INSIGHT: Top Cyber police chief warns about risks of exploitation by crime gangs when allowing bitcoin to purchase luxury property and private jets - AML Intelligence
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INSIGHT: Top Cyber police chief warns about risks of exploitation by crime gangs when allowing bitcoin to purchase luxury property and private jets

By AMLi Correspondents

A TOP police officer has warned about risks involved in bitcoin being used to buy luxury property in Britain and the possibility of exploitation by criminal gangs.

The deputy director of the UK’s Cyber Crime Unit at the National Crime Agency Nigel Leary says he has significant concerns about bitcoin or other cryptocurrencies being used for large purchases such as homes and private jets.

Leary believes big-volume cryptocurrency payments are often linked to organised crime and there were not usually enough safeguards for such purchases.

His warning came after one UK developer said he would take offers in bitcoin and ethereum for an 18,000 sq ft five-bedroom penthouse on sale for £175M in a development in upmarket Knightsbridge.

Leary did not name the One Hyde Park development and there is absolutely no suggestion the developers or any private jet company would involve themselves in any suspicious transaction. The NCA cyber chief was speaking generally about property offers being made in cryptocurrency. The developers declined to comment to The Times newspaper.

Deputy Director Leary told The Times: “Anything purchased with crypto assets I’d be slightly sceptical about. I’d like to see why they’re being done in that way and what the requirement is for that anonymity, and why it needed to be done in a crypto transaction.”

Leary said that while there were some moves towards regulation of digital currency exchange there were “questions about how effective that is right now”, and warned that criminals could exploit that situation.

In relation to purchases of big assets such as property, he said: “It’s easier to defraud when it’s all done remotely. It’s not as though I have to turn up at the bank with my passport which, if I’m going to try and do it fraudulently, will take a little bit more preparation than it does to do it online where I can procure myself false identity documents, false bank statements and so on.”

Leary said the use of cryptocurrencies was not suspicious in itself, however, and there were vast amounts of people using them to purchase assets legitimately, but that checks needed to be made on their use until regulation was improved.

Some private jet operators have also been reporting that a growing number of their flights are paid for in bitcoin. One operator reported that one in ten of its flights were paid for in bitcoin in January, representing 20 per cent of its sales.

According to the National Crime Agency’s annual strategic assessment released last month, criminal use of cryptocurrency has been accelerated by the pandemic.

In Britain’s West Midlands meanwhile police raided a bitcoin mining farm last month in which a gang had been stealing electricity to power their computers.

Officers who raided the building in an industrial estate expecting to find a cannabis farm because of the amount of heat emanating from it but instead discovered a cryptocurrency operation.

Bitcoin miners are groups that validate other people’s transactions on the network for a fee, by following some basic mathematical algorithms, in a process that also allows the miners to also create their own bitcoins.

The process requires a vast amount of computing power, meaning the electricity bills are very expensive.

Experts said it was rare to find a bitcoin mining farm in the UK, but added that some groups were moving out of China.

“The mining landscape is always changing,” Patrick McCorry, a former professor in cryptocurrencies at King’s College London told the Times. “China has recently banned bitcoin mining from dirty energy sources such as coal, and this has resulted in an exodus of mining to the surrounding countries.”

However, McCorry disputed the claim that bitcoin was being used for money laundering. “Cryptocurrencies are the worst tool for money laundering and criminal activity,” he said.

 “While bitcoin transactions have no strict tie to real-world identities, they do have identifiers, such as bitcoin addresses, and all transactions are replicated across the world (and recorded for ever). In some ways, it is the most traceable currency that has ever existed.”

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