Illegal circulation of digital currencies: features of criminal investigation
Keywords:
seizure, confiscation, cryptocurrency, digital currency, bitcoin, property, criminal proceedings, auction.
Abstract
The purpose of the study is to analyze the international and national legal regulation of the digital currencies circulation at the present stage, to assess the state of crime with the illegal use of these assets, to identify the features of the investigating such crimes and to substantiate proposals aimed at improving legislation and law enforcement practice.
The following methods were used in the research: normative and comparative legal – in the analysis of legislation and practice of seizure and confiscation of digital currencies in different states, to identify the strengths and weaknesses of national approaches, to assess the possibility of their unification and harmonization; phenomenological – in considering the criminal trafficking in digital currency as a phenomenon that requires special methods of detection and investigation; general logical methods of analysis and synthesis, induction and deduction, methods of empirical research and analysis.
It was shown that with the rapid growth of crime involving cryptocurrencies, the legislation of various states is at the stage of formation of legal regulation of the fight against its illicit trafficking: only some countries have established the status of digital currency as property, provided for the specifics of seizure, storage and sale of digital currency in criminal cases.
The need to recognize digital currencies as property has been substantiated. It is shown that the seizure and confiscation of cryptocurrencies should be carried out only by court decision. The lack of special knowledge in the field of digital technology among the investigator, prosecutor and the court requires the mandatory involvement of a specialist in the proceedings on cases of crimes committed with the use of digital currency.
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References
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Campbell, S. (2017). Bitcoins Bulgarian police seized from an 'organised crime gang' would now pay off a FIFTH of the country's national debt after value rises by 600% in six months. Dailymail, December 9, 2017. Retrieved from https://www.dailymail.co.uk/news/article-5163209/Bulgaria-Bitcoins-pay-FIFTH-debt.html
Court of Justice of the European Union (2015) Judgment of the court (Fifth Chamber) in case C‑264/14 «Skatteverket v David Hedqvist». October 22, 2015. Retrieved from https://curia.europa.eu/juris/document/document.jsf?text=&docid=170305&doclang=EN
Covolo, V. (2020). The EU Response to Criminal Misuse of Cryptocurrencies: The Young, already Outdated 5th Anti-Money Laundering Directive. European Journal of Crime Criminal Law and Criminal Justice, 28(3), 217-251. DOI: https://doi.org/10.1163/15718174-bja10003
Criminal Code of the Russian Federation No. 63-FZ. IMOLIN: site, June 13, 1996, adopted by the Federation Council on June 5, 1996. Retrieved from http:// www.imolin.org/doc/amlid/Russian_Federation_Criminal_Code.pdf
Criminal Procedure Code of the Republic of Belarus No. 295-Z. Nuclear Security Legislation Database by VERTIC Organisation, July 16, 1999. Retrieved from https://www.vertic.org/media/National%20Legislation/Belarus/BY_Criminal_Procedure_Code.pdf
Criminal Procedure Code of the Russian Federation No. 174-FZ. IMOLIN: site, December 18, 2001, approved by the Federation Council December 5, 2001. Retrieved from https://www.imolin.org/doc/amlid/Russian_Federation_Criminal_Procedure_Code.pdf
Custers, B. H. M., Pool, R. L. D., & Cornelisse, R. (2019). Banking malware and the laundering of its profits. European Journal of Criminology, 16(6), 728-745. DOI: https://doi.org/10.1177/1477370818788007
Database of arbitration cases of the Russian electronic justice system (2018). Decision of the Ninth Court of Arbitration Appeals of Russia in the case A40-124668-2017, May 15, 2018. Retrieved from https://kad.arbitr.ru/Document/Pdf/3e155cd1-6bce-478a-bb76- 1146d2e61a4a / 58af451a-bfa3-4723-ab0d-d149aafecd88 /A40-124668-2017_20180515_Postanovlenie_apelljacionnoj_instancii.pdfDolgieva, M. M. (2018). Cryptocurrency confiscation. Legality, 11(1009), 45-49.
