Our last post discussed the long-delayed emergence of cryptocurrency in cases wherein countries request INTERPOL’s assistance. Today’s post will discuss the specific instances of cryptocurrency cases.
The most notable case representing how INTERPOL handles cryptocurrency cases is that of Do Kwon, the founder of Terraform Labs. In 2022, the collapse of Terraform Labs’ TerraUSD stablecoin wiped out around $60 billion in market value, marking the beginning of Mr. Kwon’s downfall. Accused of fraud in both South Korea and the U.S., his case became a focal point for discussions on accountability and regulation in the cryptocurrency sector. Do Kwon and his company Terraform Labs were found liable for civil fraud in a trial that began in April, almost two years after the company’s stablecoin tanked in value and wiped out $40 billion in investors’ funds.
INTERPOL indicates that the increasing use of technology by organized crime groups allows them to better target their victims around the world. El Economista reports that in presenting a preview of its analysis of the Global Assessment of Financial Fraud, INTERPOL warned that there is increasing evidence that Latin American criminal organizations, such as Commando Vermelho and Primeiro Comando da Capital (PCC) in Brazil, and the Jalisco New Generation Cartel (CJNG ) in Mexico, are involved in the commission of financial fraud. El Economista’s article goes on to explain that to commit their financial frauds, organized crime groups are turning to migrants, who are victims of traffickers and forced to commit scams operating from call centers, from where a scheme called pig-butchering is committed, which consists of a mixture of romantic attraction and investment in cryptocurrencies.
Reportedly, after “Operation Turquoise V,” coordinated by INTERPOL, hundreds of victims were removed from their region in Latin America, being lured through messaging applications and social media platforms, and then coerced to commit fraud, including investment fraud and pig-butchering scams, a scheme that combines romantic attraction and investment practices with cryptocurrencies.
The constantly evolving nature of cyptocurrency makes it difficult for law enforcement to keep up with criminal enterprises. INTERPOL led a recent operation, HAECHI IV, which enabled police worldwide to address the growing complexity of cyber-enabled scams. Through the operation, a Purple Notice was released which alerted INTERPOL member countries to a new scam detected in Korea involving the sale of Non-Fungible Tokens with promises of huge returns, which turned out to be a “rug pull,” a growing scam in the crypto industry where developers abruptly abandon a project and investors lose their money.
While these INTERPOL initiatives are necessary, it’s important to remember that there are many legitimate reasons for cryptocurrency transactions and the system used to create and transfer cryptocurrency is secure and transparent. With INTERPOL’s history of being used for abusive purposes by some member countries, the organization must ensure that adaptations centering around cryptocurrency have safeguards so that innocent people are protected from abuse.
As always, thoughts and comments are welcomed.