The Crypto Entente: An alliance against fraud and scams

[GENERAL] Name and surname of main applicant

[GENERAL] Are you delivering this project as an individual or as an entity (whether formally incorporated or not)

[GENERAL] Please specify how many months you expect your project to last (from 2-12 months)

[GENERAL] Please indicate if your proposal has been auto-translated into English from another language

[GENERAL] Summarize your solution to the problem (200-character limit including spaces)

Providing educational content in identifying scams preventing them from occurring to users, consult and provide specialized training to LEO’s to investigate these crimes to recover stolen funds. 

[GENERAL] Does your project have any dependencies on other organizations, technical or otherwise?

[GENERAL] If YES, please describe what the dependency is and why you believe it is essential for your project’s delivery. If NO, please write “No dependencies.”

No dependencies

[GENERAL] Will your project’s output/s be fully open source?

[GENERAL] Please provide here more information on the open source status of your project outputs

This project will not be open source because there is no source code involved. There will be transparency involved in investigative measures relating to cases to highlight examples of frauds, scams, and recovery of funds to the point as to not compromise investigation.

[SOLUTION] Please describe your proposed solution

The title of this proposal, The Crypto Entente, seeks to align users in the cryptocurrency space, private companies and law enforcement against the scamming scourge that plagues not only the everyday crypto user and builder but also our friends and family who may not yet be onboarded into cryptocurrency. This proposal is geared to local law enforcement agencies and their communities and the businesses within.

The latest cryptocurrency crime report conducted by Chainalysis indicates billions of dollars stolen from users in 2023. Similarly, AARP reported seniors were also victimized in the billions in 2023. The FBI have reported an increase of 53% in total loss of money due to scams in crypto alone up to 3.94 Billion Dollars in 2023 from 2.57 Billion in 2022.

The city in which I serve is a relatively average American suburb in terms of median income, employment and quality of life. I believe it serves as a micro chasm to the scale and impact these scams have. Our city is approximately 85k People and in 2023 we had 25 crime reports of scams involving cryptocurrency with a total loss to victims of over $750,000 Dollars. We were able to successfully recover approximately $70,000 Dollars and return it to victims of their respective cases. To date in 2024, we are at nearly 20 cases with total value loss already over $1,000,000 Dollars.

I have seen a stark increase in surrounding agencies requesting assistance and have helped dozens of other local agencies with their investigations. While I am always willing to help where I have the ability and opportunity, my bandwidth can only stretch so far without increasing the number of partnerships and creating a broader network effect across multiple industries on local levels.

This is money stolen not just from people, but from families and generations to follow.

 While many in the cryptocurrency communities are familiar with scams such as “rug pulls” or wallet draining phishing attacks; there are multiple other facets to crimes involving cryptocurrency that effect other everyday people who may only dabble into crypto or are not into crypto at all if not for the scams being perpetrated against them.

“Mass Adoption” is a term used oft in the cryptocurrency world. When speaking with people not “in cryptocurrency” what is the answer you give to the question: “what happens if I get hacked or my funds are stolen”? Having been asked this early into my journey and having heard this question asked at several conferences personally and professionally the answer has been a shoulder shrug and “welp its gone”. This is simply not acceptable and inaccurate. Mass adoption at the scale dreamt of will not be achievable if people believe their funds, their life savings, their livelihood could vanish at the stroke of a key never to be seen again.

As member of the cryptocurrency community and movements for the last 7 years as well as a police officer for over 12 years, and specifically over the last 3 years I have unique insight into emerging crime trends involving the use of cryptocurrency. These crimes which hitherto have been vastly under reported and under investigated for a number of reasons:

The assumption when crypto leaves a wallet it is lost and gone forever

This is not entirely accurate for a number of reasons, one of which being the blockchain is a digital and immutable ledger of all transactions that occur to and from one address to another.

A victim may never report a scam because of this assumption and thus with fewer reports made to local police, the resources and educational investment into the tools and training necessary to solve these crimes are not allocated to this scourge. 

The victim agreed to send the funds in some form or another so it is civil and not criminal

Crimes on a state level are not typically word for word the same but very closely rhyme. While there may be some level of acquiescence by the victim to the perpetrator that does not mean it is civil. These crimes are often nuanced and often times rely on artifices, tricks, or threats to accomplish the scam, which inherently makes it criminal.

