Episode 114 of the Public Key podcast is here and as we all know, cryptocurrency has always been unchartered territory for law enforcement all around the world, but the crypto-related crimes are too big to deny and in this episode, we speak to Tony Moore (Deputy Sheriff, Los Angeles County Sheriff’s Department) who has been teaching the law enforcement community about Bitcoin since the early days.
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Public Key Episode 114: Policing the Cryptoverse and Advanced Techniques for Web3 Investigations
“We swore an oath to uphold the Constitution of the United States… But nowhere in there does it say, ‘Oh, except for the internet. We can’t go into the internet realm or the crypto realm.” – Tony Moore
Cryptocurrency has always been unchartered territory for law enforcement all around the world, but the crypto-related crimes are too big to deny and in this episode, Ian Andrews (CMO, Chainalysis) sits down with Tony Moore (Deputy Sheriff, Los Angeles County Sheriff’s Department) who has been teaching the law enforcement community about Bitcoin since the early days.
Tony shares his experiences investigating cases involving crypto, including social media parties, crypto ATM scams, pig butchering and SIM-swapping, while recognizing the challenges of staying ahead of criminals in the ever-evolving crypto landscape.
He reinforces the importance of reporting crimes, the challenges of cross-jurisdictional investigations, and the future of blockchain and AI.
Quote of the episode
“We swore an oath to uphold the Constitution of the United States as well as the Constitution of the state of California for me. But nowhere in there does it say, ‘Oh, except for the internet. We can’t go into the internet realm or the crypto realm.” – Tony Moore (Deputy Sheriff, Los Angeles County Sheriff’s Department)
Minute-by-minute episode breakdown
2 | Childhood dreams of Starsky & Hutch to joining Law Enforcement
4 | Tony Describes his path into teaching other LEAs about internet and then crypto crimes
6 | Cracking Down on social media-advertised Nitrous Oxide (NOS) parties
10 | Early encounters with crypto in Law Enforcement
15 | Balancing cryptocurrency ATM regulation and innovation
19 | Combating SIM-Swapping and Pig Butchering Scams while maintaining effective reporting
25 | Tackling crypto scams across jurisdictions and forging international policing partnerships
28 | Master cryptoverse policing in Tony’s new 5 day course
34 | Embracing continuous learning in AI and the evolving crypto landscape
Related resources
Check out more resources provided by Chainalysis that perfectly complement this episode of the Public Key.
- Website: The Los Angeles County Sheriff’s Department
- Website: Internet Crime Complaint Center (IC3): Nation’s central hub for reporting cyber crime, run by the FBI
- Whitepaper: A Fistful of Bitcoins Characterizing Payments Among Men with No Names (Sarah Meiklejohn and others)
- YouTube: Chainalysis YouTube page
- Twitter: Chainalysis Twitter: Building trust in blockchain
- Tik Tok: Building trust in #blockchains among people, businesses, and governments.
- Telegram: Chainalysis on Telegram
Speakers on today’s episode
- Ian Andrews * Host * (Chief Marketing Officer, Chainalysis)
- Tony Moore (Deputy Sheriff, Los Angeles County Sheriff’s Department)
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Transcript
Ian:
Hey, everyone. Welcome to another episode of Public Key. This is your host, Ian Andrews. Today, I’m joined by Tony Moore, who’s a deputy sheriff with the Los Angeles County Sheriff’s Department. Tony, welcome to the show.
Tony:
Thank you. And glad to be here. I know it’s been a long time coming. And I’m really excited to be here, so thanks for inviting me.
Ian:
We first talked about doing this, I think, last summer when we were together for the Chainalysis Trace DC conference, and so I’m thrilled to have you on because I think you were one of the OG investigators in the crypto space.
Tony:
Can you say OG in crypto? I don’t know. That’s kind of weird.
Ian:
I think you have to, right?
Tony:
It works. Yeah.
Ian:
We talk about the founders here being OG crypto people, but I think your history in the space is nearly as long as theirs. So I’m really looking forward to diving into the work you’ve had the opportunity to do over the last decade. But maybe start with how you got into policing in the first place. You’ve been doing this for, I think, 25 years at this point. What got you started in this career?
Tony:
Yeah, good question. To be honest with you, as a little kid, and I’m probably going to age myself here, but I was in love with Starsky & Hutch. I always wanted to be Hutch because he was the one that jumped and slid over the car. So I go, “I want to be that guy.” So yeah, so there’s been a long desire. My mom always cracks up because she reminds me of that. “You always want to be Hutch.” So it’s really just been the desire to just police, and be honest with you, when I was in college, I really wanted to go into the FBI. And Sheriff’s Department just picked me up first.
So it gave me the opportunity to stay local and stuff like that. But I always had that desire since I was a kid, to at least get to get into policing and just more investigations, which is why I wanted to go into the FBI. I knew my skill set with regards to computers and internet and understand those things. It’s what I grew up with as a kid. I just knew I can apply that in a law enforcement setting and apply what I know.
