WEBVTT - Weekend Bonus: Crypto IRL, Episode 8, 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 Marie 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. 0:00:42.440 --> 0:00:45.479 This is episode eight of Crypto I r L. If 0:00:45.479 --> 0:00:48.360 you want the full video experience, head over to Bloomberg 0:00:48.360 --> 0:01:04.919 dot com, slash qt or check it out on YouTube. So, Katie, 0:01:04.959 --> 0:01:07.320 anything going on in the world of crypto over the 0:01:07.440 --> 0:01:09.960 last week. There's a life altering event in the world 0:01:09.959 --> 0:01:12.880 of crypto this past week. You're talking about f t X. 0:01:12.920 --> 0:01:16.600 It's bankruptcy. I am huge, it is huge. Well, we 0:01:16.680 --> 0:01:20.039 got Bloomberg TV for all the breaking news. But we 0:01:20.520 --> 0:01:22.840 want to talk about crime, and it's not necessarily crime 0:01:22.880 --> 0:01:27.199 associated with the downfall of f t X. Innocent until 0:01:27.280 --> 0:01:30.800 proven guilty, it is being investigated, but a different type 0:01:30.800 --> 0:01:34.280 of crime when it comes to crypto, specifically bitcoin and 0:01:34.319 --> 0:01:37.679 crime and whether or not bitcoin is actually good for 0:01:37.760 --> 0:01:40.520 crime and whether it needs to be for thinking about 0:01:40.600 --> 0:01:49.120 money laundering. Bitcoin has been closely associated with crime since 0:01:49.320 --> 0:01:52.360 pretty much the beginning. In the early days, it was 0:01:52.400 --> 0:01:54.800 the currency of choice on the dark wet, used in 0:01:54.920 --> 0:01:58.280 drug deals, and even a murder for higher plot. In 0:01:58.360 --> 0:02:00.960 more recent years, it's been what happens have demanded when 0:02:00.960 --> 0:02:04.320 they've held pipelines, hospital systems, and met packing plants hostage, 0:02:04.760 --> 0:02:08.400 And then there's been the hacks. October two is on 0:02:08.440 --> 0:02:10.920 track to see more crypto stolen and hacks than any 0:02:10.960 --> 0:02:14.360 other month this year is on pace to be a 0:02:14.360 --> 0:02:18.600 record according to chain analysis. But his bitcoin actually good 0:02:18.600 --> 0:02:21.880 for crime? Since all transactions are public on the blockchain, 0:02:22.240 --> 0:02:25.240 everyone can see bitcoin move on the blockchain, and governments 0:02:25.240 --> 0:02:28.560 and other organizations are getting better at recovering stolen bitcoin. Plus, 0:02:29.240 --> 0:02:32.040 it's not actually that easy to launder bitcoin to turn 0:02:32.120 --> 0:02:36.560 lots of it into real, usable money. This raises an 0:02:36.560 --> 0:02:40.359 important question. If bitcoin isn't good at crime, then how 0:02:40.360 --> 0:02:42.399 can it live up to its promise as a stateless 0:02:42.440 --> 0:02:45.960 currency that could allow people in impressed areas to transact 0:02:46.000 --> 0:02:49.240 with one another without a regulator seeing what they're up to. 0:02:53.880 --> 0:02:56.760 Joe wasn't all of the odd lots podcast. We're not 0:02:56.800 --> 0:02:59.840 going to get into the f t X collapse, but 0:03:00.040 --> 0:03:03.880 you wrote back in February that it's time for bitcoin 0:03:04.400 --> 0:03:07.040 and crypto in general to get better at crime, and 0:03:07.080 --> 0:03:09.160 we're talking about a different type of crime that f 0:03:09.240 --> 0:03:13.560 TX is being investigated for, potentially more along the lines 0:03:14.040 --> 0:03:17.280 of money laundering. So way out your case for us, Well, 0:03:17.320 --> 0:03:20.280 you know, one of the core arguments that like bitcoiners 0:03:20.400 --> 0:03:24.680 make is that it's like separation of money and state right, 0:03:24.840 --> 0:03:26.920 and that it's a sort of form of money that 0:03:26.960 --> 0:03:30.680 doesn't rely on the government, it doesn't rely on traditional 0:03:30.680 --> 0:03:32.800 banking system, etcetera. And when I wrote the piece, it 0:03:32.840 --> 0:03:35.840 was if you were called like during the Canadian trucking 0:03:35.960 --> 0:03:39.120 protests and there was that big convoy and sitting aside 0:03:40.320 --> 0:03:43.520 what one's view of the protest work, which I think 0:03:43.560 --> 0:03:45.920 is like kind of irrelevant to the question. The point is, 0:03:46.240 --> 0:03:50.280 if there's going to be a moment where people needed 0:03:50.400 --> 0:03:53.280 a form of money that could like they could transact 0:03:53.320 --> 0:03:55.880 without censorship, that was it. And it didn't really work 0:03:55.920 --> 0:03:58.560 for that. They were able to like very easily track 0:03:58.680 --> 0:04:02.520 the transactions. They were able to like freeze wallets from 0:04:02.560 --> 0:04:05.520 like interacting with banks, so It's like, if bitcoin is 0:04:05.560 --> 0:04:08.320 going to live up to its promise of being a 0:04:08.360 --> 0:04:11.800 means of transaction that is separate from the states, separate 0:04:11.800 --> 0:04:14.400 from the financial institutions, I don't think it's there yet 0:04:14.520 --> 0:04:18.480 in terms of whether it's privacy or obfuscation or things 0:04:18.520 --> 0:04:23.120 like that. So you're essentially saying that if bitcoin is 0:04:23.160 --> 0:04:26.040 to live up to its promise of being this stateless currency, 0:04:26.279 --> 0:04:29.240 something that could help and oppressed people, yeah, then it 0:04:29.400 --> 0:04:32.159 actually needs to be something that would also be good 0:04:32.160 --> 0:04:34.440 for criminals. I think that, yeah, that would be the 0:04:34.480 --> 0:04:37.600 implicated because again, like what's what's a criminal in one 0:04:37.880 --> 0:04:40.840 country one city could just be a protest or somewhere else. 0:04:40.920 --> 0:04:45.080 So to some extent, like this distinction is going to 0:04:45.160 --> 0:04:48.720 be very like vagable, like yeah, some places like protest 0:04:49.000 --> 0:04:53.000 is crime, someplace free speeches crime. And so the point 0:04:53.120 --> 0:04:56.520 is that for it to like yeah, fulfill its mission, 0:04:56.800 --> 0:04:58.440 then on some level there has to be a way 0:04:58.440 --> 0:05:01.240 to transact with it without the state being able to say, 0:05:01.400 --> 0:05:03.600 you got these coins, and now these coins that they 0:05:03.640 --> 0:05:05.760 ever go to an exchange, if they ever go to 0:05:05.800 --> 0:05:08.600 like a fiat off ramp, they'll be frozen. What is 0:05:08.640 --> 0:05:10.600 the point then, I think part of the reason I've 0:05:10.600 --> 0:05:12.880 been thinking about this column that you wrote for I 0:05:12.880 --> 0:05:16.719 don't know, eight nine months is that it kind of 0:05:17.040 --> 0:05:20.640 made me think that crime is really subjective. Crime to 0:05:20.680 --> 0:05:23.599 one person, to one government, is not a crime to 0:05:23.640 --> 0:05:26.440 another government. Yeah, right, like there are all there are. 0:05:26.440 --> 0:05:29.559 There are certain categories of crimes that everyone would find 0:05:29.600 --> 0:05:35.040 to be like absolutely absolutely, but there are other yeah, 0:05:35.200 --> 0:05:39.120 in different situations, like you know, sending someone or selling 0:05:39.120 --> 0:05:41.039 a copy of the Bible might be a crime in 0:05:41.080 --> 0:05:44.279 some countries, or a different religious text or any other 0:05:44.400 --> 0:05:47.320 sort of like protest or whatever it is. And so yeah, 0:05:47.440 --> 0:05:50.400 that's exactly right. Like, how would you even begin to 0:05:50.480 --> 0:05:53.640 conceive of a currency that would work for what we 0:05:53.680 --> 0:05:57.640 would call like legitimate crime or legitimate dissidents within a 0:05:57.720 --> 0:06:00.000 country if it didn't work for things that we would 0:06:00.080 --> 0:06:03.200 considered to be reprehensible. But it works to a certain extent, 0:06:03.880 --> 0:06:05.919 And that's what it seems like at least because we 0:06:06.040 --> 0:06:11.560 are seeing still ransomware attacks that are you know, essentially 0:06:11.600 --> 0:06:16.839 say pay us x bitcoin else. Yeah, although even even 0:06:17.040 --> 0:06:20.920 ransomware attacks, there's a pretty big loss of market share 0:06:20.960 --> 0:06:22.640 