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Europol. (2018). Police seize more than EUR 4.5 million in cryptocurrencies in Europe’s biggest ever LSD bust. European Union Agency for Law Enforcement Cooperation: official site, June 28, 2018. Retrieved from https://www.europol.europa.eu/newsroom/news/police-seize-more-eur-45-million-in-cryptocurrencies-in-europe%E2%80%99s-biggest-ever-lsd-bust
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Federal Law No. 127-FZ. On Insolvency (Bankruptcy) (as amended). Garant: Legal Information Portal, October 26, 2002. Retrieved from https://base.garant.ru/185181
Federal Law No. 229-FZ. On enforcement proceedings. Garant: Legal Information Portal, October 2, 2007. Retrieved from https://base.garant.ru/12156199
Federal Law No. 259-FZ. On Digital Financial Assets, Digital Currency and on Amendments to Certain Legislative Acts of the Russian Federation. Garant: Legal Information Portal, July 31, 2020. Retrieved from https://www.garant.ru/products/ipo/prime/doc/74351466
Federal Law No. 273-FZ. On Counteracting Corruption. Garant: Legal Information Portal, December 25, 2008. Retrieved from https://base.garant.ru/12164203
Federal Register of Legislation of Australian Government (2018) Anti-Money Laundering and Counter-Terrorism Financing Act 2006. Retrieved from https://www.legislation.gov.au/Details/C2019C00011
Financial Technology Protection Act, H.R.56 – 116th Congress. Library of Congress: official site, 2019. Retrieved from https://www.congress.gov/bill/116th-congress/house-bill/56
Grobys, K. (2021). When the blockchain does not block: on hackings and uncertainty in the cryptocurrency market. Quantitative Finance, 21(8). DOI: https://doi.org/10.1080/14697688.2020.1849779
Judicial Department at the Supreme Court of the Russian Federation (2015). Report on the work of courts of general jurisdiction on the consideration of criminal cases at first instance for the 12 months of 2015. Retrieved from https://www.cdep.ru/userimages/sudebnaya_statistika/2015/F1-ug_pr-vo_1_inst-2015.xls
Judicial Department at the Supreme Court of the Russian Federation (2016). Report on the work of courts of general jurisdiction on the consideration of criminal cases at first instance for the 12 months of 2016. Retrieved from http://www.cdep.ru/userimages/sudebnaya_statistika/2016/F1-svod-2016.xls
Judicial Department at the Supreme Court of the Russian Federation (201/). Report on the work of courts of general jurisdiction on the consideration of criminal cases at first instance for the 12 months of 2017. Retrieved from http://www.cdep.ru/userimages/sudebnaya_statistika/2017/F1-svod-2017.xls
Judicial Department at the Supreme Court of the Russian Federation (2018). Report on the work of courts of general jurisdiction on the consideration of criminal cases at first instance for the 12 months of 2018. Retrieved from http://www.cdep.ru/userimages/sudebnaya_statistika/2019/F1-svod_vse_sudy-2018.xls
Judicial Department at the Supreme Court of the Russian Federation (2019). Report on the work of courts of general jurisdiction on the consideration of criminal cases at first instance for the 12 months of 2019. Retrieved from http://www.cdep.ru/userimages/sudebnaya_statistika/2020/F1-svod_vse_sudy-2019.xls
Kethineni, S., & Cao, Y. (2020). The Rise in Popularity of Cryptocurrency and Associated Criminal Activity. International Criminal Justice Review, 30(3), 325-344. DOI: https://doi.org/10.1177/1057567719827051
Kim, H. (2018). Top South Korean court recognises cryptocurrency as asset. South China Morning Post: official site. Retrieved from https://www.scmp.com/news/asia/east-asia/article/2148616/top-south-korean-court-recognises-cryptocurrency-asset
Koerhuis, W., Kechadi, T., & Le-Khac, N. A. (2020). Forensic analysis of privacy-oriented cryptocurrencies. Forensic Science International-Digital Investigation, 33(200891). DOI: https://doi.org/10.1016/j.fsidi.2019.200891
Lee, H., & Choi, K. S. (2021). Interrelationship between Bitcoin, Ransomware, and Terrorist Activities: Criminal Opportunity Assessment via Cyber-Routine Activities Theoretical Framework. Victims & Offenders, 16(3), SI, 363-384. DOI: https://doi.org/10.1080/15564886.2020.1835764
Lloyd, C. (2020). The privacy revolution begins: Did carpenter just give bitcoin users a chance to strike down the bank secrecy act? George Washington Law Review, 88(1), 204-238.
