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Michael Hearns

launderingmoney.com

Cryptocurrencies and Crime Part I: "What lies before us in the new digital crime world" by Michael Hearns from launderingmoney.com

This week I engaged in a conversation with a Texas based cyber security group that was interested in knowing what lies before us with regard to crime and cryptocurrencies. I tried to explain that the new frontier of digital currency is still expanding, and that the true end point; the actual proverbial "rubber hitting the road" has not occurred yet. When I was undercover in the drug trafficking and money laundering world, it seemed that the expansiveness of crime creativity, and asset attaining desires were not bound by conventional economic measures. A kilogram of cocaine was absolutely useless unless you desired it for personal consumption, or had a market to resell the kilogram of cocaine. As a young man growing up in Miami, the question posed amongst my peers was always: "Can you imagine if we found a duffle bag of kilos in the mangroves?" The rational aspect of my personality was always that it was useless unless we had entrusted connections in the drug trafficking world. Outside of that you'd be an extreme amateur in a very unforgiving business.

So following that same mentality, where as all fiat currency has a starting point and an end point, cryptocurrencies currently do not.

 

Let me explain: 

 

Even before there was fiat currency there was always some tangible object that was deemed desirable. It could of been gold, beads, spices, livestock, gems...but something tangible was always of value. Something you could touch, put in the hold of a ship, stick in a cave, barter with, trade for...something that had a quantitate measure to it. It could be divided, parceled, metered, weighed, or stacked.

Now we move into the cryptocurrency world and what you are essentially contending with is a valued commodity that in it's purest form is  a "valued computer entry."

It doesn't have a universal end point. Meaning that you cannot use it universally for goods and services it is currently valued only by those who are within the cryptocurrency environment. A non stock investing individual knows that if 100 shares of a high valued stock were bequeathed to him, he could make a stock sale and  convert the stock to fiat currency. But those not in the accepting or converting world of cryptocurrency are challenged as to how to enter, remain, exit, and convert in that environment.

So in speaking with the cyber security group from Texas the center point of the discussion was that at this phase of cryptocurrency evolution the biggest criminal element will come from within the tight confines of crypto currency users and holders. The attached link is a prime example of a cryptocurrency criminal prowling amongst cryptocurrency channels looking to abduct cryptocurrency holders to obtain their cryptocurrency wallets only to then resell within a cryptocurrency circle of users.

 

 https://www.cryptocoinsnews.com/indian-kidnappers-demand-bitcoin-ransom/

 

To help illuminate how the cryptocurrency theft ring would operate follow the age old construction tractor theft example: 

You research and pull building permits from city hall and see a construction site in Miami that clearly needs a construction tractor. You go to the construction site and steal the construction tractor. You then sell the stolen tractor to a construction site in Ft. Myers. Now you have created a demand for a construction tractor in Miami so you steal one form Palm Beach and sell it to the Miami construction site who is need of one that you already stole. Now you have created a second need this time in Palm Beach so you go re-steal the one form Ft. Myers and sell it to Palm Beach. The second one that Miami purchased from you well you now steal it back and sell it to Ft. Myers. You steal/sell/and re-steal the same construction tractors within the same victims and purchasers. So as you identify those in the cryptocurrency world (Building permit information). You steal crypto currency coins and wallets from your first target (Miami) and sell to your first buyer (Ft. Myers). You then steal from your second target (Palm Beach) and sell to your first target (Miami). 

The construction tractor example is basically a foundational principal that applies when a product is desired yet not closely regulated or is shared information amongst its users. 

The criminal element in cryptocurrencies will cycle within the cryptocurrency environment until there is wide based acceptance and an end point for all users.

 

 

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