WEBVTT 1 00:00:00.040 --> 00:00:03.160 We have the largest database of fraud and financial crime 2 00:00:03.160 --> 00:00:06.799 and human history. Every transaction on a public ledger is 3 00:00:07.080 --> 00:00:08.080 logged and immutable. 4 00:00:08.240 --> 00:00:08.960 It's there forever. 5 00:00:09.320 --> 00:00:12.960 I think that we're living this really interesting moment where 6 00:00:13.039 --> 00:00:15.439 the private sector has all of the data and the 7 00:00:15.480 --> 00:00:18.199 public sector has all of the authorities. And our job 8 00:00:18.239 --> 00:00:20.839 at TRM is to make sure that the public sector 9 00:00:21.239 --> 00:00:24.600 has the data that it needs. Clarity will pass. We 10 00:00:24.679 --> 00:00:27.440 will one hundred percent have a crypto market structure bill. 11 00:00:27.719 --> 00:00:30.440 We're going to get something, whether it's now or whether 12 00:00:30.480 --> 00:00:30.960 it's later. 13 00:00:36.560 --> 00:00:40.240 This episode is brought to you by Fordax. Guys, Let's 14 00:00:40.280 --> 00:00:43.439 be honest, the crypto market has been moving sideways for 15 00:00:43.479 --> 00:00:46.079 a while now. A lot of people are just sitting 16 00:00:46.079 --> 00:00:48.920 on their coins waiting for the next big move. But 17 00:00:49.039 --> 00:00:52.200 while you're waiting, your crypto is just sitting in your 18 00:00:52.240 --> 00:00:55.920 wallet doing absolutely nothing. That's why I want to mention 19 00:00:56.000 --> 00:00:59.880 one of my longtime partners, FORTASX. Instead of just like 20 00:01:00.200 --> 00:01:03.640 your assets sit idle, you can put supported cryptocurrencies into 21 00:01:03.719 --> 00:01:08.120 fortestx liquidity pools and earn daily rewards while still keeping 22 00:01:08.159 --> 00:01:11.760 the flexibility to withdraw whenever you want. One of the 23 00:01:11.799 --> 00:01:15.120 reasons I've continued working with them is because they keep delivering. 24 00:01:15.480 --> 00:01:19.840 The team is public, They've successfully completed Cyberscope team verification, 25 00:01:20.040 --> 00:01:24.760 KYC past independent security audits, and the platform has been 26 00:01:24.799 --> 00:01:28.760 building consistently for years. They've focused on long term growth, 27 00:01:28.799 --> 00:01:32.480 transparency and security rather than hype. In a market like this, 28 00:01:32.760 --> 00:01:35.519 it makes far more sense to have your crypto working 29 00:01:35.560 --> 00:01:38.640 for you instead of letting it sit idle in your wallet. 30 00:01:38.959 --> 00:01:41.280 I've worked with fortest x for a long time and 31 00:01:41.319 --> 00:01:44.359 if you're planning to hold your crypto anyway, I genuinely 32 00:01:44.439 --> 00:01:46.959 think it's one of the smartest ways to put those 33 00:01:47.040 --> 00:01:49.680 assets to work. And folks, I know security is very 34 00:01:49.680 --> 00:01:51.599 important to all of us as we hold our crypto 35 00:01:51.640 --> 00:01:55.040 assets and they are fully audited by certain and they 36 00:01:55.040 --> 00:01:57.840 are sec registered and much more so. You've got to 37 00:01:57.920 --> 00:02:00.840 check out fort x. Go to fordest x dot fi 38 00:02:01.040 --> 00:02:06.359 slash x slash Thinking Crypto link will be in the description. Hey, folks, 39 00:02:06.400 --> 00:02:09.639 welcome into the Thinking Crypto Podcast. I'm Tony Edward and 40 00:02:09.680 --> 00:02:13.520 I'm Amanda Wickcroft and joining us is Ari Redboard, Global 41 00:02:13.520 --> 00:02:16.840 Head of Policy at tim Labs, which is a blockchain 42 00:02:16.919 --> 00:02:21.080 intelligence company that helps the financial institutions, crypto businesses, and 43 00:02:21.120 --> 00:02:25.840 government agencies detect and investigate crypto related financial crime and 44 00:02:25.919 --> 00:02:27.680 fraud ery. Great to have. 45 00:02:27.719 --> 00:02:29.840 You, hey, Tony Amanda, Thank you so much for having me. 46 00:02:30.120 --> 00:02:31.759 Really looking forward to the conversation today. 47 00:02:32.280 --> 00:02:35.080 Absolutely, we're excited to chat with you. I think it's 48 00:02:35.159 --> 00:02:37.439 very timely for us to be having this conversation with 49 00:02:37.479 --> 00:02:40.520 the backdrop of crypto legislation about to make it through 50 00:02:40.520 --> 00:02:43.360 the Senate with the Clarity Act and much more. You 51 00:02:43.439 --> 00:02:47.479 have law enforcement agencies weighing in and giving their endorsement 52 00:02:47.560 --> 00:02:49.599 for the Clarity Act and much more. 53 00:02:49.680 --> 00:02:49.800 So. 54 00:02:50.280 --> 00:02:52.000 Lots to talk about, but we love to kick it 55 00:02:52.039 --> 00:02:54.520 off with your background. Tell us about where you're from 56 00:02:54.560 --> 00:02:56.960 and how do you make your way into the government 57 00:02:57.080 --> 00:02:57.960 and then into crypto. 