Manhattan, U. S. (2014). Attorney Announces Forfeiture of $28 Million Worth of Bitcoins Belonging to Silk Road. United States Departament of Justice. Retrieved from https://www.justice.gov/usao-sdny/pr/manhattan-us-attorney-announces-forfeiture-28-million-worth-bitcoins-belonging-silk
Markaryan, E. S. (2018). Specificity of conducting a research examination in the investigation of crimes committed with the use of cryptocurrencies. Actual Problems of Russian Law, 6(91), 146-152. DOI: https://doi.org/10.17803/1994-1471.2018.91.6.146-152
Mkrtchian, S. M. (2020). Property Crimes in the Blockchain Sphere: New Criminal Schemes and Their Criminal Law Assessment. Russian Journal of Criminology, 14(6), 845-854. DOI: https://doi.org/10.17150/2500-4255.2020.14(6).845-854
O’Donnell, J. (2021). Police seize $60 million of bitcoin! Now, where's the password? Reuters. Retrieved from https://www.reuters.com/article/idUSL1N2KB0QK
Palmer, D. (2018). Finland Mandates Cold Storage, Public Auctions for Seized Bitcoins. Coindesk. Retrieved from https://www.coindesk.com/markets/2018/02/20/finland-mandates-cold-storage-public-auctions-for-seized-bitcoins/
Resolution of the Plenum of the Supreme Court of the Russian Federation No. 32 of July 7, 2015. «On judicial practice in cases of legalization (laundering) of funds or other property acquired by criminal means, and the acquisition or sale of property knowingly obtained by criminal means». Internet portal «Rossiyskaya Gazeta», July 13, 2015. Retrieved from https://rg.ru/2015/07/13/sud-dok.html
Resolution of the Plenum of the Supreme Court of the Russian Federation No.1 of February 26, 2019: «On Amending the Resolution of the Plenum of the Supreme Court of the Russian Federation of July 7, 2015 N 32 «On judicial practice in cases of legalization (laundering) of funds or other property acquired by criminal means, and the acquisition or sale of property knowingly obtained by criminal means». Internet portal «Rossiyskaya Gazeta», March 7, 2019. Retrieved from https://rg.ru/2019/03/07/postanovlenie-dok.html
Saiedi, E., Broström, A., & Ruiz, F. (2020). Global drivers of cryptocurrency infrastructure adoption. Small Bus Econ. DOI: https://doi.org/10.1007/s11187-019-00309-8
Teichmann, F. M. J., & Falker, M. C. (2020). Cryptocurrencies and financial crime: solutions from Liechtenstein. Journal of Money Laundering Control, Vol. ahead-of-print No. ahead-of-print. DOI: https://doi.org/10.1108/JMLC-05-2020-0060
Thompson, C. (2015). Silk Road website founder Ross Ulbricht found guilty on all counts. CNBC: official site. Retrieved from https://www.cnbc.com/2015/02/04/silk-road-website-founder-ross-ulbricht-found-guilty-on-all-counts.html
Turner, A. B., McCombie, S., & Uhlmann, A. J. (2019). A target-centric intelligence approach to WannaCry 2.0. Journal of Money Laundering Control, 22(4), 646-665
DOI: https://doi.org/10.1108/JMLC-01-2019-0005.
Vandezande, N. (2017). Virtual currencies under EU anti-money laundering law. Computer Law & Security Review, 33(3), 341-353. Retrieved from https://isiarticles.com/bundles/Article/pre/pdf/137977.pdf
Voß, O. (2018). Bavaria sells Bitcoin for 12 million euros. The daily mirror. Retrieved from https://www.tagesspiegel.de/wirtschaft/internetkriminalitaet-bayern-verkauft-bitcoin-fuer-12-millionen-euro/22611878.html
Wang, H., He, D., Liu, Z., & Guo, R. (2020). Blockchain-Based Anonymous Reporting Scheme with Anonymous Rewarding. IEEE Transactions on Engineering Management, 67(4), 1514-1524. DOI: https://doi.org/10.1109/TEM.2019.2909529.
