That era-defining 2017 case yielded a safety-deposit box containing jewelry, gold bars, £263,000 ($345,000) in cash, and an item that flummoxed the lead investigator, Matthew Durkin, a 19-year veteran of the Surrey police. It was a USB device found in the suspect’s study. The gadget was wrapped in a small notebook, which contained two strings of 12 random words. A young probationary officer recognized the device, a KeepKey, as a virtual currency holder and the words as seed phrases to access crypto wallets. Eventually, police discovered it held 295 Bitcoin.

“It meant nothing to me until someone said it was worth £900,000,” recalls Durkin, 51.

In recent years, police departments such as Durkin’s and law enforcement agencies around the world have had to learn quickly about how to deal with crypto­currencies, often in amounts that eclipse traditional assets such as cash, gold, jewelry, cars, and real estate. In London, for instance, police seized almost £300 million of crypto linked to crime last year.

The U.S. Marshals Service held 22 cryptocurrencies valued at about $919 million last December, according to spokeswoman Shaunteh Kelly. In February the U.S. made its largest financial seizure ever: about $3.6 billion in Bitcoin stolen during a 2016 hack of the Bitfinex currency exchange. And cryptocurrencies made up almost all—93%—of the assets confiscated by the Internal Revenue Service’s Criminal Investigation Division in the fiscal year that ended Sept. 30.

“It’s exploded since 2017,” says Ryan Korner, head of the division in Los Angeles. “We’re at a point where it touches almost every investigation that we work in one way or another. We’re trying to make sure that all of our agents have the ­knowledge to work these cases.”

The qualities that make cryptocurrencies attractive to criminals—some think they’re easier to hide and ­transfer than many valuable assets—are challenging law enforcement.

To start, investigators have to learn to recognize a crypto wallet and then how to obtain the private key, or seed phrase, to unlock it. Months after the $10 million hack of the GateHub platform in 2019, French investigative judge Pascal Latournald and his colleagues held and interrogated a suspect for the better part of 48 hours before he gave up the code that unlocked $2 million in Bitcoin. The exhausted suspect, hoping for leniency, revealed he’d written it on a slip of paper inside a cookbook in his parents’ living room in southern France, according to an officer involved in the investigation who spoke on the condition he wasn’t named.

U.S. agents have discovered seed phrases hidden on a gum wrapper, inside a TV instruction manual, and on tiny pieces of paper stuffed in a suitcase in a closet, says Tigran Gambaryan, who was a special agent for the IRS’s criminal investigation arm for a decade before joining crypto exchange Binance in September.

In 2018, U.K. police chiefs lobbied the government for funding to equip about 250 officers—dubbed crypto tactical advisers—and train them in how to investigate, seize, and realize the value of digital currencies.

Read the full article here by Ellen Milligan, David Voreacos, Advisor Perspectives.