Ignacio Santoyo—an alleged Mexican human trafficker said to have blackmailed and sexually exploited 2,000 women—was captured thanks to the tracking of the Bitcoin (BTC) that he used to launder his ill-gotten gains.
According to a Dec. 8 Reuters report, Santoyo was arrested by authorities in April 2019 in a Caribbean resort after the authorities followed the data trail left behind by the Bitcoin that he is suspected of using to launder his money.
Law enforcement agencies have been having growing success in tracking Bitcoin’s blockchain trail to criminals, including a major child pornography ring and al-Queda terrorists.
Mexican law enforcement representatives told Reuters that criminals managing the trade of sex, drugs, guns and people are increasingly turning to cryptocurrency.
Santiago Nieto, the head of the Mexican finance ministry’s financial intelligence unit, said:
“There’s a transition to committing crimes in cyberspace, like acquiring cryptocurrencies to launder money … and the pandemic is accelerating it.”
So far, the sums involved in the few cases uncovered usually involve thousands or tens of thousands of dollars worth of crypto assets. As Reuters points out, those funds are but “a drop in the ocean” compared to the estimated $25 billion laundered by Mexican criminals every year. Still, over the last three years, larger sums started being discovered, with one Colombian drug cartel being found to have laundered millions with crypto.
This is not the first source that suggests an increase in crypto crime. As Modern Consensus reported in late January, blockchain intelligence firm Chainalysis reported that after a small dip in criminal activity in 2018, total dark market activity, which included mainly drug sales but also other things like stolen credit cards for cryptocurrencies, soared 70% in 2019 to more than $790 million.
Nieto explained that the criminals usually split the crime proceeds into sums under $7,500 and then deposit the fractions into separate bank accounts to avoid raising red flags with a hefty deposit. Those bank accounts are then used to buy fractions of a bitcoin, allowing them to pay associates elsewhere in the world.
Santoyo’s apprehension was made possible thanks to a new local law that requires all registered crypto exchanges to report transfers above 56,000 pesos (just over $2,800).
Authorities say Santoyo bought enough bitcoin to trigger an alert under the new law while also making his transactions via a platform where he registered with personal details including his phone number and address. He and his sister acquired 441,000 pesos ($22,260) worth of Bitcoin between May and November 2018 on crypto exchange Bitso. This allowed the authorities to track him down after months of pursuit.
Still, Rolando Rosas, the head of the Mexican Attorney General’s Cyber Investigations Unit (UICOT) admitted that even with such laws it remains hard to track criminals’ use of bitcoin.