Campbell, S. (2017). Bitcoins Bulgarian police seized from an 'organised crime gang' would now pay off a FIFTH of the country's national debt after value rises by 600% in six months. Dailymail, December 9, 2017. Retrieved from https://www.dailymail.co.uk/news/article-5163209/Bulgaria-Bitcoins-pay-FIFTH-debt.html
Court of Justice of the European Union (2015) Judgment of the court (Fifth Chamber) in case C‑264/14 «Skatteverket v David Hedqvist». October 22, 2015. Retrieved from https://curia.europa.eu/juris/document/document.jsf?text=&docid=170305&doclang=EN
Covolo, V. (2020). The EU Response to Criminal Misuse of Cryptocurrencies: The Young, already Outdated 5th Anti-Money Laundering Directive. European Journal of Crime Criminal Law and Criminal Justice, 28(3), 217-251. DOI: https://doi.org/10.1163/15718174-bja10003
Criminal Code of the Russian Federation No. 63-FZ. IMOLIN: site, June 13, 1996, adopted by the Federation Council on June 5, 1996. Retrieved from http:// www.imolin.org/doc/amlid/Russian_Federation_Criminal_Code.pdf
Criminal Procedure Code of the Republic of Belarus No. 295-Z. Nuclear Security Legislation Database by VERTIC Organisation, July 16, 1999. Retrieved from https://www.vertic.org/media/National%20Legislation/Belarus/BY_Criminal_Procedure_Code.pdf
Criminal Procedure Code of the Russian Federation No. 174-FZ. IMOLIN: site, December 18, 2001, approved by the Federation Council December 5, 2001. Retrieved from https://www.imolin.org/doc/amlid/Russian_Federation_Criminal_Procedure_Code.pdf
Custers, B. H. M., Pool, R. L. D., & Cornelisse, R. (2019). Banking malware and the laundering of its profits. European Journal of Criminology, 16(6), 728-745. DOI: https://doi.org/10.1177/1477370818788007
Database of arbitration cases of the Russian electronic justice system (2018). Decision of the Ninth Court of Arbitration Appeals of Russia in the case A40-124668-2017, May 15, 2018. Retrieved from https://kad.arbitr.ru/Document/Pdf/3e155cd1-6bce-478a-bb76- 1146d2e61a4a / 58af451a-bfa3-4723-ab0d-d149aafecd88 /A40-124668-2017_20180515_Postanovlenie_apelljacionnoj_instancii.pdfDolgieva, M. M. (2018). Cryptocurrency confiscation. Legality, 11(1009), 45-49.