by bigcoin that we've seen to like some of the 0:06:22.680 --> 0:06:25.200 privacy coins like I think like if you look around 0:06:25.240 --> 0:06:28.120 like a narrow which is a much smaller, less liquid, 0:06:28.240 --> 0:06:31.160 less market. Kept point is still popular among ransomware in 0:06:31.240 --> 0:06:33.960 tax and part because of this reason. It's like has 0:06:34.040 --> 0:06:36.960 privacy built into it from like ground up. Wait, so 0:06:37.000 --> 0:06:38.799 if you're a criminal and you want to do some crime, 0:06:39.200 --> 0:06:43.440 which is never suggest but I do think that it 0:06:43.560 --> 0:06:49.280 speaks to again like ransomware is really bad. So this 0:06:49.360 --> 0:06:51.600 is not about that. The point is like, well, then 0:06:51.720 --> 0:06:54.200 if if it doesn't work for these, then what I 0:06:54.400 --> 0:06:58.040 like to sort of like freedom, sort of like outside 0:06:58.080 --> 0:07:01.919 the state, outside the financial instant tuitions use cases that 0:07:02.000 --> 0:07:03.920 it does work for. Because the point that I see 0:07:03.960 --> 0:07:05.680 is like, Okay, they say it's like no one can 0:07:05.760 --> 0:07:08.279 block a bitcoin transaction, no one can censor it. But 0:07:08.480 --> 0:07:11.320 isn't it a defactive form of censorship if an entity 0:07:11.400 --> 0:07:14.280 can say these wallets can no longer move to an exchange, 0:07:14.280 --> 0:07:17.200 And I think that's an important sort of set up 0:07:17.240 --> 0:07:20.680 there that you can do pack and get bitcoin in exchange. 0:07:21.080 --> 0:07:23.320 It's just you can't really do anything with the bitcoin 0:07:23.360 --> 0:07:25.320 that you write. And you know, there's all kind of 0:07:25.320 --> 0:07:27.880 like train analysis is getting better and better, so it 0:07:27.920 --> 0:07:32.160 gets it becomes easier to like connect an individual to 0:07:32.600 --> 0:07:35.920 a wallet and so forth, and like law enforcement and 0:07:36.080 --> 0:07:39.280 private software companies are getting really good at this. But 0:07:39.360 --> 0:07:41.280 if there's a point where it's like really hard to 0:07:41.320 --> 0:07:45.480 disassociate a coin from a human name, from someone that 0:07:45.600 --> 0:07:49.000 is known to officials, then you start to, I think, 0:07:49.600 --> 0:07:53.880 lose some of the promise of the currency. Anything really well, 0:07:53.880 --> 0:07:57.080 that's that's it. It's a whole different episode the Philosophy Show. 0:07:58.920 --> 0:08:00.760 A delight. Thank you for having that. I'd love to 0:08:00.800 --> 0:08:07.520 be back. Beth Bisbee from Analysis, Sugit Raman from TRM Labs. 0:08:07.560 --> 0:08:08.920 It's good to have you both here with us. How 0:08:08.960 --> 0:08:11.360 are you great? Thanks for having us. What do you 0:08:11.360 --> 0:08:15.800 think of the crime scene? It's great, very realistic. It's 0:08:15.840 --> 0:08:18.560 like when you investigate a crypto in the digital world. 0:08:18.560 --> 0:08:20.520 This is exactly what it's like with all the coins, 0:08:20.640 --> 0:08:23.640 all the coins, the yellow you know, we're going for 0:08:23.720 --> 0:08:27.280 something that's really authentic. So that's some good feedback. Um, Hey, Beth, 0:08:27.280 --> 0:08:30.720 I want to start with you just give us an 0:08:30.760 --> 0:08:33.720 idea of the most shocking crime you've ever seen committed 0:08:33.720 --> 0:08:37.440 with crypto. So if I go back to my days 0:08:37.520 --> 0:08:40.240 when I was with the Drug enforce and Administration, Um, 0:08:40.320 --> 0:08:45.079 it was with drug traffickers and anywhere from drug trafficking 0:08:45.160 --> 0:08:49.760 with money laundering using crypto for drug cartels or your 0:08:49.960 --> 0:08:54.600 running the mill, individuals that were down in their parents basement, um, 0:08:54.600 --> 0:08:58.079 selling drugs on the internet. So those are shocking in 0:08:58.200 --> 0:09:03.160 the in the themselves and like how the individuals actually 0:09:03.280 --> 0:09:06.480 like benefited from it and leveraging crypto for that. When 