TULSA, OKLA (KTUL) — As digital currencies gain popularity, they have also become tools for human traffickers, according to financial crime prevention experts. While digital currencies offer financial freedom and innovation, they also present challenges for law enforcement, who are now working to track down those exploiting cryptocurrency for illicit activities.
Experts say blockchain analysis is a powerful tool in combating human trafficking. Blockchain, the technology underpinning cryptocurrencies like Bitcoin, is a decentralized digital ledger that records transactions across multiple computers. Each transaction is stored in a block, and once verified, it becomes part of a permanent chain that cannot be altered.
“The blockchain analytics tools that exist, the companies that are out there, such as chain analysis, elliptic, TRM, those are the big players in this game,” said Erin O’Loughlin, a financial crime expert. “You get a license to be able to get into their software capability, and that’s when you go hunting.”
These tools analyze publicly available blockchain data to flag irregular activity, such as rapid fund transfers between accounts, the use of known illicit wallets, or transactions that match trafficking-related patterns. However, traffickers have found ways to make detection harder.
“A mixer or a tumbler, those are the ways to obfuscate funds and to say, ‘Hey, I don’t want anyone knowing what I’m doing right now.’ And those are very controversial,” said O’Loughlin. “A lot of privacy advocates enthusiasts love it. Obviously, us in compliance, we do not like that because it just shows that you’re trying to launder money.”
These services pool cryptocurrency for multiple users, mix the funds, and redistribute them to new addresses, breaking the link between sender and receiver. To counter these challenges, regulatory measures like the travel rule require cryptocurrency exchanges to share transaction details for amounts over $1,000 when moving funds between institutions.
Information-sharing programs such as the 314(b) program allow financial institutions, law enforcement, and regulatory agencies to collaborate in tracking suspicious transactions.
Despite progress at the federal level, local law enforcement faces roadblocks in accessing financial data, as much of it requires federal clearance.
Kevin Metcalf, the director of human trafficking under Attorney General Drummond, emphasized that this is not just a distant problem.
“This is very, very, very important. Human trafficking is not like any other crime out here. It is happening in front of us. It’s happening right in the open,” said Metcalf. “It’s like labor trafficking. What does that look like? Looks like people going to work. When you’re driving by, you see people going to work. You don’t know what’s happening behind the scenes.”
As cryptocurrency continues to evolve, so do the methods used to combat human trafficking. Experts say providing local law enforcement with the right tools and resources will be critical moving forward.