Erin Fracolli, Global Head of Intelligence and Investigations at Binance, said working hand in hand with law enforcement is vital to protecting Binance users and crypto users in general from bad actors attempting to perpetrate fraud and scams. She and Erin West, a deputy district attorney in Santa Clara County, were featured on the Crossing the Chain podcast, where they spoke about collaboration between law enforcement and crypto companies.
"We work very closely with law enforcement; that’s the main purpose of our team, is really to collaborate with law enforcement, work together to come up with solutions to investigations problems, to really go above and beyond and work proactively to identify threats facing our users and also facing the larger crypto ecosystem," Fracolli said. "One of the things that we’ve learned over time is that something that affects our users is probably also affecting the larger space, and it’s really a benefit for everyone to try and tackle it head-on."
"I think another big aspect of our work that’s only growing is the training that we do, so whether it’s virtual, whether it’s in-person, we’ve actually built out a whole separate team to just handle training and capacity-building with law enforcement, focused specifically on cryptocurrency investigations," she said.
In the Aug. 24 episode, titled Digital Sleuths: The Collective Fight Against Crypto Crime, Fracolli and West discussed common scams, their work in helping victims of scams recover their money, educating law enforcement about combating cybercrime, and how they're looking to break up organized criminal networks moving forward.
West said that many people believe that when they're scammed via crypto, the money is "gone forever," but the transparency of blockchain actually enables law enforcement to more easily track transactions and potentially recover victims' funds. "That's one of the beautiful things about the blockchain," West said in the podcast. "We're able to trace funds in a way that we never would have been able to before and at a speed that we would never have been able to before. Especially in the 'pig butchering' cases that I'm handling these days, if we are able to move quickly, there is a possibility of being able to recover funds."
A pig butchering scam, also called a romance scam, refers to a scheme in which a fraudster develops a long-term relationship with a victim to build trust, typically through a social media platform or dating site. The scammer then convinces the victim to download an app or visit a website to make a crypto investment with the promise that the victim will make money, but the app or website is fraudulent, and the victim is eventually unable to withdraw the funds, according to TechTarget.
Fracolli said that in addition to partnering with law enforcement agencies, Binance is working to expand partnerships with other industry groups and companies to improve the industry's ability to combat crime. "We've built a really great relationship with groups like REACT, with different law enforcement agencies; Binance is a member of the NCFTA [National Cyber-Forensics and Training Alliance] here in the United States, which really has a heavy education focus. But one of the things that we've tried over the last couple of years to really build up is even greater collaboration and cooperation, not just with law enforcement, but across the industry. I think it can be hard for individual companies to know who to turn to to handle these things, but that's sort of the next big step. We want to make sure that we're working with other actors in the space to build awareness of these issues."
REACT is an "elite high-tech investigative force" in Santa Clara County, for which West is a prosecutor, according to the Binance blog that reported on the podcast.
Fracolli said during the podcast that in addition to helping victims recover their money, Binance is working to proactively identify and disrupt organized groups of scammers. "One of the areas that we'd really like to see more advancement on and that we're trying to work collaboratively with law enforcement and with the industry on is trying to tackle the networks and the individuals behind these scams. I think you can continue to try to put out the fire, or you can try to address it at its source...These are organized networks behind these [scams]. It's not just an accident that this is happening."
West said that from a law enforcement perspective, it's beneficial that Binance and other crypto companies are willing and eager to collaborate and assist with crime prevention. "We're finding that Binance and other exchanges are very open to being helpful, are very open to saying, 'We don't want dirty money on our platform either. We don't want bad actors moving money on our platform, and we will help.'"