0:09:06.480 --> 0:09:08.480 I think about drugs and I think about bitcoin, and 0:09:08.480 --> 0:09:11.760 I think about them both together, I think about silk road, 0:09:11.960 --> 0:09:14.720 Like is that the sort of stuff that we're talking about? Yeah, 0:09:14.760 --> 0:09:19.120 so kind of both, right, So the very first really 0:09:19.200 --> 0:09:23.440 play of drugs and crypto is silk road. Right, that 0:09:23.559 --> 0:09:26.280 was one of the most innovative spaces for somebody to 0:09:26.360 --> 0:09:28.560 be like how do I get this onto the black 0:09:28.600 --> 0:09:32.520 market without being detected by law enforcement? And then this 0:09:32.600 --> 0:09:36.360 was the generation of leveraging tour and the digital realm 0:09:36.440 --> 0:09:39.600 of what payment system was, which was crypto, and that's 0:09:39.640 --> 0:09:43.640 what created silk road. So for the traditional sense of 0:09:43.679 --> 0:09:46.400 the digital aspect for drug trafficking, yes, that would be 0:09:46.440 --> 0:09:49.920 what it is. However, um, anytime you have a type 0:09:49.920 --> 0:09:53.600 of crime, you can leverage crypto for that. So drug 0:09:53.640 --> 0:09:56.720 trafficking and the traditional sense, where you have the actual 0:09:56.800 --> 0:10:01.839 bulk movement of large qs of drugs um individuals can 0:10:01.840 --> 0:10:05.920 still accept payment with that through crypto suggets. Same question 0:10:06.440 --> 0:10:10.320 was shock and crime using Bicklin, They weren't necessarily shocking 0:10:10.400 --> 0:10:12.800 to me, because criminals often go where the sort of 0:10:12.800 --> 0:10:15.439 technology is. But the first time I was really struck 0:10:15.640 --> 0:10:19.200 by how interesting crypto really could be was when I 0:10:19.240 --> 0:10:23.040 read the indictments charging those Russian intelligence officers with interfering 0:10:23.040 --> 0:10:26.040 in the elections in because if you read those indictments, 0:10:26.120 --> 0:10:29.880 you'll see that intelligence officers were using crypto to buy 0:10:29.960 --> 0:10:32.679 servers within the United States to try to sort of 0:10:32.880 --> 0:10:37.040 you know, obscure their tracks and use that to basically 0:10:37.080 --> 0:10:40.040 purchase the infrastructure that they then used to launch the 0:10:40.040 --> 0:10:42.880 hacks into the DNC emails and all that, and even 0:10:42.880 --> 0:10:45.679 hosted the website that you know, sort of hosted all 0:10:45.679 --> 0:10:48.720 that information through the payment of crypto. So when I 0:10:48.760 --> 0:10:51.040 was in a senior role the Justice Department, that's the 0:10:51.040 --> 0:10:54.120 first time I realized, Wow, I mean, crime is very important, 0:10:54.160 --> 0:10:55.679 and all the stuff we're doing on sort of dark 0:10:55.720 --> 0:10:58.600 webs really important. But there's a foreign intelligence component to this. 0:10:58.760 --> 0:11:02.319 There's a defending democracy component to this, but ultimately those 0:11:02.320 --> 0:11:05.520 individuals were indicted. They were indicted, and the allegations are 0:11:05.520 --> 0:11:08.360 in the indictment right, and in the in the indictment 0:11:08.440 --> 0:11:10.679 you see the evidence of them using what was it, 0:11:10.760 --> 0:11:14.520 bitcoin correct, various types of crypto. So the question, well, 0:11:14.520 --> 0:11:16.400 we'll keep the question a bitcoin for now and then 0:11:16.640 --> 0:11:18.559 take it out to other types of crypto. But does 0:11:18.600 --> 0:11:20.120 it does that mean that it is or is not 0:11:20.200 --> 0:11:24.160 an effective means to essentially commit crime with? So it 0:11:24.800 --> 0:11:27.320 you know, it can be traced, right. This is something 0:11:27.320 --> 0:11:30.680 that criminals often don't realize is that the bitcoin network 0:11:30.720 --> 0:11:34.240 itself is quite traceable, and folks like my team at 0:11:34.240 --> 0:11:37.000 Tierra Labs BETS team of chain analysis have become very 0:11:37.040 --> 0:11:40.960 good at tracing those payments. So it's just dumb criminals 0:11:41.000 --> 0:11:43.040 