Chainalysis: Information sharing to combat crypto crime

Chainalysis has said information sharing across “three dimensions” is needed to help combat cryptocurrency crime, however understands “it's more challenging to do in practice”. 

Chengyi Ong, head of APAC policy at Chainalysis told Digital Nation that despite its challenges, information sharing is a strong method to help combat cryptocurrency scams both in the private and public sectors. 

“What we would like to see is information sharing, this comes up a lot. It's one of those things that is that makes a lot of sense. 

“But of course, it's more challenging to do in practice, for various operational and legal reasons. 

“At the end of the day, what we're seeing now, particularly in the issue of scams, is that firstly, it's cross-sector,” Ong said.  

According to Ong, this was recognised in the proposals from the government around a new scam framework. 

Last year, the government laid out its proposed Scams Code Framework as the next stage in its fight against scams, which cost Australians over $3.1 billion alone in 2022.  

Ong said the idea centred on the plan to bring in the different sectors such as telcos and banks, “to maximize the touch points and the vectors through which people can be scammed.”

“It's cross-sectoral. It's also transnational. Often what happens is the scammers themselves are not located in Australia, they're located somewhere else. The value that gets stolen also gets sent potentially overseas. 

The best method of information sharing “needs to take place on three dimensions.”

“First is across sectors, second is across public and private sector and then thirdly, internationally like cross borders, so across sectors - across public and private and across borders.”

The scam space now has the likes of generative AI assisting bad actors from growing more sophisticated and outpacing law enforcement.

“With Gen AI offering so many new typologies [and] new ways to get scammed," Ong added. 

"The reality for law enforcement is that it’s like the Red Queen and Alice in Wonderland - you have to run as fast as you can just to keep up and draw on whatever tools you have.”

“The only way to be able to tackle this problem in a sustainable way is to try to look at the networks, the syndicates, the perpetrators behind this sort of criminal activity and try to take them down.”

Ong added within industries, the discourse is shifting to a more mature awareness of risk and obligations.

“In terms of the overall discourse, we're also hearing a very strong focus on use cases. It's not enough to just issue a coin or spin up a new project, like what problem is it solving?”

Lastly, Ong said, other players “that haven't traditionally always been involved in this space” are now looking into the cryptocurrency.

“It's not just a crypto game anymore. You've got banks, traditional financial institutions, and asset managers coming into this space. You've got central banks thinking very hard about what you can do with blockchain and smart contracts.

“You've got a lot of talk and a lot of thought around real-world asset tokenization and what benefits this can bring both in terms of transparency and just basically confidence across different types of sectors.”

Ong said “This bubble of energy and momentum” is centred around productivity, “meaning how can we make crypto and blockchain meaningful for the economy meaningful for people's lives?

“That's what I'm most excited about.”