WEBVTT - Weekend Bonus: Crypto IRL, Episode 7, with Tim and Katie 0:00:03.640 --> 0:00:06.760 This is Bloomberg Crypto, a daily Bloomberg I Heard podcast, 0:00:07.120 --> 0:00:10.119 and I'm Stacy mrirae Ishmael, Managing editor of Crypto for 0:00:10.160 --> 0:00:29.040 Bloomberg News. Yes, I know it's Saturday, but we're here 0:00:29.040 --> 0:00:32.520 to offer you our listeners a special audio only version 0:00:32.600 --> 0:00:35.640 of a new weekly video series called Crypto I r L. 0:00:36.200 --> 0:00:39.120 That's I r L like in real Life, and it's 0:00:39.159 --> 0:00:42.159 hosted by friends of the show Katie Greifeld and Tim Stenovic. 0:00:42.400 --> 0:00:45.040 This is episode seven of the series. If you want 0:00:45.040 --> 0:00:48.040 the full video experience, head over to Bloomberg dot com, 0:00:48.080 --> 0:01:04.240 slash qt or check it out on YouTube. What cop 0:01:04.280 --> 0:01:07.400 are you? I think I'd be the grizzled veteran with 0:01:07.440 --> 0:01:09.640 a heart of gold, grizzled veteran with the heart of 0:01:10.160 --> 0:01:13.039 a Clint Eastwood type, you know. Yeah, Like at the 0:01:13.160 --> 0:01:16.440 end of the day, I'm you know, hard on the outside, 0:01:16.480 --> 0:01:20.520 but I just want the best for my colleagues, my rookies, 0:01:20.880 --> 0:01:25.160 such as yourself. I'm a rookie, I think in this situation. Yeah, 0:01:25.200 --> 0:01:28.360 I like to think of myself as the good cop. Alright, 0:01:28.400 --> 0:01:31.760 that's pretty vanilla, but it's fine. Good cop, Okay, you 0:01:31.760 --> 0:01:34.319 can be the bad cop. We should probably explain why 0:01:34.360 --> 0:01:37.840 we're talking about cops. The entire episode is about crypto 0:01:37.880 --> 0:01:41.000 and crime. Tim If I can't use my crypto to 0:01:41.120 --> 0:01:45.000 fund activities that other people might think are illegal, what 0:01:45.040 --> 0:01:52.600 are we even doing here? That's the question. Bitcoin has 0:01:52.640 --> 0:01:55.920 been closely associated with crime since pretty much the beginning. 0:01:56.560 --> 0:01:58.880 In the early days, it was the currency of choice 0:01:58.920 --> 0:02:01.440 on the dark wet, used in drug deals and even 0:02:01.480 --> 0:02:04.760 a murder for higher plot. In more recent years, it's 0:02:04.840 --> 0:02:08.200 been what hackers have demanded when they've held pipelines, hospital systems, 0:02:08.200 --> 0:02:11.720 and met packing plants hostage, And then there's been the hacks. 0:02:12.360 --> 0:02:15.360 October two is on track to see more crypto stolen 0:02:15.400 --> 0:02:19.080 and hacks than any other month this year is on 0:02:19.120 --> 0:02:22.600 pace to be a record according to chain analysis. But 0:02:22.639 --> 0:02:26.280 as bitcoin actually good for crime, since all transactions are 0:02:26.280 --> 0:02:29.080 public on the blockchain, everyone can see bitcoin move on 0:02:29.120 --> 0:02:32.079 the blockchain, and governments and other organizations are getting better 0:02:32.080 --> 0:02:35.919 at recovering stolen bitcoin. Plus it's not actually that easy 0:02:35.960 --> 0:02:39.480 to launder bitcoin to turn lots of it into real, 0:02:39.760 --> 0:02:44.519 usable money. This raises an important question. If bitcoin isn't 0:02:44.520 --> 0:02:46.520 good at crime, then how can it live up to 0:02:46.520 --> 0:02:49.600 its promise as a stateless currency that could allow people 0:02:49.600 --> 0:02:52.840 in impressed areas to transact with one another without a 0:02:52.880 --> 0:03:00.639 regulator seeing what they're up to. Tell as at all 0:03:00.840 --> 0:03:05.200 the podcast in February, you wrote that it's time for 0:03:05.280 --> 0:03:08.120 bitcoin to get better at laundering money, and I have 0:03:08.200 --> 0:03:11.160 been thinking about it since then. I pushed to get stuck. 