Must-Know Crypto Investigations of 2023: Latin America

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Must-Know Crypto Investigations of 2023: Latin America

In our second installment of “Must-Know Crypto Investigations of 2023,” we head to Latin America, where law enforcement agencies have been taking aim at crypto-related crime. 

“With rising crypto adoption across Latin America, we’ve seen more criminals, including organized crime groups, turn to cryptocurrency to launder funds and target crypto assets,” shared Ramin Sawal, TRM’s Director of Law Enforcement Relations for Latin America. “There is a growing recognition amongst law enforcement agencies in Latin America around the need for crypto investigation capabilities to disrupt crime. We are encouraged to see successes coming out of Argentina and Brazil, and are proud to have supported a number of these victories.”

1. Argentine law enforcement makes first crypto asset seizure in SIM-swap case

In June 2023, the Prosecutor’s Unit Specializing in Cybercrime Investigations (UFEIC) within the Judicial Department of San Isidro in Buenos Aires dismantled a cybercrime ring and, in a national first, seized crypto-assets as part of a prosecution. 

The UFEIC team identified and arrested six members of a criminal organization for hijacking victim cell phones through phishing and “SIM swapping – the act of gaining unauthorized access to a victim’s phone by duplicating SIM cards or fraudulently causing a cell phone provider to switch phone access to a new cell phone. During their raid, UFEIC investigators recovered electronic crypto wallets and seized their assets. Using TRM, the investigators were also able to map out the criminal network through cryptocurrency tracing, and identify additional victims, complicit money mules and additional members of the criminal organization.

“[This operation was] done in the way that American and European security agencies like the FBI and Europol do it,” said prosecutor in charge Alejandro Musso. “What we did with this is to break the barrier of doubts for judges and prosecutors because nobody wanted to do it, as everyone had many doubts about how we could seize funds from both a technical and legal perspective.”

UFEIC was able to trace the stolen funds to a foreign exchange cash out point.

2. Public Ministry of Buenos Aires seize crypto assets from multiple blockchains

Indeed, the UFEIC’s first seizure was just the beginning. Two months later, in August 2023, the Crypto Team from the Public Ministry of Buenos Aires (MPBA) also conducted 27 search operations and seized fraudulently obtained crypto assets. The investigation revolved around cyber actors phishing and impersonating legitimate businesses, then converting the illicit proceeds to cryptocurrency, which was then laundered across multiple blockchains. Combining blockchain intelligence tools with traditional investigative techniques, investigators were able to trace and seize ETH, TRX and BNB assets in less than six months. 

The fraudsters funneled their ill-gotten gains to large centralized exchanges, from which they intended to cash out.

3. Argentine police dismantle multi-million crypto laundering operation

The next month, in September 2023, Argentine police raided the Buenos Aires residence of a couple that was laundering millions through cryptocurrencies for Comando Vermelho, one of the most powerful criminal groups in Brazil. The team was able to seize $45,000 in cryptocurrencies by accessing their crypto wallet using the seed phrase that the couple had stored in their safe. A seed phrase is a list of randomly-generated words, which store the data required to access crypto assets in a wallet.

“These three cases reflect Argentine law enforcement’s rapidly growing sophistication and knowledge in crypto investigations,” said Mariano Gemignani, Global Investigator at TRM and former analyst at the Argentine Unidad de Información Financiera (FIU). “In particular, the successful seizures in these cases - a first for Argentina - reflect an investment in crypto-specific seizure processes and training. For example, officers must be equipped to identify crypto-related evidence, such as seed phrases and private keys, on scene. Without proper process and planning, asset seizure opportunities can be quickly lost, given how quickly criminals can move crypto assets on the blockchain.”

4. Brazilian police take down drug money laundering operation 

In neighboring Brazil, law enforcement have also seen recent victories in crypto-related crime. In July 2023, the Brazilian Federal Police dismantled two large money laundering operations that had generated combined illicit profits of over BRL 2 billion (approximately USD 400 million) since 2017. The group created a crypto exchange in Rio de Janeiro, as well as a network of over 20 shell companies, to assist drug traffickers in hiding and laundering their ill gotten gains in both crypto and fiat. In a search and seizure operation spanning almost 30 properties across four states, officers arrested 11 individuals and seized more than BRL 2 million (approximately USD 400,000) in cash. 

5. Brazilian law enforcement expose dating app crypto theft ring

In December 2023, the Public Ministry of Rio de Janiero (MPRJ), working with the Public Ministry of the State of São Paulo, and the Military Police of São Paulo, arrested four Colombian nationals who had used date rape drugs to steal cryptocurrency from victims. Using dating apps as their hunting ground, the group had lured unsuspecting victims with the pretense of sharing a mutual interest in cryptocurrencies, before drugging them and stealing their cryptocurrency while they were incapacitated. 

The MPRJ opened the investigation after a victim report, and was able to trace the stolen funds to a suspect’s account using TRM Forensics. This breakthrough ultimately allowed them to identify the four individuals involved in the scheme. Aside from the arrests, the team was also able to recover 6,000 USDT in stolen funds during their search and seizure operation.

Using a blockchain address provided by one of the victims, investigators were able to trace stolen funds to a suspect’s account.

“These successes highlight the importance of cross-agency collaboration and technological prowess, specifically in blockchain analytics,” explained Bruno Requiao da Cunha, Global Investigator at TRM, criminal networks specialist and former federal agent at the Brazilian Federal Police. “Every cryptocurrency transaction is recorded on the blockchain, which means that investigators have a wealth of information available to them. The key is making sense of this information and being able to turn it into evidence. This is where blockchain analytics tools play a pivotal role.”

“It has been remarkable to witness numerous victories in 2023 alone,” concluded Mr. Sawal. “But we believe this is just the beginning. Through our Tracer Fellowship launched in October 2023, we are actively equipping law enforcement officers across Latin America with crypto investigation training and tools to empower them in disrupting cybercrime and making victims whole again. It is an honor to support the tireless efforts of these dedicated officers, and contribute to more successful outcomes on the road ahead.”

To further expand your crypto investigative skills through learning and partnership with the global law enforcement community, join our law enforcement-only working group, LEO Labs, here

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