Posted at 5:00 a.m.
(Cornwall, Ontario) “We honestly had no idea what the dark web or bitcoin when we started this investigation. »
Corporal Steve Harten candidly recounts the twists and turns that led to the arrest of a major drug trafficker – “Mr. Hotsauce” – in May 2018, in Toronto. At the start of the investigation, the RCMP only knew that the man was selling fentanyl, crystal meth and other drugs under this pseudonym in a virtual market in the dark web. The police are unaware of his true identity and his ways of doing things in the field, between the time the illicit substances are ordered and the time they are delivered.
The picture becomes clearer fairly quickly. Investigators discover that the drugs are concealed in musical birthday cards and then shipped from various Canada Post outlets. The noose tightens after a breathless spinning in the Toronto subway and a taxi chase in the streets of downtown.
After a few weeks of intense surveillance, RCMP officers search the house of “Mr. Hotsauce”. There they find not only the suspect, but also a gun and large quantities of synthetic drugs, hidden in a seedy semi-basement. They discover another crucial element: a computer still on.
In the heat of the moment, the police have the reflex to keep the computer active by constantly moving the mouse to prevent it from locking – the time to call in reinforcements from colleagues specialized in cybercrime. They find three hours later a piece of paper on which are scribbled two coded sentences. This will be the keystone to access the trafficker’s cryptocurrency wallets, his preferred method of payment.
PHOTO PROVIDED BY THE RCMP
Part of the drug “catalogue” of the trafficker “Mr. Hotsauce”. He traded on the DreamMarket platform, in the dark web, and was paid in fractions of bitcoin.
“It made it possible to reconstitute two portfolios [de cryptomonnaies]which each contained 11 bitcoins, “said Steve Harten in front of an audience of RCMP colleagues gathered this week in a hotel in Cornwall, Ontario.
What to do with this loot valued at over $200,000? We must act quickly, while the RCMP is still checking the defendant’s computer. Officers still on site call Adrienne Vickery, Senior RCMP Cryptocurrency Officer. Other calls are made to the Seized Property Management Directorate of the Canadian government. It was then agreed to transfer the 22 bitcoins to a virtual RCMP wallet, a maneuver never before performed. And that works.
This was the first time cryptocurrency had been seized as part of an investigation.
RCMP Corporal Steve Harten
Millions seized
The operation marked a turning point for the RCMP. The federal police force has since successfully traced – and seized – millions of dollars in cryptocurrency as part of criminal investigations, with the approval of the courts.
For example, 719 bitcoins, which is equivalent to some $35 million, were confiscated last January from Sébastien Vachon-Desjardins, a Gatineau resident accused of exploiting ransomware. (The RCMP declines to state the total number of seizures made since 2018.)
Despite some successes, law enforcement is struggling to keep pace with cybercriminals. Reports of fraud involving cryptocurrencies totaled $75 million last year in the country, 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 an attempt to tackle the scourge, the RCMP’s Financial Crimes Branch has set up an intensive week-long program to train 24 officers from across the country in the different facets of cryptocurrencies. Since Monday, they have been presented with concrete cases, including that of “Mr. Hotsauce”, as well as conferences by private sector experts, such as those from the firm Chainalysis.
The Press was able to attend part of this training on Monday, having made numerous attempts to speak to RCMP experts in recent months. The objective is to equip the officers responsible for cryptomonies in each province, who can then share their knowledge with their colleagues, explains in an interview Adrienne Vickery, officer in charge – Financial integrity, Criminal operations of the federal police.
“My role as National Cryptocurrency Coordinator is to share intelligence, to talk about challenges with investigations, so we can collectively identify how the RCMP can move forward,” she says.
PHOTO PROVIDED BY THE RCMP
Adrienne Vickery, National Cryptocurrency Coordinator with RCMP Federal Policing Criminal Operations, and Detective Steve Harten, who helped arrest “Mr. Hotsauce”
Counters and frauds
The role of M.me Vickery is relatively new: she was appointed as a cryptocurrency coordinator in 2016. The RCMP does not have a team dedicated exclusively to virtual currencies, she says, but uses agents who already had a interest in the matter. Most of the 24 officers in Cornwall this week are knowledgeable about the subject and are even “investing” in cryptocurrency, she says.
The RCMP’s goal is to be able to keep pace with criminals who are constantly inventing new schemes involving virtual currencies. Fraud of all kinds “reaches an astronomical level here in Canada,” says Adrienne Vickery. In the past year, scams involving fake investment platforms, which promise staggering returns, have multiplied.
Another common type of fraud is where counterfeiters pose as agents of the Canada Revenue Agency (CRA).
“They tell the victims that if they don’t send funds, they will be arrested,” said Ms.me Vickery. They’ll ask victims what their ZIP code is, and while they’re with them on the phone, they’ll check sites like Coin ATM Radar, which show where cryptocurrency ATMs are, and direct the person to the nearest ATM. closer then ask him to insert money into it to send funds [en cryptomonnaie]. »
The multiplication of cryptocurrency counters is also in the sights of the RCMP, confirms Adrienne Vickery. These machines, where you can buy bitcoins and other currencies in relative anonymity with cash, are now six times more numerous than at the start of the pandemic, she points out. Canada is the world’s second-largest market, with 2,435 ATMs in operation, according to Coin ATM Radar.
PHOTO OLIVIER JEAN, LA PRESSE ARCHIVES
A cryptocurrency counter installed in a Montreal convenience store
We are certainly interested in these machines. I believe with any new system there is potential for money laundering.
Adrienne Vickery, Officer in Charge – Financial Integrity, RCMP Criminal Operations
A recent survey of The Press has made it possible to determine that at least 270 of these counters have appeared in Quebec in recent years, in a fairly significant regulatory vagueness. Revenu Québec, responsible for issuing operating permits, is unable to quantify their number. The Financial Transactions and Reports Analysis Center of Canada (FINTRAC), which has overseen this industry federally since 2020, is also unable to provide a number.
These machines are seen by many authorities as an ideal way to launder money, since cryptocurrencies can be purchased in cash in relative anonymity below a certain threshold – $1,000 in Canada. The UK banned them for this reason in March 2022.
The RCMP did not want to confirm whether investigations had already been launched in the country in connection with bitcoin counters. Ditto for the Sûreté du Québec and the Police Department of the City of Montreal. Adrienne Vickery reminds us that many people use these machines – and cryptocurrencies in general – for legitimate purposes, despite the explosion of fraud.
The RCMP hopes to deliver its new “National Cryptocurrency Investigator Course” four to five times a year.