0:03:12.080 --> 0:03:16.120 Did it really made an impression on me? Um? I 0:03:16.200 --> 0:03:19.959 find it a very compelling argument, But lay out your case. Well, 0:03:19.960 --> 0:03:22.960 you know, one of the core arguments that like biitcoiners 0:03:23.080 --> 0:03:27.359 make is that it's like separation of money and state, right, 0:03:27.480 --> 0:03:29.600 and that it's a sort of form of money that 0:03:29.639 --> 0:03:33.320 doesn't rely on the government, it doesn't rely on traditional 0:03:33.360 --> 0:03:35.480 banking system, etcetera. And when I wrote the piece, it 0:03:35.520 --> 0:03:38.520 was if you were calls like during the Canadian trucking 0:03:38.640 --> 0:03:41.800 protests and there was that big convoy and sitting aside 0:03:43.920 --> 0:03:46.120 what one's view of the protest work, which I think 0:03:46.200 --> 0:03:48.560 is like kind of irrelevant to the question. The point is, 0:03:48.920 --> 0:03:52.960 if there's going to be a moment where people needed 0:03:53.040 --> 0:03:55.960 a form of money that could like they could transact 0:03:55.960 --> 0:03:58.520 without censorship, that was it. And it didn't really work 0:03:58.560 --> 0:04:01.240 for that. They were able to like very easily track 0:04:01.360 --> 0:04:05.160 the transactions that were able to like freeze wallets from 0:04:05.200 --> 0:04:08.160 like interacting with banks. So it's like, if bitcoin is 0:04:08.200 --> 0:04:11.000 going to live up to its promise of being a 0:04:11.040 --> 0:04:14.480 means of transaction that is separate from the states, separate 0:04:14.480 --> 0:04:17.080 from the financial institutions, I don't think it's there yet 0:04:17.200 --> 0:04:21.159 in terms of whether it's privacy or obfuscation or things 0:04:21.200 --> 0:04:25.800 like that. So you're essentially saying that if bitcoin is 0:04:25.839 --> 0:04:28.680 to live up to its promise of being this stateless currency, 0:04:28.640 --> 0:04:31.760 yea something that could help and oppressed people, Yeah, then 0:04:31.800 --> 0:04:34.599 it actually needs to be something that would also be 0:04:34.640 --> 0:04:37.000 good for criminals. I think that, Yeah, that would be 0:04:37.040 --> 0:04:39.880 the implication because again, like what's what's a criminal in 0:04:40.040 --> 0:04:43.080 one country one city could just be a protest or 0:04:43.120 --> 0:04:47.520 somewhere else. So to some extent, like this distinction is 0:04:47.560 --> 0:04:50.320 going to be very like vagable, like yeah, some places 0:04:50.400 --> 0:04:54.760 like protest is crime, someplace free speeches crime. And so 0:04:55.200 --> 0:04:58.560 the point is that for it to like, yeah, fulfill 0:04:58.600 --> 0:05:00.920 its mission, then on level, there has to be a 0:05:00.920 --> 0:05:03.600 way to transact with it without the state being able 0:05:03.640 --> 0:05:06.000 to say, you got these coins, and now these coins 0:05:06.000 --> 0:05:08.120 if they ever go to an exchange, if they ever 0:05:08.200 --> 0:05:10.520 go to like a fiat off ramp, they'll be frozen. 0:05:10.960 --> 0:05:12.880 What is the point then? I think part of the 0:05:12.880 --> 0:05:15.119 reason I've been thinking about this column that you wrote 0:05:15.160 --> 0:05:18.680 for I don't know, eight nine months is that it 0:05:18.800 --> 0:05:22.279 kind of made me think that crime is really subjective. 0:05:22.920 --> 0:05:25.800 Crime to one person, to one government, is not a 0:05:25.839 --> 0:05:28.440 crime to another government. Yeah, right, Like there are all 0:05:28.480 --> 0:05:31.640 there are. There are certain categories of crimes that everyone 0:05:31.720 --> 0:05:36.120 would find to be like absolutely, shouldn't people absolutely, But 0:05:36.160 --> 0:05:40.080 there are other yeah, in different situations, like you know, 0:05:40.480 --> 0:05:43.080 sending someone or selling a copy of the Bible might 0:05:43.080 --> 0:05:45.440 be a crime in some countries, or a different religious 0:05:45.440 --> 0:05:48.719 text or any other sort of like protest or whatever 0:05:48.760 --> 0:05:51.599 it is. And so yeah, that's exactly right. Like, how 0:05:51.600 --> 0:05:55.240 would you even begin to conceive of a currency that 0:05:55.360 --> 0:05:58.480 would work for what we would call like legitimate crime 0:05:58.600 --> 0:06:01.760 or legitimate dissidents within a country if it didn't work 0:06:01.800 --> 0:06:04.440 for things that we would consider to be reprehensible. But 0:06:04.480 --> 