• Usman W. Chohan

International Law Enforcement Responses to Cryptocurrency Accountability


Although cryptocurrencies do offer interesting prospects for improving the international financial architecture, their deployment and adoption has brought many risks. There are particular aspects of the cryptocurrency environment, including Tumblers and Darknet Markets, as well as fraudulent practices and thefts, that warrant urgent remedial attention. This is why, even though they may not represent traditional monetary instruments, there is a pressing need to situate them within our existing structures of accountability and oversight.

The international law enforcement community’s engagement with the rapid growth of cryptocurrencies can be described as reactive rather than proactive, but this may be accepted as natural given both the complexity and rapid pace of the technological breakthroughs surrounding the cryptocurrency space.

As such, it is important for international law enforcement institutions to work diligently, both independently and in concert, to ensure that cryptocurrencies are used in a manner that does not endanger broader financial stability.

For this reason, as I have noted in a recent paper, the creation of an Interpol working group dedicated to improving the cryptocurrency environment is encouraging. Such international law enforcement initiatives can augment cryptocurrency accountability, which now displays tangible deficiencies.

On April 3, 2018, Interpol announced that it had convened the first working group (WG) on DarkNet and Cryptocurrencies. This was done with cooperation from the Bavarian Ministry of Justice at the Global Complex for Innovation in Singapore. The WG, which had 39 participants representing 18 member countries and Europol, identified the rise of Altcoins as an “emerging threat” to law enforcement practice. It stated that there has been a steep rise in the growth of digital phenomena such as DarkNet markets, cryptocurrencies and specific Bitcoin mixers and tumblers, which pose a significant threat because they involve many types of crime beyond cybercrime.

What is particularly worrisome in this regard is that the level of threat is increased by the challenges posed by cryptocurrency mixers, anonymisation techniques, lack of altcoin tracing tools and decentralised escrow services.

As part of the WG’s proceedings, law enforcement officials shared case studies of investigations they had conducted in the cryptocurrency arena, while also noting the technical and legal challenges that they continue to face in various national contexts.

As part of the consensus-building around law enforcement approaches, there was broad agreement among members of the WG on the importance of building networks and sharing information to maximise investigative resources and avoid duplication of efforts.

It is encouraging to note that this working group will be part of an ongoing process of consultations, and that there are plans for another working group meeting in October, 2018.

Such international law enforcement responses to cryptocurrency accountability mark an important first step in developing the oversight mechanisms and the accountability architecture necessary to create an environment in which the innovations of cryptocurrencies are not offset by nefarious elements.

Usman W. Chohan, Sydney


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