From Faster Cars in the 1920's to Encrypted Messaging in 2020 - The Crooks Stay One Step Ahead
Bitcoin and Encryption: A Race Between Criminals and the F.B.I.

Criminals have perennially exploited technology to stay a step ahead of law enforcement.

The F.B.I. struck back in the past week with a pair of victories: a seizure of most of the $4 million ransom in Bitcoin that Russian hackers extorted from an American pipeline operator, and the announcement of a yearslong sting where thousands of suspects were duped into using a messaging app secretly controlled by the authorities. More than 800 people were arrested in more than a dozen countries.

The breakthroughs came in part because law enforcement officials learned how to leverage two rapidly advancing technologies — encryption and cryptocurrencies — that had previously been a boon for criminals.

Yet the events did little to fundamentally alter the challenges for the authorities in an increasingly digital world, according to former law enforcement officials, prosecutors, historians and technology experts. The global sting is highly unlikely to keep criminals from using encryption and could encourage them to go even further underground, former and experts officials said. And while the F.B.I. has shown that it can recover stolen cryptocurrencies, doing so requires resources beyond the reach of most law enforcement agencies.

Ultimately, the cases were the latest iteration in the decades-long back and forth between lawbreakers and the F.B.I. in which both sides have seized on technological advances, whether it is criminals hiding behind encryption or investigators exploiting facial recognition, drones and other mechanisms.

“Police today are facing a situation of an explosion of data,” said Yossi Carmil, the chief executive of Cellebrite, an Israeli company that has sold data extraction tools to more than 5,000 law enforcement agencies, including hundreds of small police departments across the United States. “The solutions are there. There is no real challenge to accessing the data.”

Yet intercepting communications has remained a troublesome problem for the police. Two of the world’s most popular messaging services, Apple’s iMessage and Facebook’s WhatsApp, use so-called end-to-end encryption, meaning only the sender and receiver can see the messages. Not even the companies have access to their contents, allowing Apple and Facebook to argue that they cannot turn them over to law enforcement.

The authorities’ frustration has prompted them to target smaller encrypted apps favored by criminals. In July, the police in Europe said they hacked into one called EncroChat, leading to hundreds of arrests.

That pushed many criminals onto a new service, Anom. They had to buy specialized phones with few working features, aside from an app disguised as a calculator. With a code, it would turn into a messaging app, Anom, that claimed to be encrypted.

In fact, the F.B.I. created Anom. The bureau and the Australian police started the operation by persuading an informant to distribute the devices to criminal networks, after which they caught on by word of mouth. After three years, Anom had more than 12,000 users.

Criminals felt so comfortable on the service that they stopped using coded language, sending photos of smuggled cocaine shipments and openly planning murders, the police said. And when the authorities obtained court approval to surveil any Anom users, they could easily monitor their messages.

But when the police carried out hundreds of arrests and detailed the scheme to news cameras this past week, the ruse was over. The authorities were once again in the dark.

An Attractive Tool for Criminals

For years, Bitcoin and other digital currencies were the coin of choice for international criminal syndicates. The qualities that make cryptocurrencies attractive — decentralization and anonymity — make them great for theft, ransom and selling drugs.

Getting paid used to be the hardest part of holding something or someone hostage, said Ross Anderson, a cybersecurity researcher at the University of Cambridge who studies how the police and criminals use technology.

“It’s easy enough to grab the heiress or her dog, but the problem then is that when you threatened to cut her ear off, and asked Mr. Rockefeller to send you a large suitcase full of dollar bills, the police tagged along or they put a radio transmitter in it,” he said. “With Bitcoin, you can get actually quite substantial extortion amounts, like seven- and eight-figure sums, which can be delivered instantaneously to Russia or North Korea or wherever.”

That new model fueled a surge in ransomware attacks, where hackers take control of a person’s or company’s computers and demand a ransom. Recorded Future, a security company that tracks such attacks, estimated that last year, one attack occurred every eight minutes.

Many companies pay the ransoms because it is easier and faster than alternative solutions, despite also giving hackers more incentive.

Yet the Colonial Pipeline case showed that the police could also use cryptocurrencies to their advantage. Each transaction is recorded in a public ledger, making the money traceable even as it travels from one anonymous account to the next. That means that law enforcement with enough money and know-how can typically hack into an account and snatch back the money.

But hacking can be expensive and time-consuming, leaving few agencies outside the F.B.I. with the ability to do it.

Cellebrite, the Israeli company, said its sales increased 38 percent in the first quarter to $53 million as more police departments bought its tools to hack into suspects’ phones.

At least 2,000 law enforcement agencies in all 50 states have such tools, including 49 of the 50 largest U.S. police departments, according to Upturn, a Washington nonprofit that investigates how the police use technology.

Still, some of the nation’s top law enforcement officials have asked for more from tech companies and lawmakers. “There are many, many serious cases where we can’t access the device in the time period where it is most important for us,” Mr. Vance told lawmakers. nytimes.com