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CipherTrace gives officials tips on how to uncover criminals’ crypto caches

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Blockchain forensics firm CipherTrace has published comprehensive guidance to assist law enforcement officials in identifying signs of cryptocurrency use when carrying out criminal investigations.

The report notes that the U.S. Department of Treasury has identified a “consistent decrease in reported bulk cash seizures by agencies throughout the United Since” since 2013, suggesting the trend may indicate increased cryptocurrency adoption among criminals.

“The signs of cryptocurrency usage, however, can easily be overlooked by investigators unfamiliar with what to look for.” 

The report encourages law enforcement to scour confiscated phones and computers for cryptocurrency-related applications, bookmarks and authenticator apps, supplying a list of popular cryptocurrency exchanges, wallet providers, and crypto ATM maps.

“Old, disconnected, and seemingly non-functioning computers could hold the private keys to cryptocurrency wallets,” CipherTrace emphasized.

Investigating officers are also encouraged to examine so-called “pocket litter” and “other random papers” for Bitcoin ATM receipts and wallet recovery seed-phrases, providing examples of how recovery-seeds are typically stored on paper.

Example of wallet recovery phrase: CipherTrace

The post adds that “recovery seeds can also be hidden within books, planners, and unrelated notes, or in plain sight as clear lists or metal backups.”

The report also provides an extensive list of hardware wallet manufacturers and models, and examples of what the most popular devices look like.

“The signs of cryptocurrency use can be easily overlooked by investigators; hardware wallets can look like inconspicuous USB sticks and recovery seeds are just random words on a page.”

CipherTrace urges law enforcement to be especially vigilant in searching for evidence of crypto caches “when there is a lack of cash seizure for known cash intensive activities.”



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Regulation

New York authorizes first Yen stablecoin operator in the US

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New York has given the first authorization to a stablecoin backed by the Japanese Yen to operate in the U.S.

Per a Dec. 29 announcement, the New York Department of Financial Services has granted Japanese firm GMO-Z.com a charter to handle U.S.D. and Yen-backed stablecoins in New York. 

Given New York’s status as a global center, the NYDFS is the most prominent state financial regulator in the U.S. It is also one of the most aggressive. A pass to operate in New York often opens up the rest of the country. 

GMO’s charter is as a limited liability trust company rather than a full bank, the principle difference being in authorization to handle deposits. While a stablecoin operator typically needs the ability to hold reserves of the pegged asset, GMO’s charter limits its rights to hold other kinds of deposits not central to its ability “to issue, administer, and redeem” its stablecoins. 

The right to issue such non-depository charters has been a bone of contention between state regulators like the NYDFS and national banking regulators in the U.S. 

GMO president and CEO Ken Nakamura said: “We’re breaking ground with our move to issue the first regulated JPY-pegged stablecoin, which many see as a safe haven asset.” 

The NYDFS recently made changes to its famous BitLicense, including a conditional format that buddies up newly licensed firms with existing licensees. The first conditional BitLicense went to PayPal, facilitating the launch of its new crypto services earlier this fall with the help of longstanding licensee Paxos.