In 2017, the Benton County Sheriff’s Office (Arkansas) cyber crimes unit came across a problem when, during a vice operation, the need came up for the agency to use Bitcoin, a type of cryptocurrency. “Nobody happened to have any Bitcoin laying around and we were very leery purchasing Bitcoin with a Sheriff’s Office credit card,” says Detective Olin Rankin. In this instance, Rankin ended up using his personal debit card to purchase Bitcoin online in order to use the funds during the operation. He knew, however, that using his own card to purchase the cryptocurrency wasn’t a sustainable practice. “We needed to find a resource to have Bitcoin on our end without having to have the personal side of it involved,” he says.
Though it has only been around for about a decade, Bitcoin is a popular cryptocurrency that allows users to make purchases—even international purchases—easily, as it’s neither tied to one country nor bank. It can also be used to purchase things anonymously, a fact that makes it a popular payment type on the dark web.
In order to obtain Bitcoin, a user can purchase the cryptocurrency at face value on an exchange—a fairly easy process, says Rankin. “It’s as easy as starting an account at an exchange, verifying your identity and attaching a debit card or a bank account to it and then clicking on a Buy Bitcoin button. Now you have Bitcoin in a wallet online.”
The other option is for a user to personally “mine” Bitcoin with Bitcoin mining hardware. In this practice, the miners complete difficult calculations and earn the cryptocurrrency, says Rankin. He explains, “a Bitcoin miner is essentially a dedicated machine whose sole purpose is to verify transactions on the Bitcoin network and miners are rewarded on the work that they produce for verifying these transactions.”
New pilot program brings new challenges
When it came to using Bitcoin in vice operations, the Benton County Sheriff’s Office needed to make the decision whether to buy the cryptocurrency on the exchange—which would mean they may not know where the Bitcoins came from—or to mine it themselves, meaning they create newly minted Bitcoin.
“When Detective Rankin came to me with the idea for us to use Bitcoin, I assumed he had read about the idea somewhere,” says Criminal Investigations Division Lt. David Undiano. “But after a little bit of research we realized we couldn’t find an existing policy for how to handle Bitcoin. We had to ask ourselves: How do we manage the funds? Who has to know about the funds? How do we keep our cryptocurrency safe?”
One of the challenges they faced was the fact that they had to ensure they weren’t using tainted Bitcoin to catch criminals. They found that mining Bitcoins themselves would be safer than purchasing on an exchange. “We can ensure the taxpayers that the Bitcoins that we’re storing on our hardware wallet or using in our investigations are clean,” Undiano says. “We minted them ourselves and they are not the result of some of these nefarious acts or some of these crimes being committed on the deep web that people are getting paid for,” he stresses.
Once they had decided that mining Bitcoin would be the safest way to obtain the cryptocurrency, they needed to guarantee that the Bitcoins could be safely stored once they got them. “As far as securely keeping it and making sure you’re protected from hackers and losing your Bitcoins due to an attack, that gets a little more involved and there are different ways you can protect yourself from that,” says Rankin. The agency ultimately ended up using a hardware wallet that keeps their currency offline so that hackers cannot access it.
After they determined how to keep their cryptocurrency safe, the next step was to get the miner working and begin testing the power usage. Rankin loaned his personal mining equipment to the sheriff’s office for use. “I loaned multiple miners because I had varying styles which included higher hashrates and lower hashrates,” he says. “Some were rack style, some were the newer form factor, some had one fan, some had four fans, and for testing purposes it was essential to have a variety to test out our facility’s capabilities. It was perfect for the testing we were doing.”
“The whole pilot program was just about the test,” says Undiano, “seeing what happens if we run two miners versus one. We wanted to see what would happen if we ran it at full speed versus dialing it back a little bit to save energy and run it at a slower hash rate.” The difference in power usage, they found, was marginal, with little difference in power consumption during the three-month pilot period.
Due to the amount of energy the miners use, however, the agency also had to ensure that they were stored in a cool place and did not cause any issues with the other equipment. “It was a long testing period to make sure everything was going to be operable and to determine if we could run the miner full-time if we wanted to,” says Rankin.
Bitcoin aids in vice operations
Undiano and Rankin both consider the pilot program a success and point to the many uses of Bitcoin in its operations. “Depending on which site you use to post your prostitution ad, you have to do it with Bitcoin,” says Rankin. “If we want our ad to be seen, it has to be a ‘highlighted ad,’ and to do that we had to use Bitcoin to raise it to the top of the page.” When the sheriff’s office previously posted ads prior to using Bitcoin, they had problems getting the ads at the top of the page, drastically affecting the efficiency of their operations.
The agency also has used the cryptocurrency to buy their way into other dark web illicit activities, such as child exploitation rings. Recently the detectives were working a case where an individual was live-viewing child pornography. “We couldn’t trade child pornography to get in and start identifying who was hosting and who else was involved, but we could buy our way in with Bitcoin,” says Undiano.
Although Bitcoins have anonymity, there are ways to trace them back to individuals, based on the steps the suspect takes. “If the suspect makes a bad move and turns the Bitcoin into cash and if it’s at an exchange that’s in the U.S., then we will absolutely know whose bank account that Bitcoin was cashed out and sent to,” says Rankin. “Is that person going to be in Arkansas? Probably not. But our unit works closely with and is a part of a task force affiliated with the DHS.” Though the agency may never trace the illicit activities to an individual, there’s still a benefit of using Bitcoin to purchase fake passports, driver’s licenses, stolen firearms, etc. “Even if we purchase a stolen firearm and never identify where it came from, the fact is that it’s off the streets and it costs the taxpayers the electric cost for the miner,” says Rankin.
Cybercrime is everywhere
For those agencies looking to start a similar program, Undiano and Rankin caution to take it slow, noting that it’s not an easy plug-and-play operation—there are a number of things to consider. Bitcoin miners can range in price depending on a number of factors. “The
More importantly outside of cost, cyber crimes units need to get their administration on board with the process. “The most difficult thing is whether or not you have an administration who is open to the idea of taking risks,” says Rankin. “And possibly subjecting themselves to public ridicule.” There are many people who don’t understand cryptocurrency or don’t understand what’s going on behind the scenes of a criminal enterprise. “What it takes is that one person who goes out on a limb and says, ‘Okay, let’s try this and see where it goes.’” So far, public opinion on the pilot program has been generally positive.
After running the pilot program for a period of time, the agency found that it had successfully created an adequate amount of Bitcoin for operations, to the point where they were able to turn the miners off. “We have a [Bitcoin] balance right now and when that balance runs low we will revisit mining again,” says Rankin, who noted that the agency couldn’t justify continuing to spend taxpayer dollars running electricity when there was no further need to create Bitcoin. Now the unit has security measures in place to ensure its Bitcoin is safely stored offline so no one can get to it. “We also have an auditing process in place to make sure that no one on the inside would mess around, get greedy and take it for themselves,” Rankin says.
Undiano and Rankin note that while it would probably be easier to sit on the interstate and catch speeders, there are crimes off of the highways and in the neighborhoods—cybercrime affects every agency. “You don’t realize there may be a problem until you start looking for it,” says Undiano. “Our major interest in this came because so many times in the past, law enforcement finds themselves being reactive to a situation. In our area we had not run into issues with ransomware attacks or people utilizing Bitcoin for stuff, but the problem was that it was here and no one knew about it. If [law enforcement] think cryptocurrency is not in their area or that no one is abusing it or using it for nefarious purposes, it may just be that they aren’t looking for it.”
