Bitcoin owners — honeypots for criminals.
Rich people have always been an attractive target for robbery and extortion. Now rich Bitcoin owners are the honeypots for criminals.
Virtual currencies can be easily transferred to an anonymous address setted by criminals While banks can stop or cancel doubtful electronic transactions, Bitcoin banks cannot stop or cancel the currency transfer, and that makes this scheme very alluring.
So, thieves have already applied this scheme in a huge number of recent transferring from Russia, Ukraine and Turkey to Canada, the United States and Britain.
Last month in Thailand, a young Russian man was attacked by thieves. They kept him blindfolded in his own apartment until he transferred about $100,000 worth of Bitcoin to their online wallet.
A few weeks earlier in Ukraine, the head of a Bitcoin exchange was taken hostage and was released only after his company paid a ransom of $1 million in Bitcoin.
In New York, a friend held a man in captivity until he transferred more than $1.8 million worth of Ethereum.
“This is now becoming more pervasive and touching more law enforcement divisions that deal with organized crime and violent crime on a local level,” said Jonathan Levin, the founder of Chainalysis. His company specializes in tracking criminal transactions on the blockchain, the computerized ledger where every Bitcoin transaction is publicly recorded.
According to Mr. Levin, Chainalysis has helped police to try tracking down the criminals in several recent cases, including some that were not made public.
But even the police has tracked the transaction, it is impossible to determine the relationship of the account with the criminals, unlike traditional bank accounts.
“For this, the advantage of Bitcoin is that it’s hard to verify,” said Chanut Hongsitthichaikul, an investigator with the Chalong Police Station, which investigated the case in Phuket. “We asked the victim how to track it since they know Bitcoin better than us. We asked them how to check the receiver. They said there is no way. It is hard to do.”
The programmers are working on developing methods for signing the virtual currency transactions, which can warn the authorities that the transaction is being made under duress, Mr. Levin said. He noted that the most obvious way of protection is creation of wallets that require several signatures.