0:06:07.120 it works to a certain extent, And that's what it 0:06:07.160 --> 0:06:10.520 seems like, at least because we are seeing still ransomware 0:06:10.560 --> 0:06:15.839 attacks that are you know, essentially say pay us x 0:06:15.960 --> 0:06:21.560 bitcoin else. Yeah, although even even ransomware attacks, there's a 0:06:21.600 --> 0:06:24.480 pretty big loss of market share by bigcoin that we've 0:06:24.480 --> 0:06:26.560 seen to like some of the privacy coins, like I 0:06:26.600 --> 0:06:29.159 think like if you look around like Manarrow, which is 0:06:29.279 --> 0:06:32.600 much smaller, less liquid, less market kept point is still 0:06:32.640 --> 0:06:35.920 popular among ransomware in tax and part because of this reason. 0:06:36.000 --> 0:06:39.440 It's like has privacy built into it from like round up. Wait, 0:06:39.520 --> 0:06:40.960 so if you're a criminal and you want to do 0:06:41.000 --> 0:06:45.280 some crime, which is would never never suggest, but I 0:06:45.320 --> 0:06:49.880 do think that it speaks to again like ransomware is 0:06:50.080 --> 0:06:53.120 really bad. So this is not about that. The point 0:06:53.240 --> 0:06:55.919 is like, well, then if if it doesn't work for these, 0:06:56.360 --> 0:06:59.520 then what I like to sort of like freedom, sort 0:06:59.560 --> 0:07:04.120 of like outside the state, outside the financial institutions, use 0:07:04.160 --> 0:07:06.279 cases that it does work for because the point that 0:07:06.320 --> 0:07:07.960 I see is like, Okay, they say it's like no 0:07:08.000 --> 0:07:10.840 one can block a bitcoin transaction, no one can censor it. 0:07:10.880 --> 0:07:13.600 But isn't it a defective form of censorship if an 0:07:13.680 --> 0:07:16.400 entity can say these wallets can no longer move to 0:07:16.400 --> 0:07:19.120 an exchange, And I think that's an important sort of 0:07:19.520 --> 0:07:22.080 set up there that you can do pack and get 0:07:22.080 --> 0:07:25.360 bitcoin in exchange. It's just you can't really do anything 0:07:25.400 --> 0:07:27.480 with the bitcoin that you write, and you know there's 0:07:27.520 --> 0:07:30.200 all kind of like train analysis is getting better and better, 0:07:30.320 --> 0:07:33.880 so it gets it becomes easier to like connect an 0:07:33.920 --> 0:07:37.200 individual to a wallet and so forth, and like law 0:07:37.320 --> 0:07:40.960 enforcements and private software companies are getting like really good 0:07:40.960 --> 0:07:43.280 at this. But if there's a point where it's like 0:07:43.320 --> 0:07:47.200 really hard to disassociate a coin from a human name 0:07:47.440 --> 0:07:51.000 from someone that is known to officials, then you start to, 0:07:51.160 --> 0:07:54.880 I think, lose some of the promise of the currency 0:07:55.200 --> 0:07:57.960 of anything. Really well, that's that's it. It's a whole 0:07:58.000 --> 0:08:02.680 different episode the Philosophy Show to delight. Thank you for 0:08:02.720 --> 0:08:08.200 having me. I'd love to be back. Beth Busbee from Analysis, 0:08:08.440 --> 0:08:10.800 Sugit Rahman from TRM Labs. It's good to have you 0:08:10.840 --> 0:08:13.040 both here with us. How are you great? Thanks for 0:08:13.080 --> 0:08:14.920 having us. What do you think of the crime scene? 0:08:15.360 --> 0:08:18.800 It's great, very realistic. You know what it's like when 0:08:18.800 --> 0:08:21.440 you investigate a crypto in the digital world. This is 0:08:21.480 --> 0:08:25.040 exactly what it's like. All the coins, the yellow you know, 0:08:25.800 --> 0:08:28.040 we're going for something that's really authentic. So that's some 0:08:28.080 --> 0:08:32.240 good feesback. Um, hey, I want to start with you. 0:08:32.280 --> 0:08:35.200 Just give us an idea of the most shocking crime 0:08:35.440 --> 0:08:38.640 you've ever seen. Committed with crypto. So if I go 0:08:38.720 --> 0:08:41.080 back to my days when I was with the Drug 0:08:41.160 --> 0:08:45.480 Enforcement Administration, um, it was with drug traffickers and anywhere 0:08:45.600 --> 0:08:50.880 from drug trafficking with money laundering using crypto for drug 0:08:50.920 --> 0:08:55.000 cartels or your running the mill, individuals that were down 0:08:55.000 --> 0:08:58.920 on their g parents basement, um, selling drugs on the internet. 