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in a description. Hey everybody,
Tony here, I'm at the DC Blockchain

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Summit and with me is Ren mckechren, who is the CEO of fraud Optics

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Incorporated brand. Great to have you
on. Yeah, thanks, Tony.

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I appreciate the opportunity of seeing me
a lot in your podcasts and a big

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fan, so thanks again for bringing
the Moon. Yeah, Ren, excited

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to talk to you. Given your
background, tell us about yourself and fraud

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optics. Yeah. So born and
raised Boston, Go Boston Bruins, of

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course. But I've been in DC
for twelve years. I was in the

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FBI for twelve years prior to jumping
into the private sector. In those five

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years, which is relevant to what
I'm going to talk about the fraud optics,

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the last five years I focused on
international money flows around the world,

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around corruption, around banking, chasing
the money, chasing the bad guys,

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and understanding where fraud exists, where
a list of that activity exists. Then

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we're closely with the DJ and SEC
on enforcement and compliance of company in that

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space. One of the Foreign Practices
Act, the International Corruption and those kinds

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of violations that go with that.
So in that essence, understanding international money

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flows and how money works was a
very sensible transition of understanding blockchain how cryptocurrency

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flows through it. So that really
peaued my interest when I was coming out

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of a bureaus what was next.
And so in that sense, the FBI

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was a great as you can imagine, education and understanding of both enforcement and

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understanding compliance because we would actually investigate
companies and individuals in those enforcement matters.

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Wow, Now when you were at
the bureau, is there like a division

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for digital assets in crypto yet or
you know, was things starting to ramp

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up slowly? Now there is a
Virtual Asset Unit, the AU which supports

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different initials within a bureau. And
as you can imagine, they've got a

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case load and then but you know, very important group and they have amazing

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folks, amazing tools, and obviously
the work is going to continue to be

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more and more high volume for them. And of course they have to work

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with their partners around the different agencies
the intelligence community because you have criminal issues

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and you have national security issues all
affecting crypto and so it's one of those

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areas and specialties that goes across all
areas where you think about from a national

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security or you know, federal law
enforcement area. It's a growing area of

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concern but also an opportunity. Now
blockchain, you know, it's verifiable,

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it's transparent, there's many companies looking
at or tracking data and analytics. It's

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all there, right, So does
it make it easy for law enforcement and

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bureau and these folks to do their
jobs versus the traditional cash or other types

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of assets. Great question. And
the old way we would do it chasing

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money flows is we would have to
find the money, go to the bank,

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corresponding banking relationships, getting bank subpoenas, and going through all the debits

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and credits. But with the blockchain, it's beautiful from a forensic accounting standpoint,

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and work a lot of forensic accounts. We always deploy those looking at

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the money flows. The blockchain is
brilliant. It's transparent. You see the

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flows, you see the announces,
you see the wallets and the entities.

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However, Comma right, the problem
then becomes, you know the people behind

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what we call ultimate be official ownership
of those wallets. Right? And so

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if I'm chasing money in the old
days around the world, I see money

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go to a bank account, I
said, peen of the bank, and

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I understand the KYC. You know
your customer, the AML questions, they

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may have asked, suspicious sectivity courts
that may even filed. But if I

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come in my investigation upon a wallet
that is fairly holding cryptos as a as

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a fraud scheme, sure there's no
place in subpoena, right, There's no

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place to do a search want.
Of course, if it's in exchange,

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that's one thing. There's an opportunity
for information requests, right, But as

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you know, the issue is these
wallets, these private wallets that we really

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have a tough time, hard question
for you because a lot of this is

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being figured out with it by the
government, right, and how we're going

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to regulate all of these things.
On one hand, I see the benefits

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of someone having their own private wallet
and so on and so forth, So

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how do we find that balance?
And this is a tough question I'm throwing

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at you. Yeah, And as
you know, there's i mean five bills

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now kicking around the hill on this
issue, and a lot of people that

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are attracted to blockchain and cryptocurrency like
the decentralized nature of it. And I

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understand that from a privacy standpoint,
right. The tricky part role is have

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to be there's got some sort of
negotiation on a little bit coming. You're

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giving us a little and then taking
a little so that people are comfortable.

