Australia's 'Operation Kraken' seizes over $6 million in crypto after deciphering seed phrases from organized crime wallets

Australian Federal Police have seized 9.3 million Australian dollars ($6.4 million) from the alleged mastermind behind Ghost.

Ghost was an encrypted messaging service used by organized crime groups to coordinate illegal activities, such as drug trafficking and money laundering, offering advanced encryption features and message self-destruction. The platform was brought down last month following a two-year investigation coordinated by Europol and global law enforcement agencies, including the AFP.

The 32-year-old man, based in Narwee, a suburb of Sydney in New South Wales, was arrested on Sept. 17 as part of the AFP’s ongoing “Operation Kraken,” and charged with five offenses, including supporting a criminal organization.

The crypto assets were seized after analytics specialists at the AFP-led Criminal Assets Confiscation Taskforce deciphered the suspect’s seed phrases from analysis of hardware wallet devices found at his home, the AFP said on Wednesday.

As a result, it gained access to the cryptocurrency and transferred it to secure storage, the AFP added. It is the second seizure of cryptocurrencies under Operation Kraken after 2 million AUD ($1.4 million) in assets linked to a Western Australia crime syndicate were restrained by the CACT in August.

Crypto hardware wallets are generally safe for storing cryptocurrencies because they keep private keys offline, reducing vulnerability to hacks or malware. However, if someone with the right skillset gains physical access to the device, they could potentially extract or decipher the seed phrases — essential for accessing the wallet and recovering funds.

“The restraint of these assets shows the technical capabilities and powers that the AFP, and our partners through the CACT, are able to bring to bear on organized crime,” AFP acting Commander Scott Raven said. “Whether you have tried to hide them in real estate, cryptocurrency or cash, we will identify your ill-gotten goods and take them away from you, leaving you with nothing.”

Operation Kraken

The AFP’s Operation Kraken initiative against organized crime has resulted in 46 arrests, 93 search warrants and intervening in 50 threats to life or harm. Operation Kraken has seized 2.37 million AUD ($1.6 million) in cash and 11.09 million AUD ($7.6 million) in other assets since 2022.

The CACT, which includes the AFP, Australian Taxation Office, Australian Criminal Intelligence Commission, AUSTRAC and Australian Border Force, said it would seek to have the restrained assets forfeited to the Commonwealth, managed by the Australian Financial Security Authority to benefit the country’s crime prevention programs.

It's important to note that the operation is not affiliated with the well-known crypto exchange Kraken in any way.

“We’re disappointed by this operation’s codename, which has absolutely nothing to do with our brand. Kraken is one of the world’s longest standing crypto platforms, and a leading operation in the Australian crypto ecosystem. We have an established reputation for robust security, expert client services, and a commitment to regulatory compliance,” a Kraken spokesperson told The Block.

Updated with comment from Kraken.