0:08:59.000 --> 0:09:03.959 So those are shocking and the of themselves and like 0:09:04.280 --> 0:09:08.200 how the individuals actually like benefited from it and leveraging 0:09:08.240 --> 0:09:10.079 crypto for that. When I think about drugs and I 0:09:10.120 --> 0:09:12.600 think about bit colin and I think about them both together, 0:09:13.200 --> 0:09:15.480 I think about silk Road, Like is that the sort 0:09:15.520 --> 0:09:19.319 of stuff that we're talking about? Yeah, so kind of both. Right, 0:09:19.400 --> 0:09:24.480 So the very first really play of drugs and crypto 0:09:24.679 --> 0:09:27.160 is silk road. Right, that was one of the most 0:09:27.200 --> 0:09:29.720 innovative spaces for somebody to be like how do I 0:09:29.840 --> 0:09:33.520 get this onto the black market without being detected by 0:09:33.559 --> 0:09:36.680 law enforcement? And then this was the generation of leveraging 0:09:36.800 --> 0:09:40.520 tour and the digital realm of what payment system was, 0:09:40.520 --> 0:09:44.040 which was crypto, and that's what created silk road. So 0:09:44.559 --> 0:09:48.600 for the traditional sense of the digital aspect for drug trafficking, yes, 0:09:48.679 --> 0:09:51.520 that would be what it is. However, um. Any time 0:09:51.559 --> 0:09:54.760 you have a type of crime, you can leverage crypto 0:09:54.880 --> 0:09:58.000 for that. So drug trafficking and the traditional sense where 0:09:58.000 --> 0:10:02.640 you have the actual bulk move of large quos of 0:10:02.760 --> 0:10:05.960 drugs UM individuals can still accept payment with that through 0:10:06.000 --> 0:10:11.559 crypto suggets. Same question was shock and crime using Bicklins. 0:10:11.840 --> 0:10:14.480 They weren't necessarily shocking to me because criminals often go 0:10:14.640 --> 0:10:17.160 where the sort of technology is. But the first time 0:10:17.160 --> 0:10:20.480 I was really struck by how interesting crypto really could 0:10:20.520 --> 0:10:24.240 be was when I read the indictments charging those Russian 0:10:24.280 --> 0:10:27.600 intelligence officers with interfering in the elections in because if 0:10:27.600 --> 0:10:30.839 you read those indictments, you'll see that intelligence officers were 0:10:30.920 --> 0:10:34.560 using crypto to buy servers within the United States to 0:10:34.640 --> 0:10:37.840 try to sort of you know, obscure their tracks and 0:10:38.000 --> 0:10:41.760 use that to basically purchase the infrastructure that they then 0:10:41.880 --> 0:10:44.640 used to launch the hacks into the DNC emails and 0:10:44.640 --> 0:10:47.520 all that. And they even hosted the website that you know, 0:10:47.600 --> 0:10:50.760 sort of hosted all that information through the payment of crypto. 0:10:51.000 --> 0:10:53.240 So when I was in a senior role the Justice Department, 0:10:53.400 --> 0:10:55.360 that's what the first time I realized, Wow, I mean, 0:10:55.480 --> 0:10:57.719 crime is very important, and all the stuff we're doing 0:10:57.760 --> 0:10:59.959 on sort of dark webs really important. But there's a 0:11:00.000 --> 0:11:03.160 for an intelligence component to this, there's a defending democracy 0:11:03.160 --> 0:11:06.520 component to this. But ultimately those individuals were indicted. They 0:11:06.520 --> 0:11:09.200 were indicted, and the allegations are in the indictment right 0:11:09.240 --> 0:11:12.040 and in the in the indictment you see the evidence 0:11:12.160 --> 0:11:15.440 of them using what was it, bitcoin correct various types 0:11:15.480 --> 0:11:18.040 of crypto. So the question, well, we'll keep the question 0:11:18.040 --> 0:11:19.800 a bitcoin for now and then take it out to 0:11:19.840 --> 0:11:21.880 other types of crypto, but does it does that mean 0:11:21.920 --> 0:11:25.160 that it is or is not an effective means to 0:11:25.240 --> 0:11:28.240 essentially commit crime with? So it you know, it can 0:11:28.360 --> 0:11:30.800 be traced, right, And this is something that criminals often 0:11:30.840 --> 0:11:34.640 don't realize, is that the