Bitcoin
Bitcoin mining attracts ‘various types of criminal actors’, says Europol
European law enforcement agency Europol has criticized crypto mining as well as layer 2 solutions, saying they cause “additional problems for police investigations.”
European Law Enforcement Agency Europol criticized crypto mining It is layer-2 blockchain solutions, stating that they pose “additional problems for police investigations.”
On a recent 40 page report Regarding cryptography, the Hague-based agency highlighted how crypto mining has become an attractive method for criminals to launder illicit proceeds.
Criminal actors can use mining operations to hide illicit gains, in some cases even generating additional profits for criminals, Europol says, adding that suspicious activity has also been detected in mining pools, particularly those exploited by ransomware operators.
“[…] Pool mining schemes have also been used by scammers to run their Ponzi schemes. For example, the BitClub Network promised earnings through pool mining, although such pools did not actually exist; defrauded investors lost hundreds of millions of euros.”
Europol
However, crypto mining alone is not the only threat Europol sees in the crypto industry. Europol also raised concerns about the broader cryptocurrency landscape, emphasizing that the increasing use of zero-knowledge proofs and layer 2 applications on the blockchain could complicate the tracking of funds.
The agency warned that these technologies “may cause additional problems for law enforcement investigations,” although it did not specify the exact challenges these expanding technologies may present.
Furthermore, the report acknowledged that the task of recovering a criminal’s wallet can be “significantly complicated” due to the SLIP39 standard, commonly known as Shamir Backup. This standard, used by hardware crypto wallets, allows the creation of multiple recovery shares instead of a single mnemonic phrase. Each recovery share consists of 20 words, and a user-defined number of these shares are required to restore a wallet, adding another layer of complexity for law enforcement, Europol says.