and feature attractive quirks. Who wouldn’t support Tigran Gambaryan, the hardworking accountant who turns into a badass tax agent covered in Greek Orthodox tattoos?

And yet, it’s hard not to walk away from the book feeling like the downfall of the villains has less to do with the hard work of the investigators and more to do with the usual culprit: hubris. Time and again, the big breaches in business come not from careful financial investigations, but from the most stubborn criminal blunders.

Ulbricht, the founder of Silk Road, made the mistake of including his own email when seeking help with startup coding. Carl Mark Force, an agent for the Drug Enforcement Administration, tried to open an account with a Bitcoin exchange under a false identity – then, when he was refused, he immediately returned and registered under his real name . Another federal agent and an elusive hacker got caught after forgetting to hide their computer’s Internet addresses.

And then there’s Alexandre Cazes, the Quebec entrepreneur who saw an opening when the Silk Road was closed and founded an even bigger marketplace, AlphaBay, which he operated from Thailand. Cazes managed to include his email address – [email protected] – in the metadata of the note welcoming vendors to his drug bazaar. By the time the police were hot on his trail, his Lamborghini, his astronomical bar tabs, and his compulsive posting on a pickup artist forum had sealed his fate — with or without the help of the crypto cavalry.

At the end of the book, Greenberg reaches a bigger point, bringing back one of its protagonists, cryptographer Sarah Meiklejohn, to point out how the tools used to catch criminals could be employed just as easily in the service of mass surveillance. It’s a reasonable concern, but based on slippery slope speculation that doesn’t seem entirely convincing.

Still, there’s a bigger point to glean here, and it may lurk, like Pimp_alex_91’s email address, just below the surface.

It’s telling that before Gambaryan more or less came forward on the Force case, he was in the midst of a different investigation – into a company called Ripple which, taking advantage of the interest in Bitcoin, had published its own digital currency. The Ripple investigation makes no appearance beyond the first few pages of Tracers in the Dark. You have to turn to Google to find out what happened there: the criminal investigation into Ripple ended with a civil fine of $700,000 and a pro forma promise to behave. You can see why Greenberg would touch on this – settlements don’t usually do much drama.

But that feels like a significant omission, because, as Greenberg knows, it’s exactly such faint traces that lead to a deeper story. Ripple has not, in fact, disappeared. He is currently embroiled in litigation with securities regulators over his $1.3 billion sale of digital tokens. Its investors include some of the best-known names in tech, such as venture capital firm Andreessen Horowitz, one of many that propelled the cryptocurrency boom to untold riches.

A billion here and half a billion there is a lot, and much of it will likely be paid for by the less connected and less informed. But one glaring truth remains: Compared to some of the big investors in the crypto trade, these villains have been playing for penny stakes. If you really want to follow the money, the paths to walk aren’t those bouncing around computer servers in dingy hotel rooms. They are brilliantly lit by the billions of dollars in opaque profits amassed by some of Silicon Valley’s most upstanding citizens.

©2022 New York Times News Service


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