Chainalysis unveils Operation Spincaster to fight $2.7bn in crypto fraud

Blockchain data firm Chainalysis in a blog post revealed Operation Spincaster, an international effort that was created to fight “approval phishing” scams, which have defrauded victims of $2.7 billion in crypto since May 2021.

Approval phishing is a tactic used by criminals to steal funds through different scamming techniques including fake crypto apps and romance scams, which are also known as pig butchering.

Operation Spincaster is a global extension of an operational sprint Chainalysis conducted with the Calgary Police Service, called Operation Disruption, back in March.

Sergeant Danny Leong of the Calgary Police Service Blockchain Investigations Team said his organisation partnered with Chainalysis in a workshop that brought several Canadian law enforcement agencies and crypto businesses together to address crypto-related crime.

They “identified more than 770 individuals, 119 which were Canadians, as victims of cryptocurrency fraud, with an estimated combined loss of $59 million,” he said, adding that the participants took swift action to notify the victims and prevent further losses.

From that beginning, Operation Spincaster evolved into a series of operational sprints between April and June, designed to disrupt and prevent scams through public-private collaboration.

The transparency of the blockchain along with advanced analytics provide many opportunities for investigation, asset recovery and crime prevention, Chainalysis said.

Chainalysis proactively identified thousands of compromised wallets, which formed the basis of a series of operations across six countries — US, UK, Canada, Spain, Netherlands and Australia — with more than 100 attendees, including 12 public sector agencies and 17 crypto exchanges.

Leads followed

More than 7,000 leads were disseminated, relating to about $162 million of losses. The leads were used to close accounts, seize funds and build intelligence to prevent future scams.

Preventing scams requires an ecosystem-wide strategy that brings together the public, private sector, and civil society through a three-pronged approach that includes public education and user awareness, proactive transaction monitoring for exchanges, and boosting law-enforcement capabilities, the blog post said.

Chainalysis said it plans to roll out Operation Spincaster in more countries over the next few months.