The United States Secret Service seized more than $102 million in cryptocurrency from fraud cases since 2015, the agency's assistant director of investigations said in an interview published Tuesday.
David Smith, the assistant director of investigations for the agency told CNBC that agency agents and analysts actively "track" transactions for cryptocurrencies like bitcoin by surveilling each transaction's "blockchain," or cyber-path which can contain identifying information on those conducting the transactions.
"When you follow a digital currency wallet, it's not different than an email address that has some correlating identifiers," Smith said in an interview with CNBC at the agency's headquarters. "And once a person and another person make a transaction, and that gets into the blockchain, we have the ability to follow that email address or wallet address, if you will, and trace it through the blockchain."
While most people see the secret service as the agency tasked with protecting the president and other officials, the agency was originally created in 1865 to stamp out rampant counterfeiting in the financial system following the Civil War, according to the agency's website.
At the time, nearly a third of all currency in circulation was counterfeit, and the agency was founded out of the treasury department as its own bureau to suppress the practice.
It did not start the physical protection of presidents until 1901 following the assassination of President William McKinley.
As part of its mission to investigate financial crimes, the agency investigates fraud, such as a joint investigation with the Romanian National Police that targeted 900 victims across the United States with a scheme that involved placing fake ads on popular online auction sites for nonexistent items.
The scheme used cryptocurrencies to launder the illegal proceeds, the agency said in the CNBC story.
"One of the things about cryptocurrency is it moves money at a faster pace than the traditional format," Smith told CNBC, adding that the quick pace of transactions makes it attractive to both American consumers and criminals. "What criminals want to do is sort of muddy the waters and make efforts to obfuscate their activities. What we want to do is to track that as quickly as we can, aggressively as we can, in a linear fashion."
A "digital asset," cryptocurrencies move through the digital universe through blockchains that form a secure, decentralized record of the data without relying on a third-party to verify the transaction, according to Investopedia.
The advantage to the blockchain format is that the "blocks" of information added to the database cannot be altered, deleted, or destroyed, while keeping all the transaction information intact.
The agency tracks transactions worldwide, looking for potential illegal activity it can then break down to find out what took place and who may be involved, according to the CNBC report.
"You send me something bad on an email, I know there's some criminal activity associated with that email address, I can deconstruct, find whatever tidbits of information that you used when you initially logged in or signed up for that email address," Smith said. "Because, you know, the criminals, they're humans, too. They want to avoid some of that market volatility associated with some of the major coins."
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