CoinGeek Conference Panel Delves into Investigating Criminal Activity on Blockchain

CoinGeek Conference Panel Delves into Investigating Criminal Activity on Blockchain

As digital currencies and blockchains enjoy widespread use and popularity, so should they start preparing for an imminent crackdown as governments around the globe begin to draw up laws and policies for regulating them. Evidence of this is how Binance has stopped operations in Singapore after receiving a warning from the country’s central bank.


The perils of not adhering to laws and regulations, the importance of being regulation-friendly and what can be done to protect virtual asset providers are highlighted during a very enlightening panel discussion at the recently concluded eighth CoinGeek Conference held in New York on October 5 to 7.


The panel is comprised of Blockchain Intelligence Group’s Director of Government and Strategic Affairs and former former Special Agent at the Drug Enforcement Administration (DEA) William Callahan, BlockTrace Founder and CEO Shaun MaGruder, IRS Criminal Investigation Special Agent Richard G. Reinhardt and Ian Lee, associate director for sales and one of the founding members of Merkle Science.


All of the panelists deal with crime involving digital currencies and blockchain, investigating, tracing and apprehending criminals, at the same time preventing virtual asset entities from being affected by or connected to illicit and illegal activities. 


“There’s information out there, it’s all public. And that’s a wakeup call that all this information is public. We can trace it, so we’re able to identify the flow of the funds to when the FBI seized it and put it in their wallet, which makes law enforcement have to rethink how they are going to seize and store cryptocurrencies,” Callahan said.


What people fail to realize when transacting using a public blockchain is that all transactions are timestamped and recorded in an immutable manner, which means all of these data are available to everyone forever. 


“What’s really exciting about blockchain that’s really changing the dynamics around compliance and investigation, I think it’s about the fact that, for the first time, we have so much data. We have so much visibility as to where these cryptocurrencies are coming from. We can see the entire life cycle of a wallet and monitor its behavior,” Lee pointed out. 


Many exchanges today place a minimum amount before actually applying KYC and AML rules, which makes it easier for criminals to launder money by creating hundreds of wallets and moving money without hitting the minimum amount. And a regulatory compliant exchange or any virtual asset provider may be victimized as dirty money may course through them without them knowing it.


“As a business, you do want to build close relationships with your regulators and law enforcement. Today, the scene is very different from what it was two to three years ago. Today, regulators and law enforcement agencies are more than happy to engage with the virtual asset providers in their jurisdiction… At the end of the day, cases like this, it is time sensitive. Developing that close relationship with local authorities helps you not just in the case that an incident happens, but helps you just build a safer and more compliant business,” Lee advised.


The panel is in consensus with Lee’s advice, as Callahan, Reinhardt and MaGruder also pointed out, Bitcoin ATMs, ransomware and even romance schemes are becoming rampant in the world of digital currency that is why it is essential to develop a good relationship with local authorities.


In fact, as Callahan revealed, a huge percentage of the 93,000 drug overdose deaths in 2020 is related in some way to cryptocurrencies—either they were used to buy counterfeit drugs or the money from drug-related sales was coursed through them. This is but one aspect of crime that can be prevented if digital currencies and blockchain services are regulated.

Those who missed the three-day conference can still watch them here.

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