bitcoin network itself is quite 0:11:34.640 --> 0:11:37.640 traceable and folks like my team at r M labs 0:11:37.640 --> 0:11:40.079 bets team of chain analysis have become very good at 0:11:40.120 --> 0:11:43.920 tracing those payments. So it's just dumb criminals at this 0:11:43.960 --> 0:11:46.160 point then, because I feel like at least I don't know, 0:11:46.200 --> 0:11:48.520 maybe I spend too much time in my own bubble, 0:11:48.559 --> 0:11:50.360 but I feel like it's pretty well known that you 0:11:50.400 --> 0:11:53.360 can track things on the blockchain by now. Well, I 0:11:53.400 --> 0:11:55.400 think a lot of people maybe don't realize that the 0:11:55.400 --> 0:11:57.920 other thing is it still takes time. Right, You've got 0:11:57.920 --> 0:12:01.200 technology like mixers and other types of technology that will 0:12:01.240 --> 0:12:03.880 help you sort of you know, mix up the transactions 0:12:03.920 --> 0:12:06.760 a little bit. Um even that capability is something law 0:12:06.800 --> 0:12:09.720 enforcement can see through using the right and the effective tools. 0:12:10.000 --> 0:12:11.440 But there's a lot of crime out there and there's 0:12:11.480 --> 0:12:15.640 limited resources for law enforcement. This special audio only episode 0:12:15.640 --> 0:12:17.640 of Crypto I r L will be right back with 0:12:17.679 --> 0:12:20.560 more from Katie Greifeld and Tim Stanovic. If you want 0:12:20.559 --> 0:12:36.200 the full video experience, head to Bloomberg dot com slash qt. Okay, 0:12:36.200 --> 0:12:39.080 so we talked about shock, let's talk about scale because 0:12:39.080 --> 0:12:41.679 when I think about Silk Road, uh, that was a 0:12:41.720 --> 0:12:45.120 long time ago. Where does the state of crime using 0:12:45.160 --> 0:12:48.679 crypto stand right now? So if you look past like 0:12:48.760 --> 0:12:51.560 Silk Road, that was one marketplace. One Silk Road was 0:12:51.600 --> 0:12:54.560 taken down. It kind of like did this whackable type 0:12:54.559 --> 0:12:56.880 of thing where it dispersed and criminals were like, oh, 0:12:57.520 --> 0:12:59.880 that's a really ingenious idea in order for me to 0:13:00.000 --> 0:13:04.400 actually do my criminal activities. So you see this mold 0:13:04.440 --> 0:13:07.400 that then is being expanded within that. But if you 0:13:07.480 --> 0:13:10.800 go past just like darkner markets and drug trafficking or 0:13:10.840 --> 0:13:15.160 even UM the aspects of child expectation sites that are 0:13:15.200 --> 0:13:18.120 also being leveraged on that UM. The other type of 0:13:18.160 --> 0:13:22.000 crime is not necessarily financially driven. So we have seen 0:13:22.120 --> 0:13:26.360 individuals that have taken advantage of the Bitcoin blockchain and 0:13:26.480 --> 0:13:30.440 UM have been able to put messaging within the transactions 0:13:30.800 --> 0:13:34.199 so that it's encrypted, and there's blotton nets that then 0:13:34.280 --> 0:13:37.719 crawl the block blockchain in order to decrypt that to 0:13:37.880 --> 0:13:41.360 then infortrate different aspects. So what we saw with US 0:13:41.400 --> 0:13:43.840 was a bunch of crypto dracking that was actually occurring. 0:13:43.960 --> 0:13:47.240 So rather than just seeing the transaction that was occurring 0:13:47.400 --> 0:13:50.520 on a financial aspect, this is now being deployed for 0:13:50.559 --> 0:13:53.480 a cyber component as well. Makes something we noticed just 0:13:53.520 --> 0:13:56.800 the a few weeks ago is ices is trying to 0:13:56.920 --> 0:13:58.880 raise funds through the use of n f t s, 0:13:59.040 --> 0:14:03.040 completely novel application of the technology. The technology is amazing, 0:14:03.120 --> 0:14:05.680 it's great, but illicit actors can also use it in 0:14:05.760 --> 0:14:08.160 novel ways that are actually pretty concerning. How are they 0:14:08.160 --> 0:14:10.400 trying to do that? So basically, you know, you create 0:14:10.480 --> 0:14:12.360 sort of an n f T and use that as 0:14:12.360 --> 0:14:14.800 a means of collecting funds, and so our team at 0:14:14.800 --> 0:14:17.560 TRM was able to identify that in advance and essentially 0:14:17.600 --> 