Decree No. 8. On the development of the digital economy, Press service of the President of the Republic of Belarus, December 21, 2017. Retrieved from https://president.gov.by/ru/documents/dekret-8-ot-21-dekabrja-2017-g-17716
Europol. (2018). Police seize more than EUR 4.5 million in cryptocurrencies in Europe’s biggest ever LSD bust. European Union Agency for Law Enforcement Cooperation: official site, June 28, 2018. Retrieved from https://www.europol.europa.eu/newsroom/news/police-seize-more-eur-45-million-in-cryptocurrencies-in-europe%E2%80%99s-biggest-ever-lsd-bust
Federal Law No. 115-FZ. On Countering the Legalization (Laundering) of Proceeds from Crime and Financing of Terrorism. Garant: Legal Information Portal, August 7, 2001. Retrieved from https://base.garant.ru/12123862
Federal Law No. 127-FZ. On Insolvency (Bankruptcy) (as amended). Garant: Legal Information Portal, October 26, 2002. Retrieved from https://base.garant.ru/185181
Federal Law No. 229-FZ. On enforcement proceedings. Garant: Legal Information Portal, October 2, 2007. Retrieved from https://base.garant.ru/12156199
Federal Law No. 259-FZ. On Digital Financial Assets, Digital Currency and on Amendments to Certain Legislative Acts of the Russian Federation. Garant: Legal Information Portal, July 31, 2020. Retrieved from https://www.garant.ru/products/ipo/prime/doc/74351466
Federal Law No. 273-FZ. On Counteracting Corruption. Garant: Legal Information Portal, December 25, 2008. Retrieved from https://base.garant.ru/12164203
Federal Register of Legislation of Australian Government (2018) Anti-Money Laundering and Counter-Terrorism Financing Act 2006. Retrieved from https://www.legislation.gov.au/Details/C2019C00011
Financial Technology Protection Act, H.R.56 – 116th Congress. Library of Congress: official site, 2019. Retrieved from https://www.congress.gov/bill/116th-congress/house-bill/56
Grobys, K. (2021). When the blockchain does not block: on hackings and uncertainty in the cryptocurrency market. Quantitative Finance, 21(8). DOI: https://doi.org/10.1080/14697688.2020.1849779
Judicial Department at the Supreme Court of the Russian Federation (2015). Report on the work of courts of general jurisdiction on the consideration of criminal cases at first instance for the 12 months of 2015. Retrieved from https://www.cdep.ru/userimages/sudebnaya_statistika/2015/F1-ug_pr-vo_1_inst-2015.xls
Judicial Department at the Supreme Court of the Russian Federation (2016). Report on the work of courts of general jurisdiction on the consideration of criminal cases at first instance for the 12 months of 2016. Retrieved from http://www.cdep.ru/userimages/sudebnaya_statistika/2016/F1-svod-2016.xls
Judicial Department at the Supreme Court of the Russian Federation (201/). Report on the work of courts of general jurisdiction on the consideration of criminal cases at first instance for the 12 months of 2017. Retrieved from http://www.cdep.ru/userimages/sudebnaya_statistika/2017/F1-svod-2017.xls
Judicial Department at the Supreme Court of the Russian Federation (2018). Report on the work of courts of general jurisdiction on the consideration of criminal cases at first instance for the 12 months of 2018. Retrieved from http://www.cdep.ru/userimages/sudebnaya_statistika/2019/F1-svod_vse_sudy-2018.xls
Judicial Department at the Supreme Court of the Russian Federation (2019). Report on the work of courts of general jurisdiction on the consideration of criminal cases at first instance for the 12 months of 2019. Retrieved from http://www.cdep.ru/userimages/sudebnaya_statistika/2020/F1-svod_vse_sudy-2019.xls
Kethineni, S., & Cao, Y. (2020). The Rise in Popularity of Cryptocurrency and Associated Criminal Activity. International Criminal Justice Review, 30(3), 325-344. DOI: https://doi.org/10.1177/1057567719827051
Kim, H. (2018). Top South Korean court recognises cryptocurrency as asset. South China Morning Post: official site. Retrieved from https://www.scmp.com/news/asia/east-asia/article/2148616/top-south-korean-court-recognises-cryptocurrency-asset
Koerhuis, W., Kechadi, T., & Le-Khac, N. A. (2020). Forensic analysis of privacy-oriented cryptocurrencies. Forensic Science International-Digital Investigation, 33(200891). DOI: https://doi.org/10.1016/j.fsidi.2019.200891
Lee, H., & Choi, K. S. (2021). Interrelationship between Bitcoin, Ransomware, and Terrorist Activities: Criminal Opportunity Assessment via Cyber-Routine Activities Theoretical Framework. Victims & Offenders, 16(3), SI, 363-384. DOI: https://doi.org/10.1080/15564886.2020.1835764
Lloyd, C. (2020). The privacy revolution begins: Did carpenter just give bitcoin users a chance to strike down the bank secrecy act? George Washington Law Review, 88(1), 204-238.