Ian:
Yeah, I mean, talk to me a little bit more about that, because I think one of the things I’ve observed since joining Chainalysis is I would say not everybody’s as eager to get into the technology. They love the job, but when you start talking to them about blockchain and transaction hashes and cryptocurrency wallets, it’s like, “Whoa, whoa, whoa. Don’t drag me into the technical details.” But you’ve obviously embraced it. How did that come about?
Tony:
That’s a good question because with regards to law enforcement, there’s always that anything that’s technically involved, there’s always kind of like that standoffish. One of the things, and I’m sure we’ll talk about it, especially when I instruct and I teach, what I always say is we swore an oath to uphold the Constitution of the United States as well as the Constitution of the state of California for me. But nowhere in there does it say, “Oh, except for the internet. We can’t go into the internet realm or the crypto realm.” So I always remind that, especially when I’m speaking to investigators or conducting a course, to remind them that we have an oath to go wherever crime leads us. It’s our job to solve those crimes wherever it takes us, and we owe the people that we serve the responsibility to get that expertise and to be able to go in that field.
We can’t tell a victim, “I’m sorry, I don’t understand crypto. Can’t help you. You need to call the feds or someone else to investigate this for you.” It’s our job and our responsibility. So yeah, there is that kind of that barrier. I, at least over my career, has been trying to break that down with regards to providing just your basic internet investigation courses to assist law enforcement. And I really think that’s where my mission ended up, and I could go into how that ended up, but I never wanted to be an instructor, but I just had a commander that just told me, Tony, you need to be doing this. You need to share your expertise. And so that’s what I’ve been doing for at least the past 15 years.
Ian:
That’s amazing. And I would assume, I mean, just based on that timeline, 15 years, that kind of predates cryptocurrency. So you were teaching people about internet crime well before people were using Bitcoin or anything else as part of the fraud, I would assume?
Tony:
Yeah, yeah. It started very early on. I could say at least with regards to investigations and everything, as early as social media, that was really where a lot of my investigative, these cases and everything started. Had a pretty big one in 2013 that kind of stemmed from social media. But even before that, it was obviously internet, just helping people understand email headers and how to investigate email threats. And then it turned to social media and then, okay, now how do we investigate this social media thing? How do we get data from these providers? And then right around that same time, I discovered cryptocurrency.
And so again, my model, and I’ll say it all the time, a lot of people that know me, is that I operate and I function from a standpoint that I refuse to let bad guy know more than me. And so if it’s like I started with saying, I go wherever the crime takes us, if it’s dark web, somewhere on the internet or cryptocurrency, I refuse to let bad guy know more than me, and I’m going to do whatever I can to find out how they’re doing that. And the more important thing is how, to understand why they’re doing it. Not necessarily their intent, but what is their purpose for doing that. And so I think as investigators, if we understand that we refuse to let bad guy more than us, you’re always in that learning stage. And so that’s why I try and teach.
Ian:
Yeah, that’s amazing. You mentioned a big case back in 2013. Can you tell us more about that?
Tony:
Yeah, sure. So social media at the time, the big thing was social media parties. Kids would advertise these parties on Facebook. I’m not pointing out… There’s many platforms, but at the time, I’m sorry, it was just Facebook and Twitter. So they would advertise these social media parties as they’re called. And around that time, there was nitrous oxide, which is, if you’re familiar with it, it’s a gas, there’s only two legitimate purposes. I don’t say legal, but legitimate purposes, at least in the state of California. Dentist’s office or on a closed racetrack. And so that’s how California sees it. And it became popular because of The Fast and the Furious movies and stuff like that where they inject it into their engine to make their car go faster.
So the big thing with Noz is what’s huffing it, inhaling that gas, you get a two-minute-high and then you inhale it again. They would fill up balloons and inhale from the balloon, and we would see these at these parties and they would advertise it on there, “We are going to sell Noz.”, which is the slang term for it, N-O-Z. Also all your other variety garden of narcotics. Whatever they can find in their parents’ medicine cabinet, they would throw in a baggie and sell that, and they would call it Skittles. So we were seeing this on our end, but we had no idea that the Food and Drug Administration was looking at it from a national level.
And they were trying to crack down on these Noz distributors, and there’s really only two in the country, there’s one in the East Coast, one on the West Coast, Air Liquide, Airgas, and then they distribute to the smaller ones, which are makeshift auto repair shops, as they would call it. Right? So you go to these places and there’s no auto repair being done. They’re just selling tanks of nitrous oxide. So they would sell to these kids, kids would sell at the parties, $5 to $10 per balloon. They would inhale it. Kids were dying from over inhaling. We had one incident where a canister actually blew up, killed the individual.So us at the Sheriff’s Department, we had a team called the Electronic Communications Triage Unit, and what we did is we just said, “You know what? We know they’re being advertised, so let’s just send a radio car out there and knock on their door and say, ‘Hey, mom and dad, look what’s happening. This party’s going to happen at your house this weekend.’, and just shut it down.” And so that’s what we did. But working with the Food and Drug Administration, we kind of combined our resources and we ultimately did a 20-location search warrant in at least two counties and pretty much eradicated the Noz selling out of LA County. We also got some legislation done with regards to selling it, made it’s only a misdemeanor, but it made it a crime to sell for the purpose of huffing. So we had a huge win there, about $20 million in recovery and several million, several tons of the nitrous oxide gas.