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Yeah, this feels like cryptocurrency.
I'm not saying it's it's a standblepoint exactly,

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but whatever that middle ground is I
you see them debating, is actively

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on the hill. And but as
you know, we need the regulation because

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we we we can't have is all
the innovation and great people leaving the country

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going over to the EU that now
has my and other things right right,

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and so it's critical that we get
legislation from regulatory oversight. We want we

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want to innovate, we want to
take the technology further. We do not

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want to hold back on that.
But what is the middle ground? Very

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very triggered. Yeah, I've been
saying that lately that I think we're gonna

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have to meet in the middle of
the road with the regulators at some point.

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Uh, the devil's into details.
So we'll have to figure out,

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Hey, don't kill the innovation,
don't kill the ability for me to self

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custody. But okay, you want
me to report it on to the I

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R S or whatever something. Wait, I don't know what an answer is,

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but I think we'll have to find
that middle ground because it's gonna be

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tough. And look, bad actors
are out there who are going to try

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to take advantage of the technology and
do bad things. Now, broad optics

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tell us about who you work with
and some of the crypto related wing back

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up one more steps after the Bureau, I actually went to a company called

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Exegen, which is a governance and
risk firm that actually had a very significant

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AI tool. We were looking at
big data problems of open source around risk

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mitigation, and so in that instance, I was learning about how we used

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AI to collect large data boil it
down for risk mitigation purposes to help banks,

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third party risk people, corporates.
So that model, I learned about

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unstructured structured data sets, how to
think really smart about that, proactive around

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a list of activity. And so
when we started front Optics, it actually

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came out of the case I was
working when I was when I came out

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with a bureau and then which involved
looking at off chain data on a major

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blockchain fraud case, and we were
so successful we actually referred the case to

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the FBI sec DJ. The person
was located on red notice and they were

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arrested overseas and brought back. And
what we did we went back and said,

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that's very rare in the world of
crypto fraud or crypto list of activity,

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right, We said, what made
the difference in that case, and

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we'd began to look at of course
we did from tracing critical to all of

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us. But we actually was about
the off chain data that we began to

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look at around the wallet activities.
Okay, this wallet is connected to what

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else where do we look off chain? Because so much is you know,

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innovation and investments around the blockchain,
the cross chain understanding. People had forgot

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this really beautiful enchanced data on off
chain supporting blockchain investigations and risk appetite and

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risk indicators and behaviors. And so
we saw us opening it said wait a

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minute, why can't we start to
look at this as as as an area

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for as both preventive and also to
understand for investigations. Are you able to

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buy any chance disclose the name of
that case or who what it was?

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I can't right now. It's still
it's not it's not have been admunicated yet.

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Okay, but it's a great example
again using blockchain technologies. It's a

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critical that I'm saying the crypto flows
and then and then re engineering that on

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the word on the off chain side
to say, okay, are there is

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there a Twitter handle involvement other NFTs
in ball right right? Are there other

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behaviors this guy, this lobster was
using that we can look at whether it

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could be a myriad of things to
improvee IP addresses real location, start thinking

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about rerect the refinance person and if
you think about and these are areas that

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we collect dave O, I p
read bring a social you know, all

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sorts of block aggregators, right,
sure, So we bring that data together.

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We'll say where does the profile of
this personal pretension on this profile and

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that's how we use them. Yeah, it's fascinating and I'm sure it's opening

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up a ton of cans of worms, right like people trying to do different

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things with this technology, to do
bad activities. So is your service essentially

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are you like working with government agencies
like the SEC can call you up or

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the THEOJ things like that. So
we have reserved commercial and public sector clients

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and we actually deliver as a product
API, so our data they can make

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calls and our data. It integrates
with whatever platform they're using, if it's

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an investigations platform, if it's a
compliance risk platform, if it's a transactional

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monitoring platform. Our data comes in
and most of the time they're looking at

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the transactions on the blockchain, and
we're saying we're waiting to make guys let's

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bring in there's an other subset of
data that's really helped helpful to understand the

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holistic activities. And so that's the
area, that's the gap that we've identified.

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We think there's nobody better than us
doing that. But we also think

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about adoption like a corporate multi national
corporation is taking on transactional activity. Take

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a big retailer saying, hey,
we don't want to miss on the demographic.

