Criminal actors can use mining operations to obscure illicit earnings, in some cases even generating further profits for criminals, Europol says. The agency also notes that suspicious activity has been detected in mining pools, particularly those exploited by ransomware operators. Europol points out that pool mining schemes have been utilized by scammers to run Ponzi schemes, citing the example of the BitClub Network which promised earnings through pool mining but did not actually exist, resulting in defrauded investors losing hundreds of millions of euros. Europol emphasizes that crypto mining alone is not the only threat in the crypto industry.
The agency also raises concerns about the broader cryptocurrency landscape, highlighting the increasing use of zero-knowledge proofs and layer-2 applications on the blockchain. It warns that the use of these technologies could complicate the tracing of funds, potentially causing additional problems for law enforcement investigations. Europol also states that the standard used by hardware crypto wallets allows for the creation of multiple recovery shares instead of a single mnemonic phrase. Each recovery share consists of 20 words, and a user-defined number of these shares are required to restore a wallet.
According to Europol, this adds another layer of complexity for law enforcement.