Ian:
What an amazing story. I remember when these parties were happening, this was a thing. I mean, it took me way back, but yeah, back when Facebook was cool and people still posted on Facebook. So I’m curious, from that, when was the first time you remember encountering crypto in a criminal setting?
Tony:
You want me to sound cliche? Because it literally is. I came across the white paper and I go, “Holy crap, what is this?” I couldn’t put it down. I mean, I know that sounds cliche, but that’s literally how I found it, in my endeavors with a social media investigator. I was like, “What is this Bitcoin stuff?” And it was really Bitcoin. And I just couldn’t put it down. I tried to learn everything I could. At that particular time, you couldn’t Google it. I mean, there just was you Google it and nothing would come up. Not even the white paper at the time. So it kind of intrigued me, and that’s where I went down the rabbit hole.
I just started wanting to learn, learn more, came across Andreas Antonopoulos, who some people call the Bitcoin Jesus. Just started listening to his YouTube channels whenever he put stuff out, was lucky enough to become one of his inaugural students in his course that he teaches online. It was the first online course. This was in late 2013, 2014. The first online course for digital currency. It was a 18-week course, pretty deep, deep dive. And I can happily say that I think that certificate is actually on the blockchain. I think that was the first time an accredited college put a certificate on the blockchain. So got excited about that. So that’s [inaudible 00:11:21].
Ian:
So at that point, you weren’t necessarily looking at it as a tool for criminals to, say, launder money. This was just personal interest. You were fascinated with the technology.
Tony:
Yeah, absolutely. I saw it, but me, immediately, I was starting to say, “How are criminals going to start to use this?” And then that’s when we started seeing Silk Road. And another thing I did, came across Sarah Meiklejohn’s white paper, Fistful of Dollars. Read that white paper, actually called her and spoke to her for about an hour on the phone because it intrigued me about how she traced, and I now know a lot of the blockchain analytical companies are based off that white paper. She did a phenomenal job, but just the fact she was willing to talk to [inaudible 00:12:09]. She talked to law enforcement right after the paper.
But no, it intrigued me and I was like, “This is really cool.” But she was extremely nice, but explained everything, and that’s when I knew, I said, “I’ve got to tell the masses.” And that’s when I set out to say, “You know what? I’m going to start teaching this. I’m going to start talking about it from a law enforcement perspective.” So really since 2014, I’ve been ringing a bell saying, “This is going to come. It’s going to happen. We’re going to see this.” And had the opportunity in late 2014, 2015 to present at International Association Chiefs of Police, the IACP, which is the largest law enforcement conference in the country. I was the first to present on Bitcoin at a conference, really, in the United States. And I’ve seen a lot of dazed looks in the audience, but I said, “This is coming. We need to start preparing for this.” And 2017, 2018, I think, started hitting. So yeah, that’s how I really got started in that film.
Ian:
That’s amazing. For people who didn’t recognize the name, I think the paper you’re referring to is the one that explained the co-spend heuristic, which was a mechanism based on how transactions work on the Bitcoin blockchain and similar chains that allowed you to connect the unspent dollars from a given transaction, connect various wallets together. Kind of a seminal paper that is foundational for any of the tracing tools that are out there today looking at the Bitcoin blockchain.
Tony:
Absolutely.
Ian:
We had my colleague, Joe Saar, who’s also formerly a police officer, on the podcast last year, and he shared a similar story of finding crypto very early on, and immediately he went, “Wow, this is really cool. And then I wonder what criminals are doing with this?” He went back to his precinct and started talking to some of his colleagues at the time, and the way he tells the story, kind of got laughed out of the building. And they said, “Joe, what are you doing? Why are you looking at this?” He was in a narcotics unit at the time. He’s like, “Our job is to go find people selling drugs. We’re not concerned about fake money on the internet.” What was the reception? You became an evangelist and were encouraging people to understand the technology and make sure that they were aware of it in their jobs. Did people react positively to that, or were they skeptical? What did they think of you?
Tony:
I kind of got the same response as well, and Joe, I can say Joe was, he was in one of my first policing cryptocurrency courses I [inaudible 00:14:58].
Ian:
That’s amazing. I didn’t know that.
Tony:
Yeah, yeah. I know. I started that course in late 2015… I think it was in my second or third course. But yeah, from the time in there, he was eager, he was wanting to learn everything. “Hey, Tony. What more can I read?” So yeah, so that totally describes Joe. And I remember that podcast. I was like, “Yeah, he is a go-getter.” And so I kind of got the same response as well. I took it to our Major Crimes Bureau who kind of investigates murder for hires, I mean, all of our major, major type cases. And they laughed me out of the building. I said, “Listen, there’s murder for hire. They’re using Bitcoin on the dark web. This is a dark web space. If you just set up and just did sting operations, you know how many…”
And they were like, “What is dark web? First off, what is the internet?” So I had to backtrack. And yeah, so I kind of got the same response, and so I really didn’t get my first good case until 2016. But yeah, it was interesting to kind of… One thing with me is I kind of built up that reputation of knowing that, hey, listen, if Tony’s talking about this, it’s probably going to be something, at least with regards to internet investigations and helping investigators. So I always knew it was something there. It was just a matter of when is it going to hit LA County, right? I’m not feds. I can’t go and find a case throughout, but I knew it was going to eventually hit LA and it did in a big way.
