In a decisive move to counter the escalating use of cryptocurrencies in criminal activities, London’s Metropolitan Police established a 40-member team specializing in crypto investigations.

The move comes as authorities express mounting concerns that digital currencies now play an ‘endemic role’ in organized crime.

UK Crypto Fraud Cases Skyrocket

Since its inception in May, the specialized squad has swiftly responded to 74 intelligence referrals, resulting in 19 active criminal investigations. This proactive approach reflects law enforcement’s urgency in addressing the rising tide of crypto-related crimes.

The allure of cryptocurrencies for criminal networks lies in their capacity to obfuscate assets and enable seamless cross-border transactions. Bitcoin, in particular, has long been favored for its ability to shield illicit wealth transfers, presenting a considerable challenge for law enforcement agencies worldwide.

Recent statistics from a leading law firm, RPC, reveal a 41% surge in reported UK crypto fraud cases over the past year, amounting to a staggering £306 million. This stark increase underscores the urgent need for targeted efforts to combat crypto-enabled criminal activities.

Detective Inspector Geoff Donoghue, heading the Met’s crypto investigation team, underscored the paradigm shift in the perception of cryptocurrencies within criminal enterprises. Once regarded as a niche avenue, growing evidence suggests that digital currencies have now permeated various illegal activities, including drug trafficking, weapons transactions, human exploitation, and other nefarious enterprises.

Israeli police recently blocked cryptocurrency accounts associated with gathering donations for Hamas, highlighting the direct link between digital currencies and funding for terrorist organizations.

Blockchain researchers at TRM Labs reported that crypto fundraising has witnessed a notable upswing following violent attacks by these groups, with Hamas-controlled crypto addresses receiving over $400,000 (£328,000) after a conflict in May 2021.

Closer to home, criminal syndicates in the UK have quickly adopted cryptocurrencies for their illicit endeavors. One notable case saw eleven individuals in Cardiff sentenced for converting 40 kilograms of cocaine into an estimated £3 million worth of cryptocurrency. Another group’s audacious £21 million Bitcoin scam led them to distribute £5,000 gift cards on the streets, underscoring the scale and audacity of crypto-enabled crimes.

UK’s Move to Regulate Crypto

While the cryptocurrency market has witnessed fluctuations, Mat Stanley, a detective sergeant in the Met’s cyber crime unit, points out that these fluctuations have had minimal impact on criminal operations. In the eyes of those engaged in illegal activities, the value of cryptocurrencies is secondary to the transactions they facilitate.

The regulatory landscape for cryptocurrency trading in the UK remains largely uncharted, inviting scrutiny for its volatility and potential association with addictive behavior. The government’s February announcement of plans to regulate crypto in alignment with traditional financial assets like stocks and bonds has sparked debate among MPs. Some advocate classifying crypto trading as a form of gambling, aligning with its online betting-like nature.

Across the pond, US regulators have taken legal action against major industry players, including Coinbase and Binance. Additionally, the ongoing trial of FTX founder Sam Bankman-Fried in New York sheds light on the cryptocurrency sector’s legal challenges.