Erin Fracolli, the Global Head of Intelligence and Investigations at Binance, the largest cryptocurrency exchange in the world, and Erin West, a deputy district attorney in Santa Clara County, spoke on a recent episode of the Crossing the Chain podcast about the importance of collaboration between law enforcement and crypto companies. Fracolli and West said that collaboration is key both in assisting victims of scams and in proactively identifying and disrupting criminal networks.
According to an Aug. 24 Binance blog post, in the podcast episode, which was titled Digital Sleuths: The Collective Fight Against Crypto Crime, Fracolli said that working with law enforcement is a major part of her role. She noted that issues affecting Binance users typically impact other crypto users as well, so Binance's anti-crime work benefits the industry at large.
"We work very closely with law enforcement; that’s the main purpose of our team, is really to collaborate with law enforcement, work together to come up with solutions to investigations problems, to really go above and beyond and work proactively to identify threats facing our users and also facing the larger crypto ecosystem," Fracolli said on the podcast. "One of the things that we’ve learned over time is that something that affects our users is probably also affecting the larger space, and it’s really a benefit for everyone to try and tackle it head-on."
Fracolli also said that Binance has expanded the training it provides to law enforcement agencies to help them improve their ability to tackle crypto-related crimes. "I think another big aspect of our work that’s only growing is the training that we do, so whether it’s virtual, whether it’s in-person, we’ve actually built out a whole separate team to just handle training and capacity-building with law enforcement, focused specifically on cryptocurrency investigations," Fracolli said.
Fracolli estimated that 90% of the crimes her team handles are scams. West said that fortunately, the transparency of blockchain allows law enforcement to track stolen funds and provides a greater likelihood of the funds being recovered. "That's one of the beautiful things about the blockchain," West said. "We're able to trace funds in a way that we never would have been able to before, and at a speed that we would never have been able to before. Especially in the 'pig butchering' cases that I'm handling these days, if we are able to move quickly, there is a possibility of being able to recover funds."
According to TechTarget, a pig butchering scam refers to a scheme in which a scammer develops a relationship with a victim in order to build trust, typically though a social media platform or dating site. The scammer then persuades the victim to download an app or visit a website to make a crypto investment with the promise that the victim will make money, but the app or website is fraudulent, and the victim is eventually unable to withdraw their funds.
West said that thanks to training, more and more members of law enforcement are being equipped to investigate crypto-related crimes. She said she wants investigators to understand that thanks to blockchain, tackling these crimes is "doable," "and that you can make a big impact for your victims."
Fracolli said during the podcast that in addition to helping victims recover their money, Binance is working to proactively identify and disrupt organized groups of scammers. "One of the areas that we'd really like to see more advancement on and that we're trying to work collaboratively with law enforcement and with the industry on is trying to tackle the networks and the individuals behind these scams. I think you can continue to try to put out the fire, or you can try to address it at its source...These are organized networks behind these [scams], it's not just an accident that this is happening."
Fracolli said law enforcement agencies are open to learning more "tips and tricks" about how to tackle crypto crimes, and West said Binance and other crypto companies are willing and eager to collaborate and assist with crime prevention. "We're finding that Binance and other exchanges are very open to being helpful, are very open to saying, 'We don't want dirty money on our platform either. We don't want bad actors moving money on our platform, and we will help,'" West said.