Ian:
Yeah. Amazing. So fast-forward to 2016, what was the first big case that involved crypto?
Tony:
Yeah, so I was… So one thing I noticed very early on in looking at the cases, I have a background in quite a few things. I kind of gave you my resume, but I did work on the intel side looking at counterterrorism and stuff like that with regards to more cyber aspect for our department. And so I also knew that there was a means of using cryptocurrency to fund terrorist organizations. I knew that was happening, people just weren’t seeing it. But what I also saw was now the influx of crypto ATM machines. I got to use our very first crypto ATM machine. It was in North Hollywood at a sandwich shop, and I saw the announcement coming on. This was the first one in LA. I said, Tony being Tony, “I got to use that.”
So first [inaudible 00:17:28] I drove over there and just put $20 in because I wanted to see… It was intriguing me. So I wanted to see how it worked, and again, how does this work? How does this function? How’s the money get sent? Who does it get sent to? What type of address do I get? Those types of things. And so what I started seeing was… You remember local Bitcoins, and so I was seeing not only just, hey, let’s meet up, but hey, I have this string of ATM machines, which at the time, this was right, this was clearly after FinCEN came out with their regulations. It was March of 2014, I believe. They came out with the regulations with regards to money service businesses. And so I knew, “Let me check if this guy’s register, not register.” And so I started seeing all these ATMs popping up, and that’s when I coordinated with our Fraud & Cyber Crimes Bureau, and I’m going to throw her name out there.
We have an outstanding detective over there, who I’ve worked closely with, and she does a phenomenal job of investigating. Probably one of the best investigators I’ve ever worked with. She said, “Yeah, Tony, give it to me. Let’s work it.” And so partnering with her, next thing you know, we partner with IRS and HSI, and basically take down 20 locations of his ATMs. And he ends up pleading guilty to not only laundering money for dark net vendors, but acknowledged laundering money for human trafficking and stuff like that. And these were all undercover buys with agents that he admitted to. So that was the very first big case. And I think that was actually the first and largest case in the US with regards to ATM takedowns.
Ian:
It’s such an amazing story. What is your view on ATMs? Because I’ve talked to some people who they say, “Look, there’s no legitimate purpose for these things. They’re either an endpoint for a scam, some victim is sent to them as a way to forward money that can’t be recovered.” I think we had Matt Hogan, who I think from Connecticut on the program to talk quite a bit about the work he’d been doing to protect elder victims of scams that had an ATM access. But you’re also an advocate for the technology. You’re wearing a blockchain is the future t-shirt right now, for those of you that are listening and can’t see. It’s a great t-shirt. So what do you think about them? I mean, is there a legitimate place for ATMs? We certainly have some customers of Chainalysis who use our technology to be legitimately registered with MSBs and… So I’m sort of torn on the topic. What do you think?
Tony:
Yeah. Well, I will say this, very early on, it was Wild Wild West, right?
Ian:
Yeah.
Tony:
What I have witnessed in seeing even during my investigation and even till now, I will say that the industry is doing its best to kind of regulate itself. I will say that there’s some in the space, I can’t remember his name off the top of my head right now, but DigitalMint, he’s doing a phenomenal job with creating an association. They want to regulate themselves. Trust me. I’m not going to lie. There’s money being made in that industry, especially with regards to how they price things. Can it be bordering on victimizing the person that comes to use it? Absolutely. Based on the amount of fees you charge. And I talk about what California has recently done, so it can be a problem.
I will say, just speaking for that industry, they’re doing their best to clean it up. However, do we see victims being directed there? Absolutely. One of my most recent cases just filed the case in 2020 was the same thing, the US Marshals scams, and they would say, “Hey, you got a warrant for your arrest, your credit card and identification was found in a traffic stop in El Paso, Texas, and there was narcotics all in the car. And we don’t think you’re part of it, but hey, all that money you have in your bank account, you need to give it over to the feds, go to this crypto ATM and put it all in there.” Right? I mean, US government’s not going to tell you to do that. And so people were falling for that. So [inaudible 00:21:41] multiple victims with regards to that case, but they were sending them to these crypto ATMs.
Same thing with elder scans, the tech support scams. So I kind of treat it like everything else. It can be used for nefarious purposes. Does it have a legitimate purpose? Think of someone that needs that onboarding and wants to go put their money in right away. Just like me in 2014. All I wanted to do is just see how it worked. I don’t want to have to go to Coinbase, sign up and do all those types of things. Can I just get money in and out quickly? That’s the problem with crypto right now, is the off ramping in a legal way, but in an off ramping that I can get it just like my normal bank account. I think that’s the point it’s trying to solve.