at this point then, because I feel like at least 0:11:43.160 --> 0:11:45.280 I don't know, maybe I spend too much time in 0:11:45.320 --> 0:11:46.920 my own bubble, but I feel like it's pretty well 0:11:46.920 --> 0:11:50.600 known that you can track things on the blockchain by now. Well, 0:11:50.640 --> 0:11:52.280 I think a lot of people maybe don't realize that. 0:11:52.640 --> 0:11:55.079 The other thing is it still takes time. Right, You've 0:11:55.120 --> 0:11:58.280 got technology like mixers and other types of technology that 0:11:58.320 --> 0:12:00.640 will help you sort of you know, mix up the 0:12:00.640 --> 0:12:03.840 transactions a little bit. Um. Even that capability is something 0:12:03.960 --> 0:12:06.280 law enforcement can see through using the right and the 0:12:06.280 --> 0:12:08.520 effective tools. But there's a lot of crime out there 0:12:08.520 --> 0:12:12.560 and there's limited resources for law enforcement. This special audio 0:12:12.640 --> 0:12:14.880 only episode of Crypto I r L will be right 0:12:14.920 --> 0:12:17.959 back with more from Katie Greifeld and Tim Stanovic. If 0:12:17.960 --> 0:12:20.720 you want the full video experience, head to Bloomberg dot 0:12:20.800 --> 0:12:34.400 com slash qt Okay. So we talked about shock, Let's 0:12:34.440 --> 0:12:37.959 talk about scale because when I think about Silk Road, Uh, 0:12:38.000 --> 0:12:41.120 that was a long time ago. Where does the state 0:12:41.160 --> 0:12:44.280 of crime using crypto stand right now? So if you 0:12:44.559 --> 0:12:47.679 look past like Silk Road, that was one marketplace. One 0:12:47.720 --> 0:12:50.080 Silk Road was taken down. It kind of like did 0:12:50.120 --> 0:12:52.920 this whackable type of thing where it dispersed and criminals 0:12:52.920 --> 0:12:56.320 were like, oh, that's a really ingenious idea in order 0:12:56.360 --> 0:12:59.440 for me to actually do my criminal activities. So you 0:12:59.600 --> 0:13:03.360 see this mold that then is being expanded within that. 0:13:03.720 --> 0:13:06.360 But if you go past, just like darknet markets and 0:13:06.400 --> 0:13:11.079 drug trafficking or even um the aspects of child exploitation 0:13:11.160 --> 0:13:14.120 sites that are also being leveraged on that, um, the 0:13:14.200 --> 0:13:17.959 other type of crime is not necessarily financially driven. So 0:13:18.080 --> 0:13:21.840 we've seen individuals that have taken advantage of the Bitcoin 0:13:21.880 --> 0:13:26.200 blockchain and um have been able to put messaging within 0:13:26.240 --> 0:13:30.680 the transactions so that it's encrypted, and either's bot nets 0:13:30.679 --> 0:13:34.120 that then crawl the block blockchain in order to decrypt 0:13:34.160 --> 0:13:37.840 that to then infortrate different aspects. So what we saw 0:13:37.880 --> 0:13:39.800 with US was a bunch of crypto dracking that was 0:13:39.800 --> 0:13:43.360 actually occurring. So rather than just seeing the transaction that 0:13:43.480 --> 0:13:46.400 was occurring on a financial aspect, this is now being 0:13:46.440 --> 0:13:49.680 deployed for a cyber component as well. I means something 0:13:49.679 --> 0:13:53.160 we noticed just a few weeks ago is ices is 0:13:53.160 --> 0:13:55.280 trying to raise funds through the use of n f 0:13:55.320 --> 0:13:59.160 T s completely novel application of the technology. The technology 0:13:59.200 --> 0:14:02.079 is amazing, it's great, but elicit actors can also use 0:14:02.120 --> 0:14:04.640 it in novel ways that are actually pretty concerning. How 0:14:04.640 --> 0:14:06.760 are they trying to do that? So basically, you know, 0:14:06.800 --> 0:14:08.600 you create sort of an n f T and use 0:14:08.720 --> 0:14:11.200 that as a means of collecting funds. And so our 0:14:11.200 --> 0:14:13.680 team at TRM was able to identify that in advance 0:14:13.679 --> 0:14:16.360 and essentially notify you know, law enforcement and has since 0:14:16.400 --> 0:14:19.000 been taken down. It doesn't look like, uh, you know 0:14:19.040 --> 0:14:20.800 they had actually mobilized the n f T, yet they 0:14:20.800 --> 0:14:23.520 