Former hostage negotiator Dan O’Shea discusses the ongoing investigation into the alleged kidnapping of Nancy Guthrie on Day 10 of the search on “Mornings With Maria.”
The disappearance of Nancy Guthrie has placed a renewed focus on the traceability of cryptocurrencies and their use by criminals following reports of alleged ransom notes demanding payment in bitcoin.
Guthrie, 84, was last seen on Feb. 1, when authorities believed she had been abducted from her home. There have been reports of several alleged ransom notes demanding payment bitcoin during the course of the study, now in its second week.
While bitcoin gained a reputation for being associated with crime following the dismantling of the online Silk Road black market in 2013, where crypto was used to buy illegal drugs and other items, the evolution of the digital asset industry and its extensive surveillance in the years since has made it harder for bad actors to do so.
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Bitcoin transactions are recorded on the blockchain, which can be tracked by the public and law enforcement, which has more sophisticated tools. (Jakub Porzycki/NurPhoto via Getty Images)
“The blockchain is a public ledger that can be controlled by anyone for free, so anyone can look up a specific bitcoin wallet address and see every transaction that comes in and goes out from the very beginning,” she said.
“So there’s no way to hide those tracks. This is actually an incredibly powerful tool for law enforcement. In fact, it’s a much better tool for law enforcement than it is for criminals, which is why we really don’t see much criminal activity with bitcoin anymore as the industry has matured,” Boring added.
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FBI Director Kash Patel shared photos taken by a doorbell camera outside Nancy Guthrie’s home on Tuesday, February 10. (@FBI DirectorKashPatel via X)
Boring said criminals could “self-take custody” of their bitcoin without using a third party – such as a bank – to hold the funds, although they would still face problems trying to convert the crypto to the fiat currency of their choice.
“If a ransom has been paid to a bitcoin wallet and the criminal has control of that money, that’s entirely possible. But at some point they’re going to have to transfer that money to US dollars or to yen or to euros or whatever currency they want so they can use the money,” she said.
“The companies that offer this money exchange service are all regulated companies worldwide. You have to use a regulated financial institution like Coinbase, and at that point you’re at a point [know your customer] so that we know the identity of the person trying to exchange the bitcoin associated with the ransom payment,” Boring said.
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The bitcoin and digital asset industry has developed advanced track-and-trace technologies, Boring said. (Photo illustration by Chesnot/Getty Images)
Another tactic used by criminals to undermine bitcoin’s traceability is to send it from a self-custodian. crypto wallet to multiple wallets, although these various distributions are still traceable by law enforcement agencies. Boring noted that this tactic has led to the rise of mixed services in the crypto space that “take crypto from multiple parties and mix it together, and then you can take it out the other end.”
“That’s a way to hide it. But even that, you get all the money that goes into a mixer, you can see all the crypto that comes out, so there’s still traceability, but it confuses things a little bit for law enforcement purposes — but law enforcement is very, very advanced and can track and trace all transactions on the blockchain,” Boring said.
She noted that companies within the crypto economy have created track-and-trace software that is used by compliance officers at crypto companies and in law enforcement.
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“This is a very sophisticated effort that has been built over the last decade. There is a lot of coordination with the crypto exchanges and law enforcement agencies to detect and trace illegal activity in this space, and it is very effective and very efficient,” Boring said.
She added that the Justice Department has had a number of cases where they have seized large amounts of cryptocurrency from criminals, and said that “law enforcement has done a really good job of helping police criminals who are misusing this technology for nefarious purposes and keeping this ecosystem safe.”