But just like anything else, there’s that Wild West mentality in there. I think it can be regulated. And like I said before, with regards to California, it just became active in January of this year that they are now capped on the fees that they can charge at Crypto ATMs. They must register with the state, they must list all their ATMs, and starting next year, you’ll have to get KYC information. So California’s taken a step to do what they can, and I applaud to regulate or our congressional leaders for doing that.
Ian:
That’s fantastic. I think those protections, you set up the conditions for what legitimate operations looks like, and then you have responsible innovation.
Tony:
And I like how you put that because that’s what it is, right? It’s responsible innovation. We don’t want to cap innovation. Like I said, I’m law enforcement. I’m going to go after bad guy. But like my t-shirt, I believe blockchain is the future, which lead me into my Web 3.0 concept and everything. But yeah, you’re right. We don’t want to cap innovation or stifle innovation.
Ian:
Yeah. Yeah. That’s great. Let’s talk about another topic. Erin West, another friend of the podcast, friend of yours, I think. She started in the area of sim-swapping, I think was her kind of entree into what she’s now made a personal passion of trying to stop pig butchering scams. Were you seeing sim-swapping cases as well? Was that a big part of your caseload early on?
Tony:
Yeah, absolutely. That was another caseload. And I can tell you with Erin West and the REACT team, we go way back. I mean, we started, really, with sim-swapping. That was maybe late 2015 or early 2016. Well, yeah, more 2016. But Dave Berry, Caleb Tuttle, and Samy Tarazi, I mean, that’s who I work closely with. And we have five high-tech task force within Southern or within California, state of California. They’re one of them. So I work with all of them, but we just really had that partnership and helped them a lot with their cases, a lot of their tracing and a lot of their early cases. So yeah, it was part of ours. We all kind of just met at the middle and said, “Hey, let’s figure this out together.” And that’s what we did. But yeah, we had this exact same problems early on.
Ian:
Yeah, it’s kind of amazing, the nexus of innovation, that all across the country, there’s a handful of people that have been leading in this space and really leaned into learning the technology and then figuring out how to help victims and ultimately stop some of these crimes. It’s pretty amazing. Now, I’ve heard a pretty big number that LA Sheriff’s Department has managed to seize, recover stolen funds related to pig butchering. I’ve heard about 3 million you all have managed to recover on behalf of victims. Is that number accurate?
Tony:
Yeah, yeah. That’s about right. And that’s really since 2016, 2017. So that’s not just pig butchering, but that that’s all crimes that we’ve had. Yeah.
Ian:
That’s amazing. So talk about maybe if you have a specific case or you want to talk in the general sense, if I’ve been unlucky enough to be a victim of a crime, I get in touch with the sheriff’s department. What happens next? How have you had that much success? Because I feel like that’s a bit of an outlier from the typical police organization.
Tony:
Yeah. So there’s a few things that I always say. And I know you’re going to have victims that definitely listen to your podcast and want to know more. So I always say reporting it, first and foremost, is the primary thing. A lot of them are reluctant to do that. I talk to victims almost every week. Someone’s either emailing me, hitting me up on social media and whatnot. I mean, it breaks my heart because me, just me and the person I am, I want to help everybody. I can’t trace every case. And not only that, for us, there’s jurisdictional issues too. I can’t just take every case like I would want to. So my main thing is to get them to report it. I always tell them to bring all the documentation with them, don’t go and say this is what happened. And then because that law enforcement officer, sometimes the desk officer or a patrol car that comes out isn’t going to understand what you’re explaining to them.
They may think it’s a civil matter, which again is an area that we’re addressing with regards to training. That it’s not a civil matter, it is theft by false pretense. So to get them to understand that. So if they bring the documentation, show that, that helps. Once they do that, I know a lot of people knock IC3, but take it from me, trust me, what I can tell you is we do look at it. I go into it every single day to see if there’s nexus to the cases as I’m working. So the IC3 is a big help, and the more you can put in there, and I know FBI’s working on restructuring it so you can properly put in cryptocurrency addresses and stuff like that, but it is a big help. Even though you think nothing’s being done on the back end, a lot of people are looking at that and it’s helping us make a connection to organized crimes, organized, well, crime organizations is the best way to put it. So it does help. So yeah.
Ian:
For people that aren’t familiar with IC3, can you just explain what that is real quick?
Tony:
Yeah, so it’s Internet Crime Complaint Center for the FBI. So think of it as like their 911. So everything’s online. So you can go there, report your incident, there’s drop-downs for whatever category you think it is. There’s investment fraud, whatever. And you can submit… I don’t believe you can submit documents just yet. That’s something they do want to do eventually, but you can put all that information in. Right now, just put it in the banking information with regards to cryptocurrency addresses. The more you put in there, the quicker we can look at that and at least start to investigate your portion of the IC3 plus. And we’re searching. We’re always searching for addresses that are linked to other reported crimes, and that helps us. But that’s what it is, ic3.gov., I believe.
