The postal service’s law enforcement arm is buckling down on crypto

DeFi platforms have seen a steady surge in user activity and token prices, leading some analysts to say that the ‘DeFi Summer 2.0’ is well underway.

A newly released USPIS internal audit recommends a crypto training program for investigators.
 

The U.S. Postal Inspection Service (USPIS), the law enforcement arm of the U.S. Postal Service (USPS), is re-thinking the way it handles crypto-related investigations.

According to an internal audit report published last Thursday, the agency said its management of seized cryptocurrency assets and crypto-related investigative procedures need to be improved.

The audit was led by Mary Lloyd, the agency’s cybersecurity and technology expert. It found a “lack of standardized [cryptocurrency] training” for postal inspectors and inconsistent communication between inspectors and the Cryptocurrency Fund Program, a body created in 2017 to serve as the custodian for the postal service’s crypto wallet and to generally oversee its crypto operations.

Additionally, accounting software used by USPIS to track transfers of cryptocurrencies during investigations was found to have “data integrity issues,” including duplicate transactions, that resulted in inaccurate records.

Postal inspectors investigate crimes involving the mail, often working with other law enforcement agencies like the FBI and the Financial Crimes Enforcement Network (FinCEN), to catch criminals who use the mail to transport drugs and other illegal substances.

Because cryptocurrency provides a layer of pseudonymity for illegal online transactions, often through dark web marketplaces, the USPIS and other law enforcement agencies have had to develop undercover crypto investigation procedures. Some of those methods have succeeded more than others.

Lloyd’s report said that USPIS should develop a “comprehensive cryptocurrency training program” for its inspectors, “develop written procedures for the management and oversight of the national wallet,” fix the accounting system and improve communication between inspectors and the Cryptocurrency Fund Program.

The audit, which was announced in March, was self-directed. It was the first time the USPS has formally examined the topic of cryptocurrencies, according to a report from Nextgov, a publication that covers technology issues in the government.

The report also revealed the relatively small scope of the USPIS’s crypto investigations: In 2019 and 2020, the Cryptocurrency Fund Program received only nine requests for crypto for investigative purposes, and the postal inspectors seized crypto assets in only four cases.

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