Police Partner with Chainalysis to tackle Cryptocurrency Scams
Delta, BC – On September 16th and 17th, 2024, the Delta Police Department (DPD) and blockchain analytics company Chainalysis hosted "Operation DeCloak", a localized sprint of Operation Spincaster, aimed at disrupting cryptocurrency scams. As a result of this initiative, over 1,100 victims of cryptocurrency fraud were identified worldwide, including a significant number of potential Canadian victims. During this partner investigation, 240 crypto addresses were closely examined, revealing an estimated collective loss of $35 million CAD.
The workshop brought together representatives from various law enforcement agencies, including the RCMP, Victoria Police Department, Vancouver Police Department, the BC Securities Commission, the BC Prosecution Service, and the BC Financial Services Authority (BCFSA), as well as key stakeholders from cryptocurrency exchanges such as Shakepay and others.
Chainalysis conducted training sessions to investigate leads, trace stolen funds and identify compromised wallets using the Chainalysis Crypto Investigations solution. The event promoted proactive policing and disruption strategies aimed at combating fraud with particular emphasis on a growing tactic known as "approval phishing."
"Approval phishing" is used by romance and investment scammers targeting cryptocurrency transactions. This method involves convincing victims to unknowingly approve malicious blockchain transactions. Scammers gain trust by promoting false investment opportunities with the promise of high returns. The scammers typically connect with victims via social media, apps, or pop-up ads. A transaction grants the scammer access to tokens in the victim's digital wallet without the victim’s knowledge, resulting in unauthorized withdrawals.
Immediate steps were taken to notify identified victims of these scams. With the cooperation of the exchange companies, affected individuals were promptly contacted with the goal of preventing further harm.
Since the workshop, the DPD has been able to successfully deploy the techniques learned through Operation DeCloak. The technique was applied to a previous investigation which identified stolen cryptocurrency funds in a blacklisted address containing $1.2 Million USD. This address was in the process of being seized by an overseas Police Agency.
Using the DeCloak techniques, the DPD Cybercrime Unit identified an additional 70 transactions with a value of $800K USD sent from Canadian exchanges. Those victims are being identified and the funds are being seized from the blacklisted address to be returned.
This collaboration with Chainalysis and cryptocurrency exchanges is a testament to the DPD’s focus on innovation and commitment to community safety and well-being.