The victim may feel ashamed or embarrassed

Victims of some of these scams can sometimes get embroiled into believing they are in an intimate online relationship. They disclose personal intimate details over several months believing wholly the person they are talking to love them, and are devastated when they are tapped out of funds and discarded by the scammer. Often times this leads to a deep depression, loss of homes or assets and in some cases suicide.

For the sake of brevity these are just 3 common reasons for not reporting being a victim of a scam, but is by no means all encompassing and each circumstance is unique

SCAMS AND WHO ARE EFFECTED

·        Phishing and ransomware attacks remain popular and prevalent amongst scammers and are surprisingly successful, especially amongst the elderly community who are often duped into withdrawing large sums of moneys from banks and depositing them into Bitcoin ATM’s.

·        Investment schemes: A tale as old as time. Scammers present opportunities to have prodigious returns on their investments only to never be able to withdraw such vast sums of fortune. This typically involves large sums of money, victims have mortgaged and double mortgaged houses, lost life savings and had their entire life’s work and saving stolen from them.

·        Pig Butchering: If you’ve never heard the term, get familiar with it. These add the emotional twist of the knife on the investment scams. The kicker with this, is we know and have credible information these are large transnational criminal organizations operating these scams. The “line level” person involved in these scams are often victims themselves of kidnapping, human trafficking and torture. Locked in large facilities surrounded by armed guards and forced to sit in front of stations with dozens of cell phones and scam people all day. Their safety only secured by hitting their quotas. If they don’t, they can be assaulted, tortured, sex trafficked or killed.

Again, this is not all inclusive but just a few of the most pervasive scams I see nearly every day committed against people from all walks of life. 

WHAT DO WE DO ABOUT IT

Having personally investigated dozens of cases over the last 3 years and assisting in dozens more collaborating with officers from all over my state, the United States and abroad, it is clear there is a large knowledge gap between average people and law enforcement vs. scammers.

To illustrate into context, imagine a timeline of cell phones. On one end you have the first iterations of ubiquitous cell phones: a Nokia with a grayscale text and a green backlight capable of calls texts and the game snake, and on the other a modern Samsung Galaxy S24Ultra capable of running an entire life or business. The average person and law enforcement would fall somewhere closer to the Nokia and the scammer closer to the latest Samsung. Now think about all the knowledge and technology that makes those two phones different. The good news in this case, is we have the knowledge and technology of the Samsung and need only to teach and disseminate it to the Nokia folks.

By creating educational content specifically tailored to different subject groups IE: the elderly, general public, banks, and local law enforcement we can begin to move through the knowledge gap represented by the cell phone iteration epochs.

This can effectively create a system of locks and dams where if one is passed (the initial victim), by the time they are to the next lock (perhaps a bank or Bitcoin ATM) the scam could get stopped, but if not it continues to the next lock, likely law enforcement where with the skills, education and tools necessary they can investigate the scam, trace the funds, potentially recover them or at a minimum catalog the scam, addresses and modus operandi and upload it into a deconfliction portal accessible to other law enforcement officers to cross jurisdictionally collaborate or eventually aggregate enough victims and funds to push federally (Speaking in terms of the USA). 

The ultimate goal: I'm out of a job as a cryptocurrency investigator; While I know that will likely never be the case, that is the goal I will indefatigably strive towards.

Types of Educational Content

Print form content: Creating one page easily identifying the purpose flyers for specific purposes. This would include in gas stations, grocery stores and shops that house Bitcoin ATMS, Senior living facilities and social groups such as AARP, Lions clubs etc. These can also be made for Banking institutions to be placed at or near tellers, in employee breakrooms, and on employee side of tellers with quick reminders of scam traits.

Marketing flyers for upcoming in person and virtual training sessions with sign up and registration information.

The creation of pocket-sized investigator resource guides with tips for gathering information from a victim of a scam. This would be pocket sized designed to fit in a patrol officers vest pocket. Digital forms of trainings and tips would be made available for investigators to both save cost, and because they are more likely to have computer access and typically work in an office setting.

Audio/Video: Creating both short and long form content covering scam types and traits, safety tips for the general public. Training videos for private institutions such as banks and other fiduciary institutions. Videos and meeting calendars for law enforcement officers on how to investigate these crimes, and consult with them on cases.

