How a Mount Prospect detective leaned into his banker past to become a crypto crimefighter
Cryptocurrency has many names: bitcoin, ethereum, tether, chainlink, litecoin and shiba inu, to list just a handful.
Whatever the name, it all means the same thing to a growing cadre of law enforcement officers: another way to rip off potential scam victims.
One of those officers is John Napoleon, a Mount Prospect police detective who is developing a reputation as a crypto crimefighter.
Napoleon carved out his niche as an outgrowth of a prior career.
"Before I came to Mount Prospect, I used to work in a bank," he said. "And that's where I started to learn about cryptocurrency."
Cryptocurrency is digital or virtual currency that uses cryptography to secure transactions. Unlike government-backed paper currency, cryptocurrencies don't have a central issuing or regulating authority. Instead, they use a decentralized system to record transactions and issue new units.
Cryptocrime numbers are soaring, with scammers raking in $14 billion in digital currencies in 2021, nearly twice the $7.8 billion from the previous year, according to figures released by the blockchain analysis firm Chainalysis.
"Crimes associated with cryptocurrency have increased, and we suspect they will continue to rise because there are more people utilizing cryptocurrency and criminals are finding different ways to exploit consumers, their digital devices and the exchangers," FBI Assistant Special Agent in Charge Jay Patel said.
The rise in crime reflects the surge in cryptocurrency usage and value. In 2010, a year after its creation, bitcoin went from a value of a fraction of a cent to around 9 cents. This year, one bitcoin was valued as high as $40,252.
Napoleon's path to crypto crimefighter goes back to his days as a banker. when he earned his Certified Anti-Money Laundering Specialist certification and realized the financial industry's importance when it comes to tracking criminal activities.
Cryptocurrency, he said, affects people financially more than most realize.
"It's a way that various criminal organizations can facilitate their crimes and obfuscate where (their) money came from," he said.
A wide variety of criminals are using cryptocurrencies and crypto markets to further their activities, people in law enforcement say.
"It can be your general street criminal who commits a burglary. They can use a straw person to deposit cash into an unrelated person's account, and then they can withdraw at any ATM," Napoleon said.
A scammer might persuade a victim to buy cryptocurrency and then transfer it. That was the case recently in Des Plaines, where a resident was tricked into giving $750 in cryptocurrency to a scammer posing as a Department of Health and Human Services employee.
And earlier this year, the Lake County sheriff's office warned of a cryptocurrency romance ripoff, in which scammers would approach victims on social media, lure them into believing they are in a relationship, and persuade them to purchase legitimate cryptocurrency and then trade the currency to a different and often fraudulent exchange.
Over the past year, Napoleon said he has worked on five to 10 cases involving cryptocurrency, including a still active investigation involving $50,000 in assets.
Napoleon said he believes the use of cryptocurrency will continue to grow and steps are being taken toward its acceptance by governments.
Anchorage Digital Bank last year became the first federally chartered cryptocurrency bank in the U.S., and the Federal Reserve is examining the creation of a digital U.S. dollar.
That growth has the FBI working with local and state law enforcement agencies to build partnerships and share resources, training, forensic assistance and intelligence.
"Pursuing the entire criminal ecosystem enables the FBI and partner agencies to get ahead of the threat and stop criminals before they can victimize someone," Patel said.
Napoleon, who also makes presentations about cryptocrime in the community, said there are online tools people can access to avoid scams, including the Federal Trade Commission's website. People also are free to call the Mount Prospect Police Department, he said.
Despite the rise in crime linked to it, Napoleon said cryptocurrency is not inherently bad.
"But like with any financial system, any currency that you're using, it can be stolen," he said.