Ian:
We’ll link to it in the notes. We’ll confirm it and link to it. But the concept is you get victim reporting that’s aggregated into this federal database. And then not only federal agencies like the FBI or DEA, but all of the state and local law enforcement agencies also have access to this. So that victim reporting, super critical and making sure the information’s going to the right people who even if they’re not able to immediately solve your particular case, that information’s still really valuable in future investigations because it can be the connective tissue or the lead that ties maybe your case to other cases, ultimately.
Tony:
Absolutely. Yeah.
Ian:
So that’s a great starting point. Always make sure you’re reporting. What else do you see as being critical?
Tony:
Yeah, really, the main one really hit it home again is early reporting. Because the earlier we can get on that trace, the quicker we can at least see where the funds go and at least either put a freeze or take whatever measures we need to take with regards to getting the recovery. One thing I like to say though, and talk about it too, is one thing I really try to stress to law enforcement is least don’t forget that there is an investigation that has to be done. And again, we opened with that’s being afraid to go down that hole of at least doing the investigation with regards to how did the crime occur. They may be quick to just trace and they forget that there’s a cyber aspect to it. Some agencies and federal agencies may see it as a different type of crime, like a white collar crime, but it does have a cyber nexus. And so don’t forget that side of it. But yeah, you got to investigate the whole thing.
Ian:
Yeah, no, I think you’ve also done some work on human trafficking.
Tony:
Mm-hmm.
Ian:
And one of the things that we’ve talked about on this show quite a bit is that often in these pig butchering scams, the scammers, it’s organized crime. They’ve really industrialized the scam activity. Oftentimes, they’re actually kidnapping or coercing the people that are working in these call centers who are on the scamming end of the operation. We actually just published some research recently on the Chainalysis blog where we were able to connect on chain ransom payments that had been paid to free some people that had been trafficked into one of these organizations to stolen funds that had come from a victim. They ended up terminating in the same wallet address, which was an interesting… It was unexpected, I guess, I would say. But I’m curious, have you encountered any of that human trafficking into any of these scam operations that you’ve investigated?
Tony:
So there’s two parts to that. So for us, at least, we know a lot of the human trafficking is coming from other countries. So a lot are coming from China, Laos, Thailand and being brought over or being, I shouldn’t say like they’re kind of coaxed into coming over to work and when they find out, when they get there, it’s not actually the work they thought it was going to be. But on our end, at least on the US side, there’s been a couple, especially in the case I’m working now, there’s been a couple situations where we thought that a US individual did go over there to be part of that. We later learned that no, it’s more voluntary, but we did think we had a US victim. So we definitely investigate that real quickly to find out that no, they went on their own accord.
So the point I’m getting at is that on this side, we really don’t see that human trafficking element of the overall scheme of pig butchering. It is a big problem, but for us at least, a lot of the ones that are being trafficked are coming from foreign countries. Doesn’t mean that we ignored or we forget about it. A lot of what I know about my case is that we do know some individuals that did come from those other countries, and we are aware of that.
Ian:
Wow. Talk a little bit more about the challenges of dealing cross-jurisdictionally. I mean, you mentioned you’re in LA County and that’s really… You have to have an LA County nexus for something that you work on directly, but it seems like crypto is so global in nature. It doesn’t respect the county or the state or even the country boundary. What does that mean in terms of how you actually operate the investigation? How do you tackle things that go outside your jurisdiction?
Tony:
Yeah, so what I can say for at least for the Sheriff’s department, our model is we take every report. So we will take it, do the initial, and then we call it a courtesy report. We will interview the victim, whatever, and then we will forward that off to that agency that is responsible for, that polices that area that the victim’s in. So we do do that. That’s one thing our agency will definitely do. When it comes to these type of cryptocurrency scams, I a lot of times would do that, especially if it’s a victim that calls me and is like, “Hey, I…” Either I just lost his money like a month ago. And this happened a couple of times where I’ve been called. I’m like, “Okay, it’s still kind of early.” I will trace it out and then I will tell them while I’m tracing, “Go to the police station, report it and tell them to call me.”
And so I will have the police officer call me and I’ll say, “Listen, make sure your detective gets this assistance and this, call me if they need any assistance.” I definitely do that. And so that’s one way to get around it. For us, we have this model in the Sheriff’s Department. So on our badge, we have a bear, the California bear, and our joke is the bear goes everywhere. So if we have a suspect in Dubai, we’ll go get them, right? So that’s what’s great about our agency. But with that, I mean, our sense is we’re willing to help whoever, even if it’s outside our county to the extent that we can. So I would definitely do that.
Now, I have partners in my office, at least two more detectives that I’ve spun up that are getting good at tracing. And so they’ll do the same thing. We definitely help our LA County partners trace it up, send the trace to them and say, “Here, write paper to this place, this place, this place.” So we’re trying to combat the jurisdictional issues like that. If it’s out of state, I’ll do the same thing. I’ll tell them, “Hey, just have them contact me.” So that’s how we’re dealing with the jurisdictional issues. I think any agency can do that, really. Again, it’s just a matter of time, resources and stuff like that.