In person and virtual training sessions. In person and virtual training sessions are critical to be able to convey the messages and answer follow up questions for better understanding. This can be achieved through attending various law enforcement conferences, Police departments and other regional law enforcement events, private fraud investor protection groups, banking conferences and other citizen groups such Police Citizen Academies, AARP meetings, Senior living centers etc. 

[IMPACT] Please define the positive impact your project will have on the wider Cardano community

Engaging and building with the Cardano Community

Why Cardano? In my personal experience in the cryptocurrency world, Cardano from top down has a demonstrable record of a high ethical and moral standards. It is rare to see even traditional crypto crimes such as rug pulls, and drainer attacks occur on Cardano. This is attributable to the principles Cardano is based on and who it attracts to not only build but participate in the eco system.

Projects within the Cardano ecosystem have also delivered on key technological aspects that I believe can be leveraged to aid in the prevention, education, and recovery of scams. Please note while the following projects are mentioned, it should not be taken as an endorsement or as a partnership between myself and them, rather just as a highlighting example of how I believe their technology and the Cardano blockchain can aid in this effort.

Book.io and their use of Decentralized Encrypted Assets (DEA’s)- I believe this technology can aid not only in the delivery of training materials in read form, audio, or video but also in sharing case file examples amongst the community for educational purposes as well as case file sharing amongst law enforcement agencies to maintain evidentiary integrity and reduce the costs of retaining evidentiary data freeing up funds to be allocated to other needs.

Cardano Shield: a project who is building a framework on identifying scam addresses and tokens allowing users to view potential risks of transactions before signing them.

Xerberus: A project building risk ratings surrounding projects, DEX’s and wallets.

By incorporating principles from the latter two, a wide-reaching framework of aggregating wallets known to be scammers could be catalogued in a central repository accessible by all.

What benefit does this have to Cardano?

 The use and potential to partner with other projects on Cardano, will certainly add positive attention to the Cardano ecosystem. As spoken to above regarding Mass Adoption and it being unachievable until the general public can have confidence that all is not completely lost in the event of a scam or hack. Building this kind of educational, preventative and investigative framework on Cardano, I believe, would serve people to trust the Cardano ecosystem and be more likely to join into it.

The creep into cryptocurrency adoption will continue over time and the sentiment of trust, security and general safety cannot be understated or underappreciated. It is my humble opinion this aspect will be the driving factor of onboarding people on the fence.

In the educational aspects, many Cardano technical capabilities would be utilized and most hopefully the use of DEA’s to facilitate delivery of content but also as an educational onboarding for law enforcement of how to open a wallet, interact with an address, view evidence and securely own that evidence or training material forever.

Cardano is a technological leader in the space with the most robust build out of any blockchain. Increasing the reputation and integrity of Cardano only serves in the interest of the entire Cardano ecosystem, which I humbly believe this effort would.

How can this be quantified?

While the scams prevented may never be able to be accurately tabulated because they didn’t happen, unfortunately there will still be some that do.

One attempt to be able to capture this data would be to include the opportunity to report the possible scam if it was stopped in the act or prevented through identifying the scam based on educational content received.

Actual scam data is to be collected and catalogued in certain terms including but not limited to:

·        Blockchain used,

·        Methods of exchanging cryptocurrency (CEX, DEX, BTC ATM etc),

·        Wallet addresses,

·        Crypto and fiat value,

·        If the crime was reported,

·        Status of investigation

·        Number of people, business and LEO’s trained

·        Amount of digital assets recovered

Another avenue of quantifying the usefulness of this endeavor is having a repository of known scam addresses compared against known, vetted and reported scam victims. In doing so we may be able to aggregate the value stolen to a high enough level to push the case to a US Federal agency which has further reaching enforcement actions globally. 

[CAPABILITY & FEASIBILITY] What is your capability to deliver your project with high levels of trust and accountability? How do you intend to validate if your approach is feasible?

Through my time investigating crimes involving cryptocurrency as a police officer I have been able to successfully investigate dozens of cases and bring them to resolution. I have made several cryptocurrency recoveries that I have been able to return to victims. I have also assisted other agencies in seizures to recover cryptocurrencies which they have also returned to victims.