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We want to start accepting crypto,
but we also want to protect our

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clients, our consumers, right,
and so we offer another level of protection

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saying yes, watching understand it of
course critical, but also understand what are

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we looking at from a fraud stand
one? What do we also know about

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that before you transact on the streaming
purpose? How do we help prevent the

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flaud because, as you know,
once the fraudsters are able to get those

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transfers into those wallets, very difficult, as I mentioned earlier, even for

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law enforcement search warrants and subpoena power, it's still should it'll be difficult to

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actually what we call pull that back
or discorge that from from the illicit purposes

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of the FLAUD. Now as the
crypto acid class has been growing adoption to

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technology. Have you seen a ramp
up in bad activity legal activity? Great

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question. So twenty twenty three was
a little bit down on the listed activity

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from twenty twenty two based on a
few numbers. Sure, But what I

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can tell you is there's a tsunami
of fraud coming. And this is why

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January tenth spot bit point to the
athlete's approved right. So who didn't want

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to miss out? Flaudsters didn't want
to miss out, and then people that

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weren't thinking about buying into the fs
but were told, hey, you're not

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going to miss out on the big
point etf are. Oh no, I

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don't want to miss out on that. So what we've seen now in the

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last six six weeks, because it
takes a few months for fraud to be

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determined and identified, is that we're
getting calls and emails and people reaching out.

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Had a varying substantial increase because we're
seeing this wave right of just of

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war fraud, and a lot of
these unfortunately come through dating apps is a

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big way they get in. They
look at WhatsApp. I would say eighty

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percent of the frauds that come into
us are coming in through dating apps,

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they quickly move them to WhatsApp at
telegram and then they take the conversation from

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there. Wow. And so we
have also some proactive ways to cover what

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is occurring today as frauds because there's
a lot of interesting data going back and

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forth. So we're also on the
cutting edge of saying, wait, this

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fraud is occurring right now with these
actors with these URLs and these names and

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these domains and these wallets. Cutting
edge, right, Oh, we should

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probably do an alert for our clients
on that stuff, right to take this

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part of their ecosystem. But I
do like we want to take those bad

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guys out of the equation, right, and we want to be an answer

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to mitigate those risks. But I
can tell you twenty twenty four is an

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amazing year obviously, as we know, if a cryptocurrency, it's just beginning,

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right, we know twenty four twenty
five, it's it's going right,

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Yeah, But we're also unfortunately now
it comes with that right high tide also

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raises the fraud boats, right unfortunately, right, right, yeah, great

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point, And we want to protect
people out there because there's a lot of

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folks who don't fully understand his technology
and how it works. They're seeing,

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you know, news about it,
and then some guy comes on a dating

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app or whatever it is, or
some girl and try to scam them.

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We don't want that happening. So
I certainly appreciate services like yours because if

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we don't, you know, stop
these things, it tarnishes the reputation of

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the technology in the industry. You
know, we see ourselves as a serious

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company with serious people, you know, taking on this problem, and that

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also helps for greater adoption, greater
trust, better comfort. If it's going

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to go the way it needs to
go, we need good companies also coming

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in to do the policing. Wait
a minute, who is this guy?

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Who are who's this antithy? Who
is the swalle What do we know?

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How do we protect our really valuable
customers? And once we're able to do

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that better and better, and it's
going to the technology. We are getting

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better. We're using the n to
make relationships. You connect those nodes,

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you're going to see better adoption.
Once the trust goes up, we're going

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to see the fraud go down.
Now. Question for you, and I

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don't know if this is off base
or something you speak to, but you

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know, over the years, there's
been talks. I remember Kevin O'Leary saying

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things like, you know, corporations
and institutions are going to want to know

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where the bigcoin or the ethereum came
to them. Was it used by a

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bad actor in another country? Are
you getting that sense of corporations where they

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want to know, Hey, we're
going to transact big point, but we

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want to know where that big point
we're in its life cycle? Did it

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go through some terrorist hands or something
like that. So there's different levels of

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companies with different types of cultures.
Right, So some companies want to know

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everything, sure, because their reputation
is it means so much. They already

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have a massive client base and they
want to make sure they're protecting that and

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protecting reptation of their company. Sometimes, not all the times. Younger companies

