Wolf&Grayson EditorialCryptocurrency scams have become a massive problem, with criminals stealing billions from victims each year. But catching these thieves isn’t straightforward. The digital evidence exists on blockchain networks, yet most law enforcement agencies struggle to turn this complex data into criminal charges. Ralph Dahm, a certified financial crimes investigator, specializes in bridging this gap between blockchain forensics and prosecutable cases.
How to Translate Blockchain Evidence into Criminal Charges
When Bitcoin was worth just $17 back in 2013, few people could have predicted how it would become a tool for massive criminal enterprises. Dahm got involved in cryptocurrency investigations during those early days, building on his background as a certified financial crimes investigator. “Bitcoin was just beginning back in 2013, around $17 a coin, and now it’s $112,000 today,” he recalls. “That’s tremendous appreciation, which means tremendous opportunity for crime.” The numbers tell a stark story. “The FBI logged over 880,000 reports of these kinds of crimes last year,” he explains. Some victims lose relatively small amounts, while others have had their entire life savings stolen. “I’ve seen cases worth $12 million. There have been cases with over $200 million stolen,” he notes.
Understanding Law Enforcement Challenges
Police departments face real challenges when handling cryptocurrency crimes. Budget constraints, lack of training, and other priorities often push these cases to the back burner. “If I walk into a police department, they don’t have the technology, the tracing tools to investigate these crimes,” Dahm points out. “Not exactly the highest priority compared to homicide in town or residential burglary.”
There’s also a jurisdictional problem that makes prosecution difficult. Many cryptocurrency scammers operate from overseas, particularly from organized crime networks in places like Cambodia and Myanmar. “If I’m a police department in Chicago, for example, and here’s a case, I found the money and the criminal is in Cambodia. What do you want us to do about it?” Dahm asks. “We can’t do anything about that.” Even when evidence is available, district attorneys may hesitate to pursue cases they don’t fully understand. “The state’s attorney or district attorney may not even pursue it. They won’t issue a subpoena because they don’t think it will produce results,” he explains.
Simplifying Blockchain Evidence for Courts
One of Dahm’s main challenges involves making highly technical blockchain evidence understandable for judges and juries. “Your average judge is not going to understand the technology behind bitcoin and blockchain transactions. The jury certainly is not going to understand it,” he says. “So you have to be willing to present evidence that’s highly technical and voluminous, yet keep it simple.” His approach focuses on creating clear pathways. “The victim’s wallet was here. The money moved there. It went to the scammer or criminal element here. It’s located here now. We need to stop the money,” he explains. “That’s why we need a subpoena.” The permanent nature of blockchain records actually helps investigators, even though many people think Bitcoin transactions are completely anonymous. “People think bitcoin is totally anonymous. And while it is to a degree, it’s also pseudo anonymous in that it leaves a permanent trail,” Dahm notes. “Blockchain keeps the receipts. We can follow the money forever. Gone does not mean lost.”
Highlighting Victim Impact and Losses
Behind these technical discussions are real people losing everything they have. He has known of victims who have committed suicide after losing millions to scammers. “A gentleman in Pennsylvania lost $2.8 million, then committed suicide,” he shares. “People are losing life savings.” The elderly are particularly targeted. “Senior citizens are being targeted. They’re losing billions of dollars a year,” Dahm explains. Scammers use various tactics, from romance scams that can last months to fake government calls demanding immediate action. “The grandparents scam: ‘Hey, Grandma, I’m going to jail. You need to take $10,000 in cash to the local drugstore or I will stay in jail,'” he describes as one common approach. Recovery rates remain devastatingly low. “Of all the billions that are stolen every year, recovery is maybe 2%,” he states. “Most of that because of jurisdictional issues.”
New technology is making it easier to trace complex cryptocurrency movements. “We’re seeing new tools now with artificial intelligence. We can do cluster tracing,” Dahm explains. This helps investigators follow money as criminals divide it across multiple wallets to hide their tracks. The goal remains simple despite the complex technology involved. “We translate blockchain evidence into a format that law enforcement can use to prosecute and seize stolen assets and prosecute criminals when possible,” he says. “That’s our job as blockchain investigators. It’s really that simple.”
Connect with Ralph Dahm on LinkedIn to explore blockchain investigations and financial crime solutions.