In doing so, I developed our own policy and procedures to maintain the highest ethical standards, following all judicial processes and applying objectively reasonable standards when determining criminal standards and tracing the flow of funds. While this was not always required because the suspects and exchanges are not subject to US jurisdiction, I believe in a system of checks and balances and by having judicial review on subpoenas and warrants I feel that is achieved. Further it sets precedence for cases that will inevitably turn domestic and can lean back on a regulated process used fairly and consistently over a number of cases.

These cases are all public record and subject to FOIA requests. Further, any and all of the cryptocurrency transactions are posted to the blockchain which could be checked by cross referencing police reports.

I have received extensive training in blockchain and cryptocurrency both formally and informally. As a student of crypto for the last 7 years I have gained understanding of how several blockchains operate, transactional functions and what they look like on the blockchain. Professionally I have been trained by private companies such as TRM Labs and the NW3C. I have also received training from the United States Secret Service via their training center called the National Computer Forensics Institute (NCFI).

I have also created my own training course which has been approved by the State of Minnesota P.O.S.T. Board which is the police officer licensing board. I have administered this training 3 times total to over 100 law enforcement officers from local, state and federal agencies.

Through this work I have also cultivated several private partnerships with businesses and advocacy groups. I was partly involved with a regulatory session through the Minnesota State Legislature regarding the regulation of Bitcoin ATM’s. During that I built relationships with some of the Bitcoin ATM Providers. I have built further contacts with ATM providers during my training course and other LE conferences attended.

I have also presented at banking fraud conferences hosted by Upper Midwest Automated Clearing House Association (UMACHA) as well as senior fraud advocacy groups hosted virtually by the AARP.

Validation of this approach in my opinion has been proven through the previous body of work outlined and now I look to extrapolate this pout to a larger scale to more public and private groups and investigators. As previously mentioned, there are demonstrable results that this approach has worked and needs only updated and refinements and times and technology continue on.

Being a police officer and the oath sworn to uphold this position is something that will always be held sacred to me. Trust and transparency are at the core of our profession. This was clearly demonstrated in the cases which cryptocurrency recoveries were made, the checks and balances I went through and the management of those funds.

[PROJECT MILESTONES] What are the key milestones you need to achieve in order to complete your project successfully?

A: Milestone Outputs:

Begin prioritizing and outlining key aspects of the project based on the three key aspects: Prevention, Education and Investigator training

By the end of Milestone 1: Establish a framework and network of public advocacy groups and private corporations revolving around prevention.

Create basic prevention framework for law enforcement to distribute to respective communities.

Create content and trainings from public, public advocacy groups and private corporations.

B: Acceptance of Criteria

Create a checklist of all necessary resources and infrastructure required for all aspects of prevention.

C: Evidence of Milestone Completion

Document list of involved and interested parties from public advocacy groups and private corporations.

Prevention framework for law enforcement dissemination.

Content regarding prevention of scams delivered to Public and Private groups.

Expected length: 2-4 months

A: Milestone Outputs

Begin prioritizing the key concepts surrounding investigator training. Create quick reference guides, short form content, refine training curriculum and establish residual training schedule.

B: Acceptance of criteria :

Checks with investigators in trainings to test knowledge. Follow up contact to determine retention of concepts and material.

Determine resources and costs associated with creating print content.

Determine list of resources investigators require (commercial tracing tools).

C: Evidence of Milestone completion

Deliverable short form content, Scam awareness flyers, reference guides etc.

Redacted presentation- this presentation for LE will be sensitive to investigative methods and will include live case examples from closed and current cases.

Estimated time to complete: 2-4 months.

A. Milestone Outputs

Create long form print materials: guides and pamphlets for public private corporations. create outline for a book involving the investigation of cryptocurrency scams. This will serve as education.

Source and attend various conferences, events and seminars both locally and regionally to present and provide content on scam prevention, reporting and investigating

B. Acceptance of Criteria

Schedule events, conferences to present, make proper travel arrangements.

Work with publishers to print and disseminate educational content in physical and digital forms.

C. Evidence of Milestone Completion

Documented trainings hosted, conferences attended, materials disseminated.

Estimated time: 2-4 months.

If funds and time allow this milestone will serve to create a reporting an deconfliction website for law enforcement, public and private companies to report scams which will be accessible to all. This will serve to aggregate data and known scam addresses together and link cases.