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are hungry. They'll do whatever they
can get to to grow their their market

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base or grab that market share.
Sure, they care less and have less

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money and resources spend on confliance.
But the best companies that we know who

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care really do want to truly avoid
that. So they do want to understand

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the origins of those of those dollars, of those stable points, of whatever

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tokens those are as best they can
to a point where it's defensible to say,

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look, we did the best we
could. Just screen that. Sure,

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we take that seriously. Wherever it's
human trafficking, all those areas that

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we were a terrorist financing, all
those things that you would never want to

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be associated with that can be terrible
for reputational issues. Companies are smart about

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that they do want to screen against
the Oh. Absolutely, I'm curious,

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you know, given your experience and
what you guys doing, your thoughts on

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the crypto regulations that are currently in
the works. You get the fi T

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bill vote coming up possibly next week
or the week after. Uh, this

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couple of bills and the Senate,
any thoughts on what's happening there. Well,

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I think SA was really a shot
across the bat. It really sent

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a message at a critical time.
And we're coming up in November, right,

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there's I think there's an election coming. I heard there's a rumor there's

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an election coming. Yeah, right. That we had a lot of bipartisan

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support, you know, and I'm
really actually interested in the stable poind recent

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legislation four weeks ago, again bipartisan
support talking about banks taking the custody talking

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about a MLKYC. We need something
because where the EU is ahead of us,

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I mean that means they're going to
be first on taking good companies,

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great technologists. We're going to be
bleeding out all that talent the places where

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they feel safe so they can actually
stopping not worry about enforcement by however,

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the loans of change field, so
we see it as critical. I don't

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know if it happens this year.
My experience on the hill is generally nothing

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happens a lot and during the presidential
election year, but there are some very

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strong supporters of it, you know, high level people in the different chambers

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that want to make it happen.
And it truly is becoming more of an

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electrination. I'm from Massachusetts, that's
from born and race, so I'm a

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little bit of you know, hyper
aware of what's going on right in that

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race. Right, very interesting from
the cryptocurrency standpoint, but you know,

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like any great technology, the market's
going to be way ahead of the government

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on the You can't keep it down. You just got to find a way

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that it works for people. Will
not everybody's being defrauded through these these awful

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stories that I'm hearing every day from
people that are losing a lot of money

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in their life savings and making bad
decisions. We want to protect them absolutely.

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Now, what's on your twenty twenty
four roadmap? Yeah? So really,

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right now our clients are hearing and
telling us, I should say,

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location, location, location, Right. Are they transacting with the walks that

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maybe in a sanctioned country? Oh
wow, right, that's an important issue.

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Sure? Right? Are there clusterings
of wallets that might show fraud or

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conspiracies or entities that are producing more
fraudulent wallets? Right? And so right

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now we're seeing IP addresses and geolocation
is something that you're asking for and looking

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for more as another level to understand
KYC or Okay, who are we really

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dealing with? Of course there's issues
with VPNs, right, but there's also

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VPM bleeds right, So there's different
areas of exposure there. And of course

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every time I talk to somebody in
in exchange or corporate a bank, they

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bring up a new issue that's interesting. Some of that makes sense for us

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to maybe on board that is as
a product offering, but we're also looking

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at all of that all the time, and of course partnerships, but also

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watching legislation carefully, so more than
anything for us. If they're regulatory,

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is there some passage on regulatory oversight, it's going to require consumer protections,

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right, and we're at the forefront
of that. We are very helpful from

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it and the ok R I see
to make sure we get it right.

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And so we're obviously favorable, like
every every year around here is for that.

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Sure, we're hopeful. What you
guys are doing is certainly critical for

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further adoption of this technology. And
you know, I'm excited to see the

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additional updates and we'll probably have to
have you on as things progress. As

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you know, the market rises and
like you said, all the rising tide

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list even the fraud boats right.
So but great speaking with you, and

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I love what you guys are doing. Yeah, thanks Tony, congrats on

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the book. Yeah, big fan. Love what you guys are doing.

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You're doing a great job educating on
many levels, not just investing. Every

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little piece is so important, and
you're getting the word out I think to

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the public is critical. So thanks
and looking forward to talking to good soon.

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Awesome, Thank you, Cheers,