Ian:
Yeah. Well, and you’ve also forged some partnerships. I think you mentioned earlier with the IRS CI team, the FBI, the DEA. So it sounds like you’ve also got some federal partners that you’re able to bring in when you need their resources as well.
Tony:
Yeah, I can say that our federal partners have been outstanding, just outstanding when it comes to… I think we get as much from them as they get from us, especially being in LA County, the largest sheriff’s department in the world, really. So I think that partnership is great. You got to open those channels. I know most agencies have what they call a task force officer. For those smaller agencies, that can be a benefit to your agency, especially if you’re one investigator or maybe one of three. Getting on that task force, we give you additional training, federal resources, and then it gives you that opportunity to take cases federally. So if you’re a smaller agency, that can definitely be a benefit to your agency. But our federal partners are phenomenal. Yeah, they’re excellent.
Ian:
Amazing. Tony, I want to know what it’s like to be a student in one of your classes. I feel like I’m learning a ton just chatting with you here. It’s got to be an amazing experience. But what is Professor Moore rather than Detective Moore… How do you approach sharing all the knowledge you’ve collected?
Tony:
Well, one thing I always tell, this is a day one, and my courses are usually five-day courses. I may, my new course, happy to talk about Policing the Cryptoverse that I just launched in October of last year. Yeah, so I always start the day with, “Hey, listen, this is going to be like drinking from a fire hose. You’re going to be overwhelmed. But I guarantee you, stay with me, by day five, all this will make sense.”
So I break my course down, day one, day two, day three, the building blocks. So as they go through what we’re discussing on day one, there’s accomplishments, there’s success, especially in the exercise and stuff like that. So they’re building on what they’re learning. So it is a lot. It is a lot. It can be overwhelming. If you just read the outline or the syllabus, you can be overwhelmed. But that’s one thing I do do, is I break it down easily in day bites so that you don’t have a win… Adult learning method, you don’t have a win, you’re going to get frustrated. Plus, if you’re not doing hands-on… For adults, we have to be tactile. We got to be doing things. So I make sure there’s a lot of that in there, but I break down the content in that way to make it easier to understand. Yeah, absolutely.
Ian:
And so the title of this newest course, Policing the Cryptoverse: Intro to Web 3.0 Investigative Techniques, what am I going to learn? So if I come as a student, I’ve got five days blocked off to spend with you, which probably would be an awesome week, what am I going to come out of that class having understood?
Tony:
Yeah, absolutely. And you’re always welcome, one of my class. Love to have you. So if I could take a step back and just… So in 2015, 2016, I launched my Policing the Dark Web & Cryptocurrency. This was a building block to that. I always knew that we were going to get to the Web 3.0 portion of cryptocurrency, especially when Ethereum came out and smart contracts. But to start with that first course, I taught the basics of Bitcoin. I think it’s important that as a student, you learn why Bitcoin is doing what it’s doing. Especially same thing with the dark web. A lot of courses will say, “Hey, what I like to call show and tell, this is what it does. Here, see, this is what it does.” No, in my course, you’re going to learn why it does what it does so that you can investigate that. And if you don’t know why or how dark web works or how cryptocurrency works, it’s going to make it harder for you to investigate that.
So I take it from building blocks and learning exactly what Bitcoin is, what is a transaction, what is an address, how is an address created? That’s important because you need to be able to go into court and say, “I know this address is a public key, private key pair. This is how it’s generated, this is how it’s created. And this is how I know only this person can move money from that address because they have the private key, but you need to understand why that can happen.” So I start from there and build the building blocks, day one, like I said, drinking through a fire hose, but by day five, all of this starts to make sense and everything comes together.
So I taught that course since 2016 all the way up until 2023. Had probably about 500 students go through that course in that time. And I always knew that Web 3.0… So in 2021, I started seeing the whole Web 1.0., you can consider it your basic internet, amazon.com or just really, the very first iterations of the internet. Then Web 2.0, we consider social media, you are the content. Now, Web 3.0 is you’re in control of your own content. You’re monetary.
And so that transitioning started occurring in really, around 2021. And I knew that as investigators, we’re going to have to now not only understand how transactions move on Bitcoin, but we’re have to look at other blockchains. And so since 2021, I’ve been working on this course almost two years to kind of put together and make sure it encompasses everything. But some of the things, just to give you an idea of what we go over, is the evolution of cryptocurrency, understanding smart contracts, what cross-chains are, bridges, rollups, contract transactional analysis, because you got to look at the call data in a smart contract call to be able to properly follow the money to decentralize storage systems.
And then right down to just creating your own systems to intelligently monitor transactions that might be occurring, especially theft. I know Chainalysis has Transpose. That’s a great platform to use. There’s some other ones out there as well that can help you really monitor and pull that data from the blockchain. So that’s kind of what I teach in my course to kind of give you that background of it, but then how to investigate it, but then also to how to monitor it.