were basically doing the preparatory work. I assume those n 0:14:23.560 --> 0:14:29.000 f T s weren't like I wish, But you you 0:14:29.040 --> 0:14:30.880 bring up actually my next question, which is like I 0:14:30.880 --> 0:14:32.960 actually just don't get how ISIS would do this with 0:14:32.960 --> 0:14:35.600 an n f T, Like, explain how this would work? Well, essentially, 0:14:35.640 --> 0:14:38.200 you would, you know, send funds to that n f T, right, 0:14:38.200 --> 0:14:41.080 you would use that digital representation to store value. And 0:14:41.280 --> 0:14:43.800 I mean that n f T would be not associated 0:14:43.800 --> 0:14:47.840 officially with a terrorist organization, correct, You wouldn't realize that 0:14:47.840 --> 0:14:49.200 at the time that you were sending it, though people 0:14:49.200 --> 0:14:51.320 in the know would know to send and it would 0:14:51.400 --> 0:14:55.000 evade detection. So you're essentially setting up a bank account 0:14:55.240 --> 0:14:58.640 that is unlinked to any entity in order to raise 0:14:58.680 --> 0:15:01.880 funds for terrorists. Right, Essentially would be receiving funds in 0:15:01.880 --> 0:15:05.720 a digital manner that's not tied to any particular KYC 0:15:05.880 --> 0:15:08.240 information right now, your customer, know your customer, and you 0:15:08.240 --> 0:15:09.960 would then use that and sort of move it off, 0:15:10.120 --> 0:15:12.280 you know, move it to other chains or other areas 0:15:12.360 --> 0:15:15.000 and then try to turn it into cash. So to 0:15:15.080 --> 0:15:18.360 that point, I feel like ISIS wouldn't have been using 0:15:18.600 --> 0:15:21.760 n f t s. I don't know three four years ago. 0:15:22.320 --> 0:15:24.240 I know you both have been involved in the space 0:15:24.320 --> 0:15:26.760 for a long time, Beth, I know that you've been 0:15:26.760 --> 0:15:31.520 looking at, you know, illicit activities using crypto since we've 0:15:31.520 --> 0:15:34.280 touched on some of this. But tell me how the 0:15:34.480 --> 0:15:39.800 use case has evolved since then? Has it gotten more creative? 0:15:40.160 --> 0:15:43.280 How has it changed? Oh, it's definitely more creative. So 0:15:43.360 --> 0:15:45.160 I like to always think back, like back in the 0:15:45.160 --> 0:15:47.680 good old days with bitclin, because it's no longer the 0:15:47.680 --> 0:15:51.160 good old days, where like the technology has advanced and 0:15:51.320 --> 0:15:55.320 all of these different aspects of cryptocurrency have popped up. 0:15:55.360 --> 0:15:58.120 So you have n f t s, you now have 0:15:58.320 --> 0:16:02.120 all of the defied toekens are available, and the platforms 0:16:02.160 --> 0:16:05.280 that are operating in that manner that it's hard to 0:16:05.360 --> 0:16:07.720 keep up with all of that. So not only are 0:16:07.760 --> 0:16:10.760 you having individuals that are still in the bitcoin realm, 0:16:11.120 --> 0:16:15.360 but they're now transitioning into the DeFi space. And UM 0:16:15.400 --> 0:16:18.000 there's so many advancements with that with blockchains on top 0:16:18.000 --> 0:16:21.520 of other blockchains and um just being able to understand 0:16:21.560 --> 0:16:25.160 what that technology represents as well as how criminals are 0:16:25.240 --> 0:16:29.120 using that technology. For what it does not necessarily represent, right, 0:16:29.280 --> 0:16:33.200 and to me, that's the evolution that I will always continue. 0:16:33.720 --> 0:16:37.960 Um and being able to understand how it's being leveraged 0:16:38.080 --> 0:16:41.400 is one of the most um interesting things for the 0:16:41.440 --> 0:16:44.840 evolution of what cryptocurrency is. Is it kind of easy 0:16:44.880 --> 0:16:47.760 to make money as a criminal using crypto? I would 0:16:47.800 --> 0:16:51.080 say there are ways to take advantage of the systems 0:16:51.120 --> 0:16:53.680 for sure. So you have platforms now where you can 0:16:53.840 --> 0:16:57.120 stake funds, right, and you can stake that with criminal 0:16:57.160 --> 0:17:00.440 funds and so like you actually are earning money interest 0:17:00.480 --> 0:17:03.360 on all of these different things that are actually illicitly earned. 