A. Milestone outputs

A complete deliverable package of materials regarding preventing cryptocurrency scams, educational materials on scams, their operation and how to identify them and training resources and tools for public, public advocacy groups, private corporations, and law enforcement.

Acceptance of Criteria

Checklist of all relevant materials available

Case file list of reported scams by public and private corporations to law enforcement

C. Evidence of Milestone completion

Data and stats on total crime types, scam types, cryptos used, platforms used, crypto recovered and if any were stopped, prevented scams from previous 12 months of the project.

Content to include short and long form printed and digital content, presentations and other resource guides. Availability of commercial tracing tools to law enforcement.

[RESOURCES] Who is in the project team and what are their roles?

Jake Tuzinski- https://www.linkedin.com/in/jake-tuzinski/

-Creator of prevention, educational and training content. Instructor for Law Enforcement trainings. Coordinator of groups from public advocacy and private corporations to discuss prevention and education strategies within them.

Graphic designers to be sourced to aid in creating the short form content to optimize marketing value

[BUDGET & COSTS] Please provide a cost breakdown of the proposed work and resources

Budget and Costs

*costs calculated at Ada/USD exchange rate as of 05/11/2024 at $0.44

** This project is not for pecuniary gain and no payments will be made to myself for time and effort put into creation and development of this project.

Software

Digital media editing software for videos, marketing campaigns, and other aforementioned forms of content: 1,650 ADA (covers licensing for one year

Commercial Cryptocurrency tracing tool: 30,000 to 60,000 ADA to be negotiated with vendor. Price is determinate on which software provider is chose.

Hardware

Cameras and accessories capable for filming content, hosting virtual trainings: 2,200-3,000 ADA

Miscellaneous small media hardware (Hard drives, flash drives etc) for storing created materials, and also providing to groups, corporations and LE agencies: 1,100-1,500 Ada

Computer capable of running and operating above creation software/hardware systems: 2,500-2,700 ADA

Marketing Material

Cost of graphic designer and development of editable material to be tailored to different businesses, groups and law enforcement agencies: To be negotiated with graphic designers estimated over the 12 months to budget 5,000 ADA

Cost of printed materials, flyers, pocket resource guides, pamphlets and books: Will be negotiated through sourcing print shops and publishers: estimated cost over the 12 months 11,000 ADA to 20,000 ADA

Cost of attending conferences and workshops: Covering any registration fees and travel cost: 11,000 to 20,000 ADA

Total approximated cost range: 64,450 ADA - 113,850 ADA

Any overages will be covered through personal funding to ensure success. Any left over funds will be used to bolster marketing materials and or further development of the project.

[VALUE FOR MONEY] How does the cost of the project represent value for money for the Cardano ecosystem?

3.94 Billion Dollars. This is the estimated total loss through scams reported by the FBI on 2023, up 53% from 2022 and 2.57 Billion.

At present this opportunity would allow an investment of approximately 44,000 Dollars stretched the max, reaching local communities and local victims who are otherwise underserved and underreport these crimes.

Cardano is one of the worlds most recognizable brands, and this project has the opportunity to add a higher level of trustworthiness to the brand amongst public groups private institutions (mainly banking and financial institutions) and law enforcement agencies.

This serves to benefit Cardano in many ways, first of which all of the above groups and entities are made up of people. As crypto spreads and permeates through society, which blockchain might they choose to onboard on? One they hear about vulgar named coins and rampant scams or one they know to be of high integrity, morals, and a wantonness to serve people for good. I suspect the latter, I certainly would.

Cardano is a leader in technology and development in the blockchain industry, and with approval of this proposal I believe Cardano will emerge as a leader (amongst actual blockchains) in the fight against scams, frauds, blockchain safety and education.

While the prevention may never be quantifiable, the investigations, suspects identified and charges as well as crypto recovered can be. This concept I have already proven on a small scale with limited resources and initial training. Being able to build on the model and framework created to serve other communities not only helps Cardano as mentioned above, but the cryptocurrency industry and society as a whole.

Thank you to all who have read this proposal. I am grateful for the opportunity to be considered and thankful to have been pointed in this direction. I encourage everyone to take the time, energy and concern to highlight the scams and frauds that occur and stain our industry to all your families and friends.