Trozze, Arianna D; (2024) Cryptocurrency Fraud Enforcement: Innovations in Detection, Investigation, and Prosecution. Doctoral thesis (Ph.D), UCL (University College London).

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Abstract

Since the proposal of Bitcoin in 2008, cryptocurrencies have increasingly entered mainstream consciousness, and innovations involving them continue to rapidly advance. Proponents have noted cryptocurrencies’ potential benefits for financial inclusion, security, and transparency, among other advantages. As well as their many advantages, however, they have also facilitated various types of fraud at a large scale. In particular, the field of decentralised finance (DeFi)—an ecosystem of financial products based on cryptocurrency—has proven to be a hub of such crime and presents unique and difficult challenges to regulators and enforcement agencies. Governments around the world are struggling to deal with the issue of cryptocurrency crime and prosecutions thereof are lagging compared to the pace and scale at which these crimes are occurring. In addition to certain technical enforcement challenges cryptocurrencies pose, resource limitations are a key reason more cryptocurrency crimes have not undergone enforcement action. Automation, the use of novel tools, and focusing resources on more impactful elements of enforcement actions are key solutions to this problem. This thesis explores ways to improve resource use efficiency in cryptocurrency fraud prosecution, specifically, a) which aspects of the detection, investigation, and prosecution stages of enforcement can be automated, or otherwise make use of novel tools, to improve resource efficiency, and b) on which aspects of a case enforcement lawyers should focus to maximise the chances of success in enforcement and more efficiently allocate resources therefor. This thesis shows the promise of automating elements of enforcement using machine learning, blockchain explorers and visualisation tools, smart contract analysis, and large language models. It also presents considerations for prosecutors in making decisions about which cases and defendants to charge. Though further research on these tools and insights at a larger scale is necessary, the results in this thesis suggest they could facilitate the prosecution of cryptocurrency crimes and allow more crimes to be brought to justice.

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