RCMP Crypto Training | Learn from Operation Mr. Hotsauce

(Cornwall, Ontario) Fictitious investments. drug trafficking. love cheating. money laundering With cryptocurrency fraud reaching “astronomical” levels, the Royal Canadian Mounted Police (RCMP) launched a program this week to train around 20 of its officers in the complex realities of virtual currencies. The press participated in the Federal Policing Pilot Project in Cornwall, Ontario.

Posted at 5:00 am

Maxim Bergeron

Maxim Bergeron
The press

“We honestly had no idea what the dark web or bitcoin when we started this investigation. »

Corporal Steve Harten opens up about the twists and turns that led to the arrest of a major drug dealer – “Mr. Hot Sauce” – led. At the beginning of the investigation, the RCMP only knew that the man sold fentanyl, crystal meth and other drugs under this pseudonym on a virtual market dark web. The police do not know his true identity or how he works in the field between ordering the illegal substances and delivering them.

The picture clears up pretty quickly. Investigators discover that the drugs are hidden in musical birthday cards and then shipped from various Canada Post offices. The noose tightens after a breathless spin on the Toronto subway and a cab hunt in the downtown streets.

After several weeks of intense surveillance, RCMP officers search the home of “Mr. hot sauce”. There they not only find the suspect, but also a gun and large quantities of synthetic drugs hidden in a run-down basement. They discover another crucial element: a computer that is still on.

In the heat of the moment, the police have a reflex to keep the computer active, constantly moving the mouse to avoid locking – the time to call in backup from colleagues who specialize in cybercrime. Three hours later they find a piece of paper on which two encrypted sentences are scrawled. This will be the cornerstone of accessing the trafficker’s cryptocurrency wallets, his preferred payment method.


PHOTO PROVIDED BY RCMP

Part of smuggler Mr. Hotsauce’s drug “catalog”. He traded on the Dark Web on the DreamMarket platform and was paid in fractions of Bitcoin.

“This made it possible to recompose two portfolios [de cryptomonnaies]each containing 11 bitcoins,” Steve Harten told an audience of RCMP colleagues gathered at a hotel in Cornwall, Ontario this week.

What to do with this $200,000+ loot? We must act quickly while the RCMP checks the suspect’s computer. Officials still at the scene call Senior RCMP Cryptocurrency Officer Adrienne Vickery. Other calls are made to the Government of Canada’s Seized Property Management Directorate. It was then agreed to transfer the 22 bitcoins to an RCMP virtual wallet, a maneuver never done before. And that works.

This was the first time cryptocurrency had been seized as part of an investigation.

RCMP Corporal Steve Harten

Millions confiscated

The operation marked a turning point for the RCMP. Since then, the federal police have successfully tracked down and confiscated millions of dollars in cryptocurrencies as part of criminal investigations with the approval of the courts.

For example, last January, 719 bitcoins, equivalent to approximately $35 million, were confiscated from Sébastien Vachon-Desjardins, a Gatineau resident accused of exploiting ransomware. (The RCMP declines to provide the total number of seizures since 2018.)

Despite some successes, law enforcement agencies are struggling to keep up with cybercriminals. Reports of cryptocurrency fraud totaled $75 million in the country last year, compared to just $12.6 million between 2018 and 2020, according to data from the RCMP Anti-Fraud Centre. And that’s just the tip of the iceberg.

In a bid to combat the scourge, the RCMP’s Financial Crimes Unit has set up an intensive week-long program to train 24 officers from across the country on the various facets of cryptocurrencies. Since Monday, they have been presented with concrete cases, including that of “Mr. Hotsauce”, as well as conferences by experts from the private sector, such as Chainalysis.

The press was able to attend part of that training Monday after making numerous attempts to speak to RCMP experts over the past few months. The aim is to equip the officials responsible for cryptocurrencies in each province, who can then share their knowledge with their colleagues, explains Adrienne Vickery, responsible official – financial integrity, criminal operations of the federal police, in an interview.

“My role as National Cryptocurrency Coordinator is to share information, talk about investigation challenges, so together we can determine how the RCMP can move forward,” she says.


PHOTO PROVIDED BY RCMP

Adrienne Vickery, National Cryptocurrency Coordinator at RCMP Federal Policing Criminal Operations, and Detective Steve Harten, who helped identify “Mr. Hotsauce” to arrest

counters and cheating

The role of M.me Vickery is relatively new: She was appointed cryptocurrency coordinator in 2016. The RCMP doesn’t have a team dedicated solely to virtual currencies, she says, instead employing agents who are already interested in the matter. Most of the 24 Cornwall officials this week are knowledgeable on the subject and even “invest” in cryptocurrency, she says.

The RCMP’s goal is to keep up with criminals who are constantly inventing new virtual currency schemes. Fraud of all kinds “reaches astronomical levels here in Canada,” says Adrienne Vickery. In the past year, scams have multiplied with fake investment platforms promising staggering returns.

Another common type of fraud is when counterfeiters pose as CRA agents.

“They tell victims that if they don’t send funds, they will be arrested,” Frau saidme vickery They ask victims for their zip code, and while they’re on the phone with them, they check websites like Coin ATM Radar, which show where cryptocurrency ATMs are, then direct the person to the nearest ATM and ask them to insert money send [en cryptomonnaie]. »

The multiplication of cryptocurrency counters is also on the RCMP’s radar, confirms Adrienne Vickery. These machines, where you can buy bitcoins and other currencies with cash relatively anonymously, are now six times as numerous as at the beginning of the pandemic, she emphasizes. Canada is the second largest market in the world with 2,435 ATMs in operation, according to Coin ATM Radar.


PHOTO OLIVIER JEAN, LA PRESSE ARCHIVE

A cryptocurrency counter installed in a Montreal supermarket

We are definitely interested in these machines. I believe that money laundering is possible with any new system.

Adrienne Vickery, Officer – Financial Integrity, RCMP Criminal Operations

A recent survey by The press has made it possible to note that at least 270 of these meters in Quebec have appeared in fairly significant regulatory fuzziness in recent years. Revenu Québec, which is responsible for issuing operating licenses, cannot quantify their number. The Financial Transactions and Reports Analysis Center of Canada (FINTRAC), which has been overseeing this industry at the federal level since 2020, cannot provide a number either.

These machines are seen by many authorities as an ideal way to launder money, as cryptocurrencies can be bought in cash in relative anonymity below a certain threshold – US$1,000 in Canada. The UK banned them in March 2022 for this reason.

The RCMP did not want to confirm whether investigations in connection with Bitcoin meters had already been initiated in the country. The same applies to the Sûreté du Québec and the Montreal City Police Department. Adrienne Vickery reminds that despite the explosion of scams, many people use these machines – and cryptocurrencies in general – for legitimate purposes.

The RCMP hopes to offer its new National Cryptocurrency Investigator Course four to five times a year.

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