The disappearance of Nancy Guthrie has brought a renewed focus on the traceability of cryptocurrencies and their use by criminals following reports of alleged ransom notes demanding payment in bitcoin.

Guthrie, 84, was last seen on February 1, when authorities believe she was abducted from her home. There have been reports of several alleged ransom notes demanding payment bitcoin during the course of the investigation, now in its second week.

While bitcoin gained a reputation for being associated with crime after the 2013 takedown of the Silk Road online black market, where crypto was used to buy illegal drugs and other items, the evolution of the digital asset industry and increased regulatory oversight in the years since has made it harder for bad actors to do so.

“Every bitcoin transaction is recorded in a public ledger called the blockchain, so when it comes to tracing transactions, following the money, you have a perfect record with bitcoin,” Perianne Boring, founder and president of the Digital Chamber, told FOX Business. The Digital Chamber advocates the use of digital assets and blockchain-based technologies.

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Bitcoin transactions are recorded on the blockchain, which can be tracked by the public and law enforcement, which has more sophisticated tools. (Jakub Porzycki/NurPhoto via Getty Images)

“The blockchain is a public ledger that anyone can audit, so anyone can look up a specific bitcoin wallet address and see all the incoming and outgoing transactions from the beginning,” he said.

“So there’s no way to hide those tracks. This is actually an incredibly powerful tool for law enforcement. In fact, it’s a much better tool for law enforcement than it is for criminals, and that’s why we don’t really see a lot of criminal activity with bitcoin now that the industry has matured,” Boring added.

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FBI Director Kash Patel shared still footage recovered from a doorbell camera outside Nancy Guthrie’s residence on Tuesday, February 10th. (@FBIDirectorKashPatel via X)

Boring said criminals can “self-custody” their bitcoin without using a third party, such as a bank, to hold the money, though they would still be in trouble trying to do so. convert cryptography in the fiat currency of your choice.

“If a ransom was paid to a bitcoin wallet and the criminal has control of that money, that’s entirely possible. But at some point they’re going to have to transfer that money into US dollars or yen or euros or whatever currency they want so they can use the money,” he said.

“The companies that offer this money exchange service are all regulated companies globally … you have to use a regulated financial institution like Coinbase to do that, and at that point you’re in a (know your customer) entity so we’ll know the identity of the person who’s trying to exchange the bitcoin that’s tied to the ransom payment,” Boring said.

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The bitcoin and digital asset industry has developed advanced tracking and tracing technologies, Boring said. (Photo illustration by Chesnot/Getty Images)

Another tactic criminals use to try to subvert the traceability of bitcoin is to send it from an escrow. crypto wallet to various wallets, although law enforcement can still track these distributions. Boring noted that this tactic led to the emergence of mixing services in the crypto space that “will take cryptography from various parties and mix it up, and then you can get it out the other end.”

“That’s a way to hide it. But even that, you get all the money that goes into a mixer, you can see all the crypto that comes out of it, so there’s still traceability, but it makes things a little bit confusing for law enforcement, but law enforcement is very, very sophisticated to be able to track and trace every transaction,” Boring said.

He noted that within the crypto economy, companies have created track and trace software used by compliance officers to crypto companies as well as law enforcement.

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“This is a very sophisticated effort that’s been built over a decade. There’s a lot of coordination with crypto exchanges and law enforcement to track and trace illicit activity in this space, and it’s very effective and very efficient,” Boring said.

He added that the Justice Department has had several cases where large amounts of crypto have been seized from criminals, saying that “law enforcement has really done a very good job of helping police criminals who are abusing this technology for nefarious purposes and keeping this ecosystem safe.”