It's entirely possible the LEO was masking his IP in some way; he didn't give any details. There are many other ways of flagging fraudulent (or anti-fraudulent...) accounts and transactions.
Could be blockchain analysis. Block accounts that receive bitcoin from known seized funds, like a Silk Road wallet. Basically just the opposite of tactics companies like Coinbase employ.
Thats what my bet is on. LE agencies have contractors that procure bulk quantities of prepaid phones, prepaid credit cards, etc.. for undercover investigations. I suppose its possible they traced the BTC from a funded wallet they knew was government related.
If they had prepaid credit cards, why wouldn't they just buy some Bitcoin from Coinbase with it? That wouldn't be traced back to them (unless another law enforcement agency was investigating... or if the fraudsters compromised Coinbase).
I feel like they'd at least be smart enough to use a tumbler if they were pulling it from known seized funds. They could also just give the investigator a $300 prepaid debit card card and have him buy some BTC on Coinbase.
If criminals stopped selling to stupid people, they wouldn't have much of a market.
Smart crooks don't break the law. Stupid ones do.
Breaking the law isn't cost effective, and I am not talking about morals, I am saying that the additional overhead involved in covering your tracks and the potential liabilities (years of $0 or negative dollars income, legal fees) doesn't make sense.
Only rarely do you get a legitimately intelligent criminal, and that is often the result of personality issues/emotional problems.
This is nonsense. Without writing an essay here, you are apparently focusing on the criminals in jail.
There are plenty of very successful and intelligent criminals that have long, prosperous careers in theft.
Bernie Madoff ran a very successful, very illegal Ponzi scheme until he was nearly 80.
And that's not even to touch on the internet ability to let you violate the laws of counties you aren't physically in against citizens your gov doesn't care about (eg Russia to US), and therefore greatly reduce the risk for punishment.
I remember watching an episode of Lockup and realizing, hey, plenty of these imprisoned criminals are really clever -- they just use it for horrible purposes, like building makeshift knives to stab each other.