Danish Police is the World’s First to Trace Bitcoin Transactions to Convict Drug Dealers

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by Polina Chernykh · 3 min read
Danish Police is the World’s First to Trace Bitcoin Transactions to Convict Drug Dealers
Photo: Comrade King/Flickr

Denmark’s police have used cryptocurrency transfers as an evidence for the second time in a row, what is likely to prevent bitcoin usage by criminals in the future.

Danish law enforcement have successfully caught and arrested drug dealers by tracing their bitcoin transactions. According to Berlingske, the Denmark’s National Police Cybercrime Center (NC3) has used a software that was developed for tracking activity on the bitcoin blockchain

This is not the first time when the police in Denmark used bitcoin transactions as an evidence. Last month, the courts in the city of Herning sentenced a young man, accused of buying ketamine, cocaine, and amphetamines on darknet marketplaces, to eight years in prison due to tracked bitcoin transactions.

“We are pretty much unique in the world at this moment, because nobody else has been able to use this type of trace as evidence before,” Kim Aarenstrup, the head of Denmark’s National Police Cybercrime Center (NC3), told Berlingske.

“Everybody is looking towards Denmark in this field, and we are in close dialog with several other countries at the moment, so that we can further develop the methods and teach them how we operate.”

According to Jesper Klyve, who was the prosecutor in both cases, buying illegal items has become much easier with the introduction of bitcoin, as almost anyone can go online and purchase drugs using the digital currency. Still, he admits that the situation is likely to change with the new software.

The anonymity of bitcoin makes it an attractive payment method for criminals, who previously used it for trading on dark marketplaces like Silk Road and Alphabay. However, the virtual currency is no longer the perfect tool for illegal money transfers, as it is not actually anonymous. The bitcoin network leaves traces of all transactions that can further be used by investigators.

Now, the police can track a suspect’s bitcoin transaction history and see if he has made any transfers. “All transfers that have ever been made are coded into the bitcoin-system. Therefore, you can at any given time log in and search in the system and try to identify individual users,” Klyve said.

The software, created by the Danish law enforcement agencies, compared information of bitcoin transactions used to buy drugs with transactions listed on the blockchain system, including other data about users. FBI and Europol have also begun using the system.

Bitcoin tracking tools are currently used by  a number  of startups around the world. Such companies as Elliptic, Numisight, Skry and Chainalysis are utilizing the bitcoin transactions surveillance systems and are working with law enforcement agencies worldwide.

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Polina Chernykh

Polina is an undergraduate student at Belarusian State Economic University (BSEU) where she is studying at the faculty of International Business Communication for a degree specializing in Intercultural Communication. In her spare time she enjoys drawing, music and travelling.

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