Europol Slams Crypto Mining and Layer
Europol has raised alarm bells regarding crypto mining and layer-2 solutions, highlighting their potential to hinder law enforcement investigations. These technologies, while offering benefits like scalability and privacy, pose challenges in tracing illicit funds and recovering criminal wallets.
Crypto Mining: A Lucrative Avenue for Money Laundering
European law enforcement agency Europol has criticized crypto mining, highlighting its increasing appeal for criminals seeking to launder illicit funds. Mining operations can effectively obscure the origins of illegal earnings, sometimes even generating additional profits. Europol also noted suspicious activity within mining pools, particularly those exploited by ransomware operators.
Layer-2 Solutions and Zero-Knowledge Proofs Complicate Investigations
Europol's concerns extend beyond crypto mining to the broader cryptocurrency landscape. The agency cautioned that the growing use of zero-knowledge proofs and layer-2 blockchain applications could make it more difficult to trace funds. These technologies, while beneficial for scalability and privacy, present challenges for law enforcement investigations.
Shamir Backup Adds Complexity to Wallet Recovery
The report also acknowledged that recovering a criminal's wallet can be significantly complicated by the SLIP39 standard, known as Shamir Backup. This standard, used by hardware crypto wallets, allows for multiple recovery shares instead of a single mnemonic phrase. Recovering a wallet requires a specific number of these 20-word shares, adding an extra layer of complexity for law enforcement.