0:14:20.480 notify you know, law enforcement and has since been taken down. 0:14:20.640 --> 0:14:22.800 It doesn't look like, uh, you know, they had actually 0:14:22.880 --> 0:14:24.720 mobilized the n f T yet they were basically doing 0:14:24.760 --> 0:14:27.520 the preparatory work. I assume those n f T s weren't. 0:14:27.560 --> 0:14:33.640 Like I wish you you bring up Actually my next question, 0:14:33.680 --> 0:14:35.680 which is like I actually just don't get how isis 0:14:35.680 --> 0:14:37.640 would do this with an n f T, Like, explain 0:14:37.640 --> 0:14:39.440 how this would work. Well, essentially, you would, you know, 0:14:39.480 --> 0:14:41.720 send funds to that n f T, right, you would 0:14:41.800 --> 0:14:44.600 use that digital representation to store value and and I 0:14:44.600 --> 0:14:47.040 mean so that n f T would be not associated 0:14:47.080 --> 0:14:51.080 officially with a terrorist organization. Correct. You wouldn't realize that 0:14:51.120 --> 0:14:52.440 at the time that you were setting it, though people 0:14:52.480 --> 0:14:54.640 in the know would know to send and it would 0:14:54.640 --> 0:14:58.200 evade detection. So you're essentially setting up a bank account 0:14:58.520 --> 0:15:01.920 that is unlinked to any entity in order to raise 0:15:01.960 --> 0:15:05.160 funds for terrorists. Right. Essentially would be receiving funds in 0:15:05.160 --> 0:15:08.960 a digital manner that's not tied to any particular KYC 0:15:09.120 --> 0:15:11.520 information right now your customer, no, your customer, and you 0:15:11.520 --> 0:15:13.240 would then use that and sort of move it off, 0:15:13.400 --> 0:15:15.520 you know, move it to other chains or other areas 0:15:15.640 --> 0:15:18.200 and then try to turn it into cash. So to 0:15:18.320 --> 0:15:21.600 that point, I feel like ISIS wouldn't have been using 0:15:21.840 --> 0:15:25.080 n f t s. I don't know three four years ago. 0:15:25.560 --> 0:15:27.480 I know you both have been involved in the space 0:15:27.560 --> 0:15:30.000 for a long time, Beth, I know that you've been 0:15:30.040 --> 0:15:34.760 looking at, you know, elicit activities using crypto since we've 0:15:34.800 --> 0:15:37.560 touched on some of this, But tell me how the 0:15:37.720 --> 0:15:43.040 use case has evolved since then? Has it gotten more creative? 0:15:43.440 --> 0:15:46.520 How has it changed? Oh, it's definitely more creative. So 0:15:46.640 --> 0:15:48.400 I like to always think back, like back in the 0:15:48.440 --> 0:15:50.920 good old days with bitclin, because it's no longer the 0:15:50.960 --> 0:15:54.400 good old days, where like the technology has advanced and 0:15:54.560 --> 0:15:58.600 all of these different aspects of cryptocurrency have popped up. 0:15:58.640 --> 0:16:01.360 So you have n f t is, you now have 0:16:01.560 --> 0:16:04.720 all of the defy tokens that are available and the 0:16:04.760 --> 0:16:08.400 platforms that are operating in that manner that it's hard 0:16:08.440 --> 0:16:10.800 to keep up with all of that. So not only 0:16:10.840 --> 0:16:14.000 are you having individuals that are still in the bitcoin realm, 0:16:14.360 --> 0:16:18.640 but they are now transitioning into the DeFi space. And um, 0:16:18.680 --> 0:16:21.240 there's so many advancements with that with blockchains on top 0:16:21.280 --> 0:16:24.800 of other blockchains and UM just being able to understand 0:16:24.840 --> 0:16:28.400 what that technology represents as well as how criminals are 0:16:28.480 --> 0:16:32.360 using that technology for what it does not necessarily represent, right, 0:16:32.560 --> 0:16:36.479 And to me, that's the evolution that will always continue. 0:16:36.960 --> 0:16:41.240 UM and being able to understand how it's being leveraged 0:16:41.360 --> 0:16:44.640 is one of the most um interesting things for the 0:16:44.720 --> 0:16:48.120 evolution of what cryptocurrency is. Is it kind of easy 0:16:48.120 --> 0:16:51.080 to make money as a criminal using crypto? I would 0:16:51.080 --> 0:16:54.360 say there are ways to take advantage of the systems, 0:16:54.400 --> 0:16:56.960 for sure. So you have platforms now where you can 0:16:57.080 --> 0:17:00.800 stake funds, right, and you can stake that with criminal funds, 0:17:00.960 --> 0:17:03.680 and so like you actually are earning money and interest 0:17:03.720 --> 0:17:06.600 on all of these different things that are actually illicitly earned. 