Fraud Talk: Following the Breadcrumbs-Tracing Cryptocurrencies in Fraud Investigations

In this episode, Larry Nielsen, a detective who has spent the last several years teaching himself about cryptocurrencies, shares advice for fraud examiners who are interested in expanding their toolkits to accommodate cryptocurrency investigations. He also discusses some of his experiences tracing cryptocurrencies in both a law enforcement capacity and as a consultant.

In the excerpt below from episode 117, Larry talks with Mason Wilder, CFE, about how prevalent cryptocurrency is in his fraud work, and how crypto is being used in traditional crime as a new medium. Download the full transcript in PDF form or listen to the episode at the bottom of this post.

Larry: I’m just going to make this real simple and I’ll tell you that last year in 2021, I don’t believe a single day went by that I didn’t have at least one cryptocurrency-related crime that I was investigating now. I don’t mean that I got a new crime each day, but it was just, I don’t think a day went by that. I wasn’t at least investigating one, and most of the time I had multiple cases that I was looking at involving cryptocurrency.

Mason: Can you walk us through some of the types or give us some examples, you don’t have to get too specific on details or get yourself in trouble or anything, but what are some of the investigations that you’ve seen in the last year?

Larry: No, that’s okay. A lot of the scams and fraud cases that you would see with regular Fiat currency, they translate right over to cryptocurrency. The bad actors are changing the media from Fiat to crypto but for example, the romance scam cases, the grandparent scam cases. Now let’s say instead of they still do the Fiat currency, but for the crypto ones instead of them calling a grandparent on the phone and saying, “Hey, we have your grandson here. He has been arrested, you need to go wire us $10,000 from your bank to this bank account and we’ll let him go,” instead of that, now they’re saying, “Hey, you need to go to this Bitcoin kiosk this cryptocurrency and you need to send us X amount of Bitcoin,” for example. They send it to another, they give them a wallet address to send it to, that’s one example, and then we have the SIM swap cases where it’s just a straight-up theft of someone else’s cryptocurrency, again, it’s traditional crimes, but a different medium.

Download the transcript SOURCE: ACFE Insights – A Publication of the Association of Certified Fraud Examiners