Ian:
The complexity has to have increased so much since you started doing this in 2016. I mean, I think Ethereum was barely launched at that point in time. Certainly not at the level of popularity that it is today, but in the intervening eight years, we’ve added layer two networks like Polygon or Arbitrum. Obviously, you’ve touched on bridges a few times, like this idea of being able to wrap a token, wrap my Bitcoin, move that onto the Ethereum network or a different network. You’ve got stablecoins, you’ve got DEXs where you can kind of instantaneously turn one asset into another one. You’ve got staking. It’s such a more complex ecosystem. I’m amazed you can do it in five days.
Tony:
Well, what I mentioned, remember I said right now it’s five. It is pushing towards two weeks. But yeah, right now, it’s five and it’s a tough pull but yeah.
Ian:
Now, where are people coming from when they sign up for your class? Is this anybody that is interested in cryptocurrency or is there some fundamentals where maybe you’re pulling people that have preexisting cyber expertise, they’ve already been working on internet crimes, things like that?
Tony:
Yeah, that’s a good question. What I didn’t mention is that previously, is that this is an advanced course. It really is. And I put in the prerequisites, you cannot come into this without having an understanding of blockchain technology. We do review it in day one, just to give you an overview, but you have to have an understanding. So this is an advanced course. I don’t try and hide that from anybody. It is a deep dive. You’re going to have to understand basics, and so that’s why I was recommending my first course and then this one as well. But yeah, it’s a stepping stone, and so it is not basic by any stretch of imagination. Joe Saar was actually in my first course, and you’ll see we’re deploying smart contracts. I even have a situation there where you’re going to have to decompile that smart contract and find out what’s malicious in that smart contract. So it’s a deep dive. You’re going to learn something out of it. So I think you got to have some understanding and some knowledge of blockchain just to get through it.
Ian:
Well, that’s tremendous. Now, can anyone sign up or are you pulling people just from California? If I’m police in Florida and I want to come out and spend a week with you, is that possible?
Tony:
Yeah, absolutely. So the course was first being offered through Department of Justice. Again, I always try and make sure that law enforcement, free of charge, because again, it’s important that they’re getting these expertise. And DOJ does a very good job of providing those courses for law enforcement. There’s a few other organizations out there too that would do that. But yeah, it is open to what I say, investigators, crime analysts, those that are responsible for data analytics, maybe compliance. So I will accept, you don’t have to be 100% law enforcement, just anybody that’s in the space of regulatory or investigative expertise is what I offer it to.
Ian:
I’m working here to get you a huge backlog of people who want to come sign up for the class, is what I’m doing. So I’m advertising to our listeners and giving them the path to come track you down and make sure they can get into the roster for the next edition.
Tony:
Yeah, absolutely.
Ian:
Tony, this has been a fantastic conversation. Thank you so much for the work that you’re doing out there. My customary closing question, what has you excited as you look towards the future, either work that you’re doing professionally or more broadly across the cryptocurrency ecosystem? What are you optimistic about?
Tony:
Well, I’m optimistic about retiring. I probably got about two years left.
Ian:
Okay.
Tony:
But with that said, is this ever going to go away? No. Again, like I said, I have a passion for what I do. I owe that to my former commander like I opened with who he basically instilled in me that says, “Hey, Tony, you got to give back.” A lot of people out there would put on courses, they charge for it, take money, whatever. Me, I kind of follow that motto of when you give back, you always get more in return. When I have students come to my class, and I always learn a lot from people that are in the seats, so I learn just as much as hopefully they’re learning from me. So I always come at it with that motto. For me, looking out to the future, what I see and what I’m excited about is… And again, Ian, you’re hearing it on your show first time, again, like I said, crypto back in 2013, AI, it’s coming. Okay?
So I’ve already started doing that with regards to artificial intelligence, smart contracts, cryptocurrency, and blockchain. There’s going to be a crossover. And I can tell you this, I’ve already looked at a case where an individual use GPT, ChatGPT to create a smart contract that ultimately ended up being kind of nefarious. And ChatGPT created that smart contracts. So we’re there, and there’s going to be that crossover. And I honestly think moving forward, with regards to how it’s going to function, there’s going to be some blockchain technology within AI that it’s going to come about. So you got to be schooled up on your knowledge of that. And I’ll leave you with this too. Never stop being a student. Whether you’re listening to this podcast, other podcasts, never stop learning, especially as just speaking to investigators right now. Never stop learning. Never stop wanting to know more.
If you’re in narcotics, gangs, whatever, doesn’t mean that you can’t learn something about cyber or crypto. And we’re seeing that now. A lot of our gang units are saying, “Hey, what’s this crypto stuff?” I was talking about it a long time ago that it was going to happen. So just never stop being a student. And so I think your podcast is doing a great job of getting all this type of content out to not just investigators, but everybody in the space. And I think your podcast does an outstanding job for that. So that’s why I was super excited about being here. So thanks for having me.
Ian:
Oh, man. Thank you. Thank you for all the work that you do. I love the advice. Never stop learning and watch out for the AI because it’s coming for us.
Tony:
It’s coming for us. It is. Well, I would say Skynet is here, man. Skynet is here.
Ian:
Yeah, that’s right. That’s right. Well, thank you, Tony.
Tony:
Thank you.