0:17:07.000 --> 0:17:11.320 I'm wondering if what you heard from Joe Wisenthal makes 0:17:11.320 --> 0:17:14.360 sense that this stuff in order for it to actually 0:17:14.720 --> 0:17:19.399 serve its promise as stateless currency and help people who 0:17:19.440 --> 0:17:21.600 are oppressed, it has to become better at crime. Because 0:17:22.119 --> 0:17:25.320 what you guys do trm at at analysis, Like you 0:17:25.400 --> 0:17:28.520 track this stuff something that we know can be tracked now, 0:17:28.560 --> 0:17:32.720 but people have this idea that it was untrackable. Well, look, 0:17:32.720 --> 0:17:35.439 I think privacy is very important, right, and so you know, 0:17:36.000 --> 0:17:38.840 at t RAN, for example, we don't touch personal sensitive data. 0:17:39.040 --> 0:17:42.399 It's all the blockchain information is publicly available. It's on 0:17:42.440 --> 0:17:44.360 a public blockchain and you can trace it over time, 0:17:44.400 --> 0:17:45.919 which is what Joe was saying, is why it's not 0:17:46.119 --> 0:17:48.639 good for crime. Right. But you know, just because something 0:17:48.680 --> 0:17:51.360 isn't necessarily good for crime doesn't mean that it's it's 0:17:51.400 --> 0:17:53.439 a it's a bad thing. Right, there's a lot of 0:17:53.440 --> 0:17:56.880 positive use cases for for crypto generally, or for distributed 0:17:56.960 --> 0:17:58.879 ledger technology, which is what all of the stuff is 0:17:58.880 --> 0:18:01.560 based on. That. You know, often people are are overlooking, right, 0:18:01.640 --> 0:18:02.960 I mean think about you know, the last time you 0:18:02.960 --> 0:18:04.919 try to send funds. So if you've got relatives and 0:18:04.920 --> 0:18:06.880 other parts of the world, you know, in the traditional 0:18:06.920 --> 0:18:10.600 banking system, it takes days. There's fees everywhere, and it 0:18:10.640 --> 0:18:12.360 takes forever, costs a lot of money, and it cost 0:18:12.400 --> 0:18:14.959 a lot of money. And with crypto and you need 0:18:15.000 --> 0:18:17.440 a bank account on both sides, if you were a criminal, 0:18:18.640 --> 0:18:21.480 would you use crypto or would you put the cash 0:18:21.680 --> 0:18:24.639 in a suitcase and sort of try to travel around 0:18:24.680 --> 0:18:27.760 that way? So can I give you my honest answers? 0:18:28.200 --> 0:18:32.639 I am not a criminal, This is a brain exercise, 0:18:32.720 --> 0:18:35.520 though it requires us to suspend reality. I mean, look, 0:18:35.800 --> 0:18:40.120 cash is still king when it comes to illicit activity. Right. 0:18:40.480 --> 0:18:43.800 Crypto is certainly a means of doing illegal things, but 0:18:43.960 --> 0:18:45.840 there are aspects that are more traceable. But there are 0:18:45.840 --> 0:18:48.560 aspects that make it more obfuscatable, like mixers and other 0:18:48.600 --> 0:18:51.240 kinds of technology. So you know, I certainly wouldn't be 0:18:51.280 --> 0:18:52.760 in the business of advice criminals and what to do 0:18:52.840 --> 0:18:56.480 or what not to do. This special audio only episode 0:18:56.480 --> 0:18:58.479 of Crypto I r L will be right back with 0:18:58.520 --> 0:19:01.400 more from Katie Greifeld and to Centevic. If you want 0:19:01.400 --> 0:19:04.480 the full video experience, head to Bloomberg dot com slash 0:19:04.560 --> 0:19:18.560 qt That students talked a lot about state actors, and 0:19:18.560 --> 0:19:21.160 I'm wondering in your work if you have any data 0:19:21.240 --> 0:19:24.120 that shows to what extent the crime is being committed 0:19:24.119 --> 0:19:27.879 by state sponsored actors versus by rogue individuals with no 0:19:27.920 --> 0:19:30.440 connection to a state. Yeah. So what we were able 0:19:30.480 --> 0:19:33.880 to identify is that UM for nation state actors there, 0:19:33.880 --> 0:19:36.720 it's over four million dollars that we have been able 0:19:36.760 --> 0:19:41.760 