Twitter Hack Shows That Crypto Is Easier to Investigate Than Fiat, Say Industry Law Experts

Published at: Aug. 4, 2020

During an Aug. 4 panel on legal compliance within the cryptocurrency industry, major figures noted recent shifts in public perception of the industry, pointing to arrests within weeks of the Twitter hack as an example of how effective blockchain analytics can be for solving crime.

The panel is part of an ongoing series from the Association of Certified Financial Crime Specialists. 

Twitter and law enforcement

Lana Schwartzmann, chief compliance officer for Paxful, said regarding the Twitter hack “It’s quite amazing how different this is from what we’d see in the traditional fiat world. You’d never have this resolved so quickly.”

Also speaking about Twitter, Coinbase’s chief compliance officer Jeff Horowitz agreed that it was part of a shifting narrative around crypto: “The story quickly changed to ‘how is crypto partnering with law enforcement to track this issue?’”

Overall rise in institutional comfort and interest

Horowitz continued to describe major improvements to conversations about regulation and crypto over the course of “maybe the past one to two years.” 

Jonathan Levin, a co-founder of Chainalysis, a firm that helped track the Bitcoin in the Twitter hack to 17-year-old Graham Clark, compared the estimate of $10 million laundered in Bitcoin each day to the total amount moving on the blockchain:  “There’s more than a billion dollars moved on the bitcoin blockchain per week, so this is still a very small amount of value compared to what is being moved on the blockchain.”

Institutions, said Levin, are very engaged in weighing how to onboard crypto, but noted that “This is not a when or an if, this is a how.” An audience poll during the panel found lack of regulatory guidance to be the primary barrier to financial institutions working with crypto.

Source: ACFCS FinCrime Virtual Week

Levin also spoke at length about North Korea’s famous Lazarus Group as an example of law enforcement getting better acquainted with crypto technologies. Just in March, the U.S. Treasury sanctioned two Chinese nationals and their associated crypto wallets for providing off-ramps for Lazarus Group’s stolen crypto.

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