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Kerala Police to deploy Chainalysis to track Keralites using cryptos for drug deals, terror funding

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Following reports on rise in Keralites shifting to cryptocurrencies for operating scams, drug deals, and terror funding, Kerala Police are going a step ahead to track those behind cryptocurrency deals by implementing a robust cryptocurrency (high-end) analyzing tool called “Chainalysis”.

According to official details available from Kerala Police Headquarters, the department has initiated procedures to implement the state-of-the-art Chainalysis tool, which will help the police to thoroughly track down the accounts that are transacting cryptocurrencies for various activities. A high-level team led by State Police Chief Dr. Shaik Darvesh Saheb, ADGP (Intelligence) Manoj Abraham, and ADGP (Law and Order) M R Ajith Kumar will monitor the implementation of the “Chainalysis” tool, which will be a major boost for Kerala Police in tracking large volumes of fund transactions for drug trafficking and other illegal activities.

“We have already initiated procedures to identify a vendor for the supply and installation of the high-end tool. An open tender has been called for the same, and IGP Cyber Police will handle the proceedings to finalize the tender based on specific parameters,” said a senior police officer.

Officials said high-end tools like Chainalysis are being widely used by other leading enforcement agencies in the world to detect and deter crypto crime with blockchain insights. It efficiently traces funds across blockchains, tokens, and bridges to identify entities and subpoena points for deeper cryptocurrency investigations.

Kerala Police have decided to go for a high-end tool like Chainalysis because a few countries are already using it to strengthen their law enforcement agencies’ ability to safeguard communities and defend citizen assets from crypto-related threats, and get an in-depth view of the entities involved in the transactions, discover their true identities, and assess their activities.

The technical requirements outlined by the Kerala Police mandate that the high-end tools must have the capabilities to show direct and indirect exposure of the transactions to any suspicious activity in real-world entities like gambling, terrorist funding, narcotics, and human trafficking. It should have the capacity to conduct investigations across Bitcoin, Ethereum, Tether USDT, BNB, Solana, XRP, USDC, Dogecoin, Toncoin, Cardano, Avalanche, Shiba Inu, Tron, Polygon, and 30+ blockchains. Among others, the tool should have the ability to identify a transaction originated and terminated based on a particular geographical location with time, amount, and IP address filters.

“The tool, once installed, will be a major weapon in the fight against rackets that are heavily using cryptocurrencies for illegal activities. A special unit will be trained and posted along with experts to handle cases related to cryptocurrency crimes,” the officer said.

Kerala has already witnessed a surge in frauds related to cryptocurrencies, with a Malappuram-based native pulling off a major fraud to the tune of Rs 1,200 crore by duping people with promises of high returns on investment in a non-existent cryptocurrency called ‘Morris Coin’. A Chainalysis report, “The 2024 Crypto Crime Report,” says that illicit fund transfers valued at US$24.2 billion took place in cryptocurrencies.

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