Crypto

Real-Time Crypto Crime Network Launched By Major Firms

2 hours ago
Bitcoin Ethereum News

A collective of crypto and traditional finance firms, law enforcement and security researchers has formed a new “crypto crime response network” known as the “Beacon Network” to identify and freeze illicit funds on the blockchain. 

TRM Labs on Wednesday said the Beacon Network creates “an unprecedented level of industry collaboration to block off-ramps for criminal funds.”

At least $47 billion has been sent to fraud-related addresses since 2023, according to new data from TRM Labs, though the number is likely to be far higher. 

Under the Beacon Network, verified members can flag wallet addresses suspected of financial crime, trace the funds across the blockchain and share information with connected services and law enforcement.

When the flagged funds hit an exchange or other service participating in the network, an alert is sent automatically to ensure the funds can be identified, tracked and frozen before they are withdrawn or laundered.

Founding members of the cross-sector network include crypto exchanges Coinbase, Binance, Kraken, trading platform Robinhood, payment giant PayPal, digital asset service company Anchorage Digital, Ripple, and security researchers, including ZachXBT and the Security Alliance (SEAL). 

“Leading federal law enforcement agencies globally are actively contributing to the network, flagging addresses linked to critical threats and triggering alerts that help stop illicit actors before they can cash out,” said TRM Labs. 

End-to-end “kill chain” for illicit crypto transactions 

TRM Labs said that stolen funds are often moved before law enforcement can intervene, which was the case following the $1.5 billion Bybit hack earlier this year, when the stolen funds moved through over 10,000 transactions in the first month. 

“Until now, law enforcement and cryptocurrency platforms have operated in silos, reacting only after illicit funds have disappeared. The window for interdiction is often measured in minutes, not days. With Beacon Network, that changes,” the firm said.    

“Beacon Network is the first end-to-end ‘kill chain’ for illicit crypto assets, moving from detection to action in minutes rather than days.” 

Beacon Network is already in use 

The Beacon Network is already in use, according to TRM Labs, and has registered several successes in helping track down illicit funds stolen in cybersecurity incidents. 

Once funds are flagged as illicit, the Beacon Network tracks them on the blockchain. Source: TRM Labs

In one case, a law enforcement agency was able to trace $1.5 million linked to an unidentified global scam. They used the Beacon Network to blacklist the address so the funds could be frozen when they were sent to an exchange. 

In another incident, a group of investigators managed to identify $800,000 in scam-related deposits at a major exchange, which they then flagged to be frozen. 

Related: Crypto crime unit with $250M in seizures expands with Binance

A key feature of the network is that only verified users, which include law enforcement agencies, vetted partners, and security researchers across the world, can flag an address as illicit. 

TRM Labs replied to an X user on Wednesday who asked about the network being misused, that only investigators who have been verified can flag funds, and only if they “have high confidence in and intend to act on” the information. 

“Every flag carries significant responsibility, as it signals to the entire network that the funds should be taken seriously. Misuse or abuse of this system will not be tolerated.”

Source: TRM Labs 

Major bad actors will be targeted 

The Beacon Network can be used to flag any illicit funds, but TRM Labs said there are several key targets the group will zero in on, such as addresses and transactions linked to teams of North Korean IT workers who have been scamming crypto firms worldwide.