A police think tank has first issued standard operating procedures for law enforcement agencies in India on how to investigate crypto crimes, and seize and protect cryptocurrencies during the investigation.
Law enforcement agencies must have their own crypto wallets to store seized virtual digital assets, and must liaise with crypto exchanges to block suspects ’wallets or reset keys to prevent transactions under ongoing investigation, guidelines by the Police Research Development Bureau. (BPRD), a think tank in the interior ministry, said in the guidelines.
Investigators tackling cyber crimes involving cryptocurrencies have been asked to document the scene thoroughly during the process of opening a crypto wallet so that evidence can be stored and used in court.
Currently, there are no national guidelines on cryptocurrency -related cases, as enforcement agencies often struggle, especially in seizures as well as tracking down suspects.
Although the central government has started paying taxes on crypto transactions at a rate of 30%, the state has not yet regulated cryptocurrencies and an investigation into the case is being investigated through existing cyber laws.
Illegal transactions using cryptocurrencies in 2021 are estimated at $ 14 billion, up 79% from $ 7.8 billion a year earlier, according to a Jan. 6 report in the Wall Street Journal.
The value of Bitcoin alone is currently at $ 1.98 trillion, T Rabi Shankar, deputy governor of the Reserve Bank of India, said in a keynote addressed to the Indian Banks Association on February 14. There are 17,436 cryptocurrencies and 458 crypto exchanges, he said. .
Once it is determined that there is involvement of cryptocurrencies in the crime, there should be a prompt response by law enforcement agencies to seize them, in accordance with standard operating procedures, which have been reviewed by HT.
“Law enforcement must determine if they can access the wallet by obtaining the required password or key code,” the guidelines said.
If the wallet is not encrypted, the document says, officials can have full access (provided a proper warrant has been obtained for seizure of the device), but if the wallet is encrypted, asking the suspect to provide an encryption code, password, or seed word is the easiest way to access it.
If direct access to a suspect’s wallet is not possible, or the suspect is denied access to the encrypted wallet, the device must be switched to airplane mode, or placed in a faraday bag to prevent interference, the guidelines said. The faraday bag blocks electromagnetic fields and shields closed digital devices.
To open a crypto wallet, officers can ask suspects for any passwords, seeds, or credentials needed to log in.
To store a seized cryptocurrency, “law enforcement agencies must have their own Bitcoin / crypto wallets,” the bureau said.
For online wallets, help from a third party where the currency is stored can also be taken to freeze the account and help recapture the funds left online. “Police can do this by using the same method to freeze traditional bank accounts, but the guarantee should be directed to the online wallet operator,” the SOP said.
Law enforcement officers have been asked to document the scene while seizing the cryptocurrency.
Since access to crypto wallets is often encrypted, the bureau asked police to follow best practices to keep the device’s current condition from locking from inactive, if the suspect’s mobile computer is not locked. “In the case of cell phones, faraday bags should be used,” he said.
“The crypto wallet can be opened on another device by recording the entire process with an independent witness by following the appropriate detention chain,” the SOP reads.
The biggest issue facing law enforcement in dealing with cryptocurrency related cases is the traceability of transactions and suspects, according to Karnal Singh, former chief of the Enforcement Directorate that investigates financial crimes.
“Because cryptocurrency uses a decentralized network of computers or nodes, it is difficult to know who is doing the transaction, and people can have a public key and can sit anywhere around the world, which makes traceability of suspects impossible,” Singh said.
A public key is like an account number, which is visible to anyone with internet access when a transaction is added to the blockchain.
“While cryptocurrency is a boon for people in countries with unstable currencies, anonymity is a major challenge for law enforcement agencies. When all transactions are transparent on the block, it is difficult to pin wallets for physical people. As a result, this is a safe haven. safe for criminals who carry out ransomware attacks, hack crypto exchanges and perform transactions in bitcoins, ”said Tarun Wig, co-founder of Innefu, a data analytics and cyber security company.
“As a state, our law enforcement agencies do not yet have SOPs to investigate crypto crimes and identify perpetrators,” Wig said. “While some exchanges have made KYC (know your customers) mandatory, there is an urgent need to pin each wallet to a physical entity and classify all transactions by risk score.”