Blockchain is a digital and decentralized public ledger with a system that records transactions across several computers linked to a peer-to-peer network. It was originally developed for cryptocurrency assets like Bitcoin in 2008. Blockchain Analysis/ Crypto Forensics creates transparency for a global economy built on blockchains, enabling banks, businesses, and governments to have a common understanding of how people and businesses use cryptocurrency.
Following is a brief on how LEA's can leverage Crypto Forensics to build a charge sheet for successful case closure.
> Visualization and Tracking Tools: Case management solution maintains user-friendly case tracking that has been developed for secure, practical and collaborative use
> Broad Transaction Coverage: Ensures real-time information across all the major blockchains and thousands of entities, currently attributing 90% of all active transactions
> Automated & Evidence-Based: Provides immutable historical data logging with real-time updates and sophisticated risk assessment. Available through API license
Law Enforcement/compliance officers can track and trace potentially illicit activities such as fraud, scams, security breaches, money laundering, or terrorist financing by using crypto forensics tools.
Views and thought on the cryptocurrency concerning retail investors.
In India, there are close to 15 million retail investors, who are registered with various Indian cryptocurrency exchanges. Education is a must for retail investors before investing in cryptocurrency. Most of the cryptocurrency sees 15-20% price volatility in a week or so and it creates anxiety in retail investors. Additionally, the government of India hasn't defined cryptocurrency as a legal entity. However, due to the fundamental nature of peer-to-peer transactions mechanisms of cryptocurrencies, investors can trade in cryptocurrency without any third party knowing about it. How to keep oneself safe from these frauds Retail investors should lookout for the following indicators before buying into any scheme or investment advice:
> Is the company registered in India, if not, avoid any financial transaction or bitcoin transaction
> Who are the owners – You will get the background of all the owners from the internet and if the company hasn't declared their names on their website, stay away from them. Investors should invest 1-2 hours in basic research before putting their hard-earned money
> What is the cryptocurrency they are selling and from which online platform? There are more than 1500 cryptocurrencies across the globe and all of them do not have the technology or use case to further their business needs. Investors should target only the top 10-15 cryptocurrencies for trading.
> Buy cryptocurrency in India from crypto exchanges that have a valid and transparent KYC (Know Your Customer) system in place. There are around 15 crypto exchanges that will qualify
> Do not trust any here say, be prepare to do some research on any new technology and accordingly take actions
> Indian crypto exchanges with valid KYC practice provides investors safety, in case the crypto exchanges are hacked. Do not buy any cryptocurrency from any exchanges that do not protect your digital assets.
> Lastly, there is an umpteen number of wallets available on the market, propagated by the private players. Investors should use at least 3-levels of password protection mechanisms (password, 2FA and google authentication) and do not share passwords on the mail or SMS/ WhatsApp with their loved ones.
Are there any grievance redressal process for fraud victims and what they should do if they fall victim?
Since cryptocurrency has not been legally defined by the Government of India, there is no government redressal system available in India. However, independent bodies likes Hyderabad Security Cluster and BEGIN India Think Tank continue to help investors if they get cheated, on case to case basis. Large fraud has been reported to the police and filed as FIR. However, due to the lack of capacity and capability of Indian LEAs & forensics agencies, digital forensics evidence does not get recorded and most of the culprits got bail in the respective cases.
Chinese Online Gambling Scam Case Study
High Possibility of Cryptocurrency paid as Gambling money By Indian Nationals to Chinese apps
A Chinese national and three of his Indian associates have been arrested in a crackdown on an illegal online gambling racket being run by a China-based company, the police said on Thursday. The Chinese national and his associates were arrested by the Hyderabad police from Delhi on Wednesday and brought to Hyderabad on Thursday.
The development comes a day after Chinese individuals and companies were raided by income tax sleuths in Delhi, Gurugram and Noida on suspicion of laundering money.
The online gambling was allegedly organised by different companies under the umbrella of China-based “Beijing T Power Company”, the police claimed, adding that transactions worth Rs 1,100 crore had been unearthed.
A total of 1.24 crore transactions were found to be paid to Chinese online betting scams websites for a total of INR 11,00 crore by Indian Nationals.
The HSBC bank accounts in operation were located in Gurugram One Chinese national, Yah Hao, the online firm’s head of operations and three Indian nationals, namely - Dheeraj Sarkar, Ankit Kapoor and Neeraj Tuli were arrested from their office in Gurugram.
Involvement of Cryptocurrency
> On average money paid by Indian nationals through banks to Chinese Online Gambling is pretty small and would range in INR 150-500 per individual.
> We suspect the possible Involvement of Cryptocurrency paid to Chinese Online Gambling Company, by Indian nationals, which is not uncovered in various raids conducted by ED.
> A large amount of online gambling money is easier to transfer through cryptocurrency as cryptocurrency transactions don’t require any third-party banks to complete the transfer of the funds.
How Hyderabad Security Cluster & HumanSTAR Can Help.
In association and guidance from Hyderabad Security Cluster, HumanSTAR can provide exact details of cryptocurrency funds movement from one wallet address to another wallet address.
HSC & HS can provide a detailed data analysis of funds that are transferred to the Online Gambling Chinese app with country and crypto exchange details.
For this to happen, HSC & HS will require a Bitcoin wallet address, transaction id and other cryptocurrency details from police.
The employees of Beijing T Power Company arrested will have all these details in their official communication with the customers or within the office memo.
> It may take 20-30 days for HSC & HS to provide evidence of cryptocurrency involvement and detailed data analysis, once respective details are shared by police.
(This article has been written by Dr. Zaki Qureshey, Director General & Founder, Hyderabad Security Cluster, India’s 1st Cyber Security Cluster)