to tie to UM North Korea, for instance. Right, However, 0:19:41.920 --> 0:19:46.400 if you look at just individual Elica actors within that um, 0:19:46.440 --> 0:19:49.520 although the hacks are very large, so six hundred million 0:19:49.560 --> 0:19:51.680 dollars at a time for a hack, right, it makes 0:19:51.680 --> 0:19:55.679 and grabs attention for headlines. However, what is not being um, 0:19:55.760 --> 0:19:59.800 look at our individuals that are still soliciting um elicit me, 0:20:00.440 --> 0:20:03.359 but they're doing it in a larger, smaller scale, but 0:20:03.400 --> 0:20:07.280 a higher transaction, right, so that actually supersedes the amount 0:20:07.280 --> 0:20:11.119 that's actually being moved on the list of scale for that. 0:20:11.119 --> 0:20:14.879 That's really interesting and I swear I'm just curious. So 0:20:14.920 --> 0:20:17.920 if you were committing a crime, it sounds like just 0:20:17.960 --> 0:20:21.160 a series of smaller transactions makes a lot more sense 0:20:22.480 --> 0:20:26.720 in any type of movement for financial means that that 0:20:26.880 --> 0:20:30.280 is the best way, right so um being so in 0:20:30.320 --> 0:20:34.960 a traditional financial aspect, right, there's reporting requirements in order 0:20:35.040 --> 0:20:38.600 to transactions that hit a banking system, right and so 0:20:38.840 --> 0:20:41.800 um and those are the suspicious activity reports that financial 0:20:41.800 --> 0:20:45.280 institutions and money service businesses are actually supposed to report. 0:20:45.680 --> 0:20:48.480 So if you're underneath that threshold, like you're not going 0:20:48.560 --> 0:20:52.600 to be able to be reported on as easily ten 0:20:52.640 --> 0:20:57.359 thousand dollars for funds that are going on a specifics 0:20:57.640 --> 0:21:01.439 you know, in all seriousness, um, all this talk of 0:21:01.520 --> 0:21:04.280 state actors kind of has me thinking about whether or 0:21:04.280 --> 0:21:07.639 not all of this is actually a good development or not. 0:21:08.000 --> 0:21:10.359 And I'm wondering, you know, North Korea recently launched a 0:21:10.400 --> 0:21:14.480 missile over Japan and said, you know, shock ways throughout 0:21:14.520 --> 0:21:17.600 the world, and they do this every once in a while. 0:21:18.080 --> 0:21:21.520 And I'm wondering, student, if you think North Korea would 0:21:21.520 --> 0:21:23.600 be as powerful as it is today and as much 0:21:23.600 --> 0:21:26.160 of a menace to the rest of the world if 0:21:26.200 --> 0:21:28.720 there was no such thing as crypto. Yeah, I think 0:21:28.720 --> 0:21:31.680 you can strip the crypto conversation out of that, because 0:21:31.680 --> 0:21:34.600 North Korea has been engaging in this kind of maligned 0:21:34.600 --> 0:21:37.520 cyber activity for years. They tried to steal I think 0:21:37.520 --> 0:21:39.680 it was a billion dollars from the Bank of Bangladesh 0:21:39.680 --> 0:21:41.960 a few years ago, but basically hacking into the Federal 0:21:42.040 --> 0:21:45.040 Reserve New York's account that the Bank of Bangladesh was 0:21:45.119 --> 0:21:48.399 using and siphon that money out. Nothing to do with crypto, right, 0:21:48.480 --> 0:21:52.199 it was just a cyber hack. So crypto certainly makes it, 0:21:52.320 --> 0:21:54.840 you know, a more interesting conversation because there are certain 0:21:54.880 --> 0:21:57.600 things that nation state actors can do that they couldn't 0:21:57.640 --> 0:21:59.639 do more, you know, as easily in a in a 0:21:59.680 --> 0:22:02.640 pure kind of analog world, do you guys like crypto? 0:22:02.800 --> 0:22:05.679 I mean, do you see, you guys look at the 0:22:05.720 --> 0:22:08.560 worst side of crypto when you zoom out from that? 0:22:08.640 --> 0:22:11.920 I mean, do you see this is a net positive 0:22:11.960 --> 0:22:14.000 or what are your feelings? All Right, It's definitely a 0:22:14.000 --> 0:22:17.480 net positive. Like it's innovation at its finest, and it's 0:22:17.480 --> 0:22:20.520 really fascinating to be able to watch um being able 0:22:20.560 --> 0:22:23.720 to step back and see that individuals that maybe in 0:22:23.920 --> 0:22:28.600