New Money Review podcast

New Money Review podcast

Fighting the crypto scammers

October 05, 2021

“We’ve never been so busy,” says Nick Furneaux, a digital forensic investigator who specialises in cryptocurrency crime.

Furneaux, our guest on the latest New Money Review podcast, works with law enforcement bodies and large corporates around the world, focusing on ‘the challenge of investigating crimes involving cryptocurrency’.

Listen to the podcast to hear Nick and New Money Review editor Paul Amery discuss:

How cryptocurrency created new avenues for crime

“What bitcoin did was to provide a method of transaction that at its core is anonymous. This has given the criminal a new method to mix and hide funds. It’s more challenging for law enforcement to deal with.”

“70-80 percent of arrested criminals have cryptocurrency wallets on their phones or computers. Our phone rings off the hook with calls from people who have lost money in scams, frauds and phishing attacks. On the ground, we’ve never been so busy.”

“A sizeable percentage of bitcoin traffic—high teens—comes through the TOR network. One has to ask why. I’d suggest that the number of people using TOR for libertarian reasons is small in comparison to the number of criminals using TOR to obfuscate the movement of funds.”

How criminals launder cryptocurrency

“There are people who are willing to launder crypto for you. They’ll just charge a huge percentage and give you the cash.”

The continuing frictions between cryptocurrency and banks

“We had to buy £500 of ethereum the other day for a class I’m teaching on DeFi and decentralised exchanges—the bank froze my business bank account until I could explain why. The banks are very twitchy with any sort of crypto movement.”

Why retail investors need to practise self-defence

“If you go back five years, an awful lot of the money in crypto was criminal. Now there’s a lot of retail money. And people are going to want to deal with companies that will make restitution if things go wrong.”

“If you’re going to get into cryptocurrency, make sure you understand the technology. Make sure you know the difference between a public and private key, and what a bitcoin address is compared to the private key that controls it. If you cannot understand that, do not get into crypto—you will just have ‘victim’ tattooed on your forehead.”

The global challenge of solving cryptocurrency crimes

“I don’t know how we solve the international issue. We’ve got countries that don’t care, and other countries that don’t have the people or the funds to train their law enforcement and legislators. We get calls from police forces around the world who can’t afford the blockchain forensic tools.”

Why ethereum, DeFi and NFTs are the new frontier of crypto fraud

“The biggest issue we are seeing criminally is what we generically term ‘crypto 2.0’—the ethereum blockchain with all of its tokens, and then the DeFi contracts. If a criminal stakes money into a DeFi contract and does so-called yield farming, they are earning clean money.”

“We’re seeing art fraud associated with non-fungible tokens (NFTs). You take a picture you own to auction, buy it from yourself for $100k, pay the commission, then put it back up for sale for $60k and sell it to a third party who thinks it’s cheap.”