Manhattan, U. S. (2014). Attorney Announces Forfeiture of $28 Million Worth of Bitcoins Belonging to Silk Road. United States Departament of Justice. Retrieved from https://www.justice.gov/usao-sdny/pr/manhattan-us-attorney-announces-forfeiture-28-million-worth-bitcoins-belonging-silk
Markaryan, E. S. (2018). Specificity of conducting a research examination in the investigation of crimes committed with the use of cryptocurrencies. Actual Problems of Russian Law, 6(91), 146-152. DOI: https://doi.org/10.17803/1994-1471.2018.91.6.146-152
Mkrtchian, S. M. (2020). Property Crimes in the Blockchain Sphere: New Criminal Schemes and Their Criminal Law Assessment. Russian Journal of Criminology, 14(6), 845-854. DOI: https://doi.org/10.17150/2500-4255.2020.14(6).845-854
O’Donnell, J. (2021). Police seize $60 million of bitcoin! Now, where's the password? Reuters. Retrieved from https://www.reuters.com/article/idUSL1N2KB0QK
Palmer, D. (2018). Finland Mandates Cold Storage, Public Auctions for Seized Bitcoins. Coindesk. Retrieved from https://www.coindesk.com/markets/2018/02/20/finland-mandates-cold-storage-public-auctions-for-seized-bitcoins/
Resolution of the Plenum of the Supreme Court of the Russian Federation No. 32 of July 7, 2015. «On judicial practice in cases of legalization (laundering) of funds or other property acquired by criminal means, and the acquisition or sale of property knowingly obtained by criminal means». Internet portal «Rossiyskaya Gazeta», July 13, 2015. Retrieved from https://rg.ru/2015/07/13/sud-dok.html
Resolution of the Plenum of the Supreme Court of the Russian Federation No.1 of February 26, 2019: «On Amending the Resolution of the Plenum of the Supreme Court of the Russian Federation of July 7, 2015 N 32 «On judicial practice in cases of legalization (laundering) of funds or other property acquired by criminal means, and the acquisition or sale of property knowingly obtained by criminal means». Internet portal «Rossiyskaya Gazeta», March 7, 2019. Retrieved from https://rg.ru/2019/03/07/postanovlenie-dok.html
Saiedi, E., Broström, A., & Ruiz, F. (2020). Global drivers of cryptocurrency infrastructure adoption. Small Bus Econ. DOI: https://doi.org/10.1007/s11187-019-00309-8
Teichmann, F. M. J., & Falker, M. C. (2020). Cryptocurrencies and financial crime: solutions from Liechtenstein. Journal of Money Laundering Control, Vol. ahead-of-print No. ahead-of-print. DOI: https://doi.org/10.1108/JMLC-05-2020-0060
Thompson, C. (2015). Silk Road website founder Ross Ulbricht found guilty on all counts. CNBC: official site. Retrieved from https://www.cnbc.com/2015/02/04/silk-road-website-founder-ross-ulbricht-found-guilty-on-all-counts.html
Turner, A. B., McCombie, S., & Uhlmann, A. J. (2019). A target-centric intelligence approach to WannaCry 2.0. Journal of Money Laundering Control, 22(4), 646-665
DOI: https://doi.org/10.1108/JMLC-01-2019-0005.
Vandezande, N. (2017). Virtual currencies under EU anti-money laundering law. Computer Law & Security Review, 33(3), 341-353. Retrieved from https://isiarticles.com/bundles/Article/pre/pdf/137977.pdf
Voß, O. (2018). Bavaria sells Bitcoin for 12 million euros. The daily mirror. Retrieved from https://www.tagesspiegel.de/wirtschaft/internetkriminalitaet-bayern-verkauft-bitcoin-fuer-12-millionen-euro/22611878.html
Wang, H., He, D., Liu, Z., & Guo, R. (2020). Blockchain-Based Anonymous Reporting Scheme with Anonymous Rewarding. IEEE Transactions on Engineering Management, 67(4), 1514-1524. DOI: https://doi.org/10.1109/TEM.2019.2909529.
Published
2021-10-29
How to Cite
Voskobitova, L., Vilkova, T., Nasonov, S., Khokhryakov, M., & Reshetnikov, Y. (2021). Illegal circulation of digital currencies: features of criminal investigation. Amazonia Investiga, 10(45), 252-264. https://doi.org/10.34069/AI/2021.45.09.25
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