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After meeting probable-cause and burden-of-proof requirements, law enforcement can get seizure warrants for any illicit funds that eventually land on compliant exchanges—and many funds eventually do. Law enforcement will then work with the crypto business to move the funds to a government-controlled wallet or freeze them.
“Another method is that the adversary or a member of their conspiracy cooperates and provides private keys to the government as part of a plea negotiation or cooperation to benefit them in some way,” says Gurvais Grigg, who was assistant director of the FBI before becoming an executive at Chainalysis.
The third possibility is to compromise the target’s security—which can happen in numerous ways.
“When you’re talking about a country like North Korea or Russian cyber criminal organizations, it can take years of building out networks of confidential informants and working with other governments, even those that aren’t always friendly to us,” Redbord says. “One piece is potentially hacking into a server or machine or, frankly more likely, just great police work.”
For hackers outside the United States, the task is trickier. An arrest can be impossible if the suspect is in a country that doesn’t cooperate with Washington, so prosecutors focus elsewhere.
“Good prosecutors understand that a criminal prosecution is only one part of the larger investigation and results in these types of cases,” says Redbord, who was a prosecutor for 11 years. Instead, the focus is the money.
The other aspects are regulation, politics, and diplomacy. There are several notable “rogue areas” around the world that don’t comply with international anti-money-laundering rules, Grigg says, including North Korea and Iran, “but those parts of the world are becoming smaller and smaller islands.” There are two reasons for that. If you’re a business, compliance means you have a chance to access the world’s richest markets; if you’re a nation, it means your own lawful orders can be honored in return.
What comes next?
As governments become better at surveilling and seizing cryptocurrency, hackers and criminal tactics continue to evolve.
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