0:17:03.760 --> 0:17:08.040 I'm wondering if what you heard from Joe Wisenthal makes 0:17:08.080 --> 0:17:11.120 sense that this stuff in order for it to actually 0:17:11.440 --> 0:17:16.119 serve its promise as stateless currency and help people who 0:17:16.160 --> 0:17:18.359 are oppressed, it has to become better at crime. Because 0:17:18.880 --> 0:17:22.119 what you guys do TRM a at analysis, like you 0:17:22.160 --> 0:17:25.240 track this stuff something that we know can be tracked now, 0:17:25.280 --> 0:17:29.440 but people have this idea that it was untrackable. Well, look, 0:17:29.480 --> 0:17:32.040 I think privacy is very important, right, and so you 0:17:32.080 --> 0:17:34.760 know at t RM, for example, we don't touch personal 0:17:34.840 --> 0:17:38.720 sensitive data. It's all the blockchain information is publicly available, 0:17:38.840 --> 0:17:40.679 it's on a public blockchain, and you can trace it 0:17:40.720 --> 0:17:42.360 over time, which is what Joe was saying, is why 0:17:42.359 --> 0:17:44.760 it's not good for crime. Right. But you know, just 0:17:44.800 --> 0:17:47.679 because something isn't necessarily good for crime doesn't mean that 0:17:47.720 --> 0:17:49.800 it's it's a it's a bad thing, right. There's a 0:17:49.840 --> 0:17:52.959 lot of positive use cases for for crypto generally, or 0:17:53.000 --> 0:17:55.199 for distributed ledger technology, which is what all of the 0:17:55.200 --> 0:17:57.280 stuff is based on. That. You know, often people are 0:17:57.320 --> 0:17:59.240 are overlooking, right, I mean think about you know, the 0:17:59.280 --> 0:18:00.959 last time you try to and fund so if you've 0:18:01.000 --> 0:18:03.000 got relatives and other parts of the world, you know, 0:18:03.040 --> 0:18:06.560 in the traditional banking system, it takes days. There's fees everywhere, 0:18:06.800 --> 0:18:08.840 and it takes forever, cause a lot of money, and 0:18:08.880 --> 0:18:11.439 it cost a lot of money. And with crypto and 0:18:11.480 --> 0:18:13.439 you need a bank account on both sides, if you 0:18:13.480 --> 0:18:17.439 were a criminal, would you use crypto or would you 0:18:17.480 --> 0:18:20.640 put the cash in a suitcase and sort of try 0:18:20.680 --> 0:18:22.800 to travel around that way? So can I give you 0:18:22.880 --> 0:18:28.359 my honest answers? I am not a criminal. This is 0:18:28.359 --> 0:18:31.760 a brain exercise, though it requires us to suspend reality. 0:18:31.760 --> 0:18:35.440 I mean, look, cash is still king when it comes 0:18:35.440 --> 0:18:38.760 to illicit activity, right, crypto is certainly a means of 0:18:38.800 --> 0:18:42.240 doing illegal things, but there are aspects that are more traceable, 0:18:42.280 --> 0:18:44.720 but there are aspects that make it more obfuscatable, like 0:18:44.760 --> 0:18:47.200 mixers and other kinds of technology. So you know, I 0:18:47.240 --> 0:18:49.159 certainly wouldn't be in the business of advice and criminals 0:18:49.200 --> 0:18:50.880 and what to do or what not to do. Best. 0:18:50.880 --> 0:18:53.000 Students talked a lot about state actors, and I'm wondering 0:18:53.200 --> 0:18:55.639 in your work if you have any data that shows 0:18:55.640 --> 0:18:58.600 to what extent the crime is being committed by state 0:18:58.680 --> 0:19:02.439 sponsored actors as by rogue individuals with no connection to 0:19:02.480 --> 0:19:05.040 a state. Yeah, So what we were able to identify 0:19:05.240 --> 0:19:08.520 is that for nation state actors there, it's over four 0:19:08.840 --> 0:19:11.320 d million dollars that we have been able to tie 0:19:11.440 --> 0:19:16.199 to UM North Korea for instance. Right. However, if you 0:19:16.240 --> 0:19:20.920 look at just individual elicita actors within that UM, although 0:19:21.080 --> 0:19:23.879 the hacks are very large, so six hundred million dollars 0:19:23.920 --> 0:19:25.840 at a time for a hack, right, it makes and 0:19:25.880 --> 0:19:29.560 grabs attention for headlines. However, what is not