Italian Carabinieri Leverage Chainalysis to Dismantle €8.8M Illicit Crypto Exchange, Employing Advanced Forensics to Decrypt Seed Phrases and Seize Illicit Assets

TL;DR:

• The Cryptocurrency Section of the Italian Carabinieri recently arrested Franco Lee, a Chinese national operating an illicit cryptocurrency exchange service, and seized a portion of the digital assets. The operation dismantled a network that had laundered approximately €8.8 million between 2021 and 2024.
• This success was powered by advanced investigative techniques, combining the Carabinieri’s proprietary scripts with Chainalysis Reactor for network analysis and Wallet Scan for rapid wallet identification from fragmented seed phrases.
• The investigation highlights the growing technical sophistication of European law enforcement and sets a clear precedent for tackling complex crypto-related financial crimes.

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