- Obfuscation did not help prevent the detection of insider crypto theft on the blockchain.
- The NCA was questioned following an officer who transferred Silk Road Bitcoins that were seized and used the money.
- Investigations into the seizure of digital asset security measures in law enforcement are underway.
One of the former National Crime Agency (NCA) officials was convicted to five and a half years because he stole 50 Bitcoin confiscated as a result of a high-profile Silk Road 2.0 case. The stolen cryptocurrency that is currently worth over 4.4 million pounds was supposed to be used as evidence in a large-scale crackdown against darknet markets and other organized crime.
Paul Chowles sentenced to five and a half years for stealing 50 Bitcoin
The official transferred the Bitcoin in a secure digital wallet owned by infamous Silk Road 2.0 co-founder Thomas White. They were sent to a crypto mixing service to hide the source and then withdrawn in cash and with the help of crypto-powered debit cards. Regardless of an elaborate laundering operation, the lost assets were traced by the help of specialist blockchain analytics.
Within a short amount of time, after the disappearance of the Bitcoin, investigators believed that White used his technical prowess to find a way back to his wallet. Direct tip-off by White was enough to raise suspicion within the organization. Only the NCA officials had the keys of the wallet, which indicated an insider breach as attested by White. This discovery triggered a back-up secret operation that later identified the perpetrator.
Chainalysis Solves the Blockchain Puzzle—Crypto Tools Crack Case
Source – X
With the help of sophisticated tracking by the blockchain platform Chainalysis, the police traced the laundering effort via the Bitcoin Fog, an infamous crypto mixer service. Due to tracing the wallet movement with crypto-enabled debit card spending, researchers discovered distinctive patterns and user behavior. The blockchain analysis conducted by Chainalysis provided the key evidence to trace the whole process of theft and conversion.
Source – chainalysis
A long search was used to retrieve one of the devices associated with the rest of the stolen Bitcoin, which had been inactive after almost 5 years. Forensic investigators discovered personal notepads with the recaptured user credentials of cryptocurrency accounts and access transaction records, as well as a phone that was directly involved in the illicit transactions. The financial activity of the officer such as spending more than 613,000 pounds and earning a similar amount was followed and even recorded.
Security Fallout and Digital Currency Safeguards Under Fire
The police spokesperson summarized, “The blockchain allowed transparency so that all transfers resulted in a permanent record.” Chainalysis professionals emphasized the value of both technical and non-technical skills, as well as indisputable evidence based on the blockchain, to reveal one of the most elusive threats to organizations: insiders.
The case indicates the flaws in treating the digital asset by the police. Domestic security systems are under review as authorities learn the lesson on the infiltration. Many observers are seeking more rigid access control to digital evidence and enhanced blockchain surveillance in situations where much cryptocurrency is held formally.