being on 0:19:29.760 --> 0:19:34.200 look at our individuals that are still soliciting UM illicit means, 0:19:34.480 --> 0:19:37.359 but they're doing it in a larger, smaller scale, but 0:19:37.440 --> 0:19:41.280 a higher transaction rate, so that actually supersedes the amount 0:19:41.320 --> 0:19:45.160 that's actually being moved on the elicit scale. For that, 0:19:45.160 --> 0:19:48.879 that's really interesting, and I swear I'm just curious. So 0:19:48.920 --> 0:19:51.919 if you were committing a crime, it sounds like just 0:19:51.960 --> 0:19:55.160 a series of smaller transactions makes a lot more sense 0:19:56.480 --> 0:20:01.000 in any type of movement for financial me that is 0:20:01.040 --> 0:20:04.399 the best way, right, so um, being so in a 0:20:04.440 --> 0:20:09.119 traditional financial aspect, right, there's reporting requirements in order to 0:20:09.560 --> 0:20:13.240 for transactions that hit a banking system, right and so um, 0:20:13.280 --> 0:20:16.359 and those are the suspicious activity reports that financial institutions 0:20:16.359 --> 0:20:19.920 and money service businesses are actually supposed to report. So 0:20:20.119 --> 0:20:22.639 if you're underneath that threshold, like you're not going to 0:20:22.720 --> 0:20:26.960 be able to be reported on as easily ten thousand 0:20:27.000 --> 0:20:31.520 dollars for funds that are going on a lot of specifics. 0:20:32.240 --> 0:20:34.879 This special audio only episode of Crypto I r L 0:20:35.040 --> 0:20:37.280 will be right back with more from Katie Greifeld and 0:20:37.320 --> 0:20:40.600 Tim Stenovic. If you want the full video experience, head 0:20:40.600 --> 0:20:57.080 to Bloomberg dot com slash qt. You know, in all seriousness, um, 0:20:57.119 --> 0:20:59.800 all this talk of state actors kind of has me 0:20:59.800 --> 0:21:02.960 think about whether or not all of this is actually 0:21:03.000 --> 0:21:05.280 a good development or not and I'm wondering. You know, 0:21:05.320 --> 0:21:08.920 North Korea recently launched a missile over Japan and sent 0:21:09.640 --> 0:21:12.919 you know, shock ways throughout the world, and they do 0:21:13.000 --> 0:21:15.719 this every once in a while. And I'm wondering, student, 0:21:15.760 --> 0:21:18.840 if you think North Korea would be as powerful as 0:21:18.880 --> 0:21:20.600 it is today and as much of a menace to 0:21:20.640 --> 0:21:23.320 the rest of the world if there was no such 0:21:23.359 --> 0:21:25.919 thing as crypto. Yeah, I think you can strip the 0:21:25.960 --> 0:21:29.320 crypto conversation out of that, because North Korea has been 0:21:29.359 --> 0:21:32.600 engaging in this kind of aligned cyber activity for years. 0:21:32.720 --> 0:21:34.760 They tried to steal I think it was a billion 0:21:34.800 --> 0:21:36.800 dollars from the Bank of Bangladesh a few years ago, 0:21:36.920 --> 0:21:39.800 but basically hacking into the Federal Reserve New York's account 0:21:40.240 --> 0:21:42.760 that the Bank of Bangladesh was using and siphon that 0:21:42.800 --> 0:21:45.159 money out. Nothing to do with crypto, right, It was 0:21:45.240 --> 0:21:49.000 just a cyber hack. So crypto certainly makes it, you know, 0:21:49.119 --> 0:21:51.560 a more interesting conversation because there are certain things that 0:21:51.680 --> 0:21:54.520 nation state actors can do that they couldn't do more, 0:21:54.600 --> 0:21:56.840 you know, as easily in a in a purely kind 0:21:56.840 --> 0:21:59.480 of analog world. Do you guys like crypto? I mean, 0:21:59.480 --> 0:22:02.959 do you see you guys look at the worst side 0:22:03.160 --> 0:22:05.320 of crypto when you zoom out from that, I mean, 0:22:05.359 --> 0:22:08.560 do you see this is a net positive or what 0:22:08.600 --> 0:22:11.160 are your feelings? All Right, It's definitely a net positive. 0:22:11.440 --> 0:22:14.720 Like it's innovation at its finest, and it's really fascinating 0:22:14.760 --> 0:22:17.399 to be able to watch um being able to step 0:22:17.400 --> 0:22:21.840 back and see that individuals that maybe in underprivileged areas 0:22:21.920 --> 0:22:26.120