58 00:02:58.199 --> 00:02:58.479 Yeah. 59 00:02:58.479 --> 00:03:01.800 No, absolutely, and again thanks for having me. Prior to 60 00:03:01.879 --> 00:03:04.800 joining TRM about six years ago, I spent about eleven 61 00:03:04.840 --> 00:03:07.599 years as a federal prosecutor. I spent much of that 62 00:03:07.680 --> 00:03:11.759 time in the intersection between money laundering and national security, 63 00:03:11.800 --> 00:03:15.000 what I call threat finance, essentially stopping bad actors from 64 00:03:15.039 --> 00:03:16.919 getting the money they need to do bad things. So 65 00:03:16.960 --> 00:03:22.800 I think terrorst financiers, sanctions, criminal prosecutions, export control, cyber 66 00:03:22.960 --> 00:03:26.960 North Korea. After the Department of Justice. I spent about 67 00:03:26.960 --> 00:03:30.240 two years at the US Treasury Department, working in the 68 00:03:30.680 --> 00:03:34.439 office that oversees the National Security Apparatus there so OPAC, 69 00:03:34.800 --> 00:03:37.319 the Office of Foreign Asset Control, which is our sanctions 70 00:03:37.400 --> 00:03:42.000 regulator in the US, FINSEND, a Financial Crimes Enforcement Network 71 00:03:42.120 --> 00:03:45.039 which is our financial intelligence unit, and a whole bunch 72 00:03:45.080 --> 00:03:48.479 of other sort of components that really try to stop 73 00:03:48.479 --> 00:03:52.319 bad actors from accessing the global and certainly US financial systems. 74 00:03:52.879 --> 00:03:55.240 As I said, I joined TIRAM about six years ago 75 00:03:55.759 --> 00:03:58.560 after again close to fifteen years in the US government. 76 00:03:59.199 --> 00:04:02.120 We were about seven people at the time, were about 77 00:04:02.120 --> 00:04:05.520 four hundred and fifty today globally. It's been this just 78 00:04:05.560 --> 00:04:09.439 incredible journey. I've never worked harder, I've never had more fun, 79 00:04:10.800 --> 00:04:12.840 never felt like I've done, you know, more meaningful work, 80 00:04:12.840 --> 00:04:14.960 even as a prosecutor. So it's been a really extraordinary 81 00:04:14.960 --> 00:04:18.000 adventure in the crypto ecosystem. 82 00:04:17.439 --> 00:04:21.839 With regards to the transition into crypto. Did you see 83 00:04:21.839 --> 00:04:24.959 this technology? You know, at what point, I should say 84 00:04:24.959 --> 00:04:26.759 what point did you see this technology? And was it 85 00:04:27.079 --> 00:04:29.000 what was your aha moment that you saw, Well, this 86 00:04:29.079 --> 00:04:30.839 looks like it's going to be the rails for the 87 00:04:30.839 --> 00:04:32.639 financial markets and things along those lines. 88 00:04:32.720 --> 00:04:33.480 You know, so interesting. 89 00:04:33.519 --> 00:04:35.480 I wish I had a better crypto origin story, like 90 00:04:35.519 --> 00:04:38.360 I bought bitcoin in like twenty thirteen or something like that. Right, 91 00:04:38.439 --> 00:04:41.639 I probably wouldn't, you know, I'd be driving around my 92 00:04:41.720 --> 00:04:42.600 lambou somewhere. 93 00:04:42.720 --> 00:04:44.160 But it was a little different for me. It's very 94 00:04:44.240 --> 00:04:45.199 much as a prosecutor. 95 00:04:45.360 --> 00:04:45.560 You know. 96 00:04:46.000 --> 00:04:50.000 I was investigating cases pretty early twenty fifteen, twenty sixteen, 97 00:04:50.199 --> 00:04:57.040 seventeen involving North Korea, and their crypto playbook was very different. 98 00:04:57.040 --> 00:04:57.399 Back then. 99 00:04:57.480 --> 00:05:01.040 They were really using bitcoin to launder funds. North Korea 100 00:05:01.079 --> 00:05:04.639 is a country that has no economy whatsoever. It's essentially 101 00:05:04.639 --> 00:05:08.720 a banana republic, and it's a criminal regime that has 102 00:05:08.759 --> 00:05:12.360 basically tried to figure out ways to launder funds for decades. 103 00:05:13.160 --> 00:05:15.600 Whether it was counterfeit hundred dollars bills, whether it was 104 00:05:15.680 --> 00:05:21.800 counterfeit tobacco, counterfeit cigarettes, whether it was hacking Sony pictures. 105 00:05:21.959 --> 00:05:24.600 You might remember, trying to steal a billion dollars from 106 00:05:24.639 --> 00:05:28.000 the Bank of Bangladesh. This was all before crypto. And 107 00:05:28.040 --> 00:05:29.720 what I started seeing in those early days of those 108 00:05:29.759 --> 00:05:33.319 investigations was North Korea really looking to bitcoin. And I 109 00:05:33.319 --> 00:05:35.639 said to myself, well what is this and kind of 110 00:05:35.639 --> 00:05:37.480 went down that rabbit hole a little bit to understand 111 00:05:37.519 --> 00:05:40.360 it and realized like, wow, I'm seeing bad actors use 112 00:05:40.439 --> 00:05:44.160 this at scale, but wow, what just an incredible use 113 00:05:44.240 --> 00:05:49.279 case for lawful citizens and what a particular like, what 114 00:05:49.319 --> 00:05:52.279 a possible revolution this technology is when it comes to money. 115 00:05:52.519 --> 00:05:54.360 So I think for me it was very much like, Hey, 116 00:05:54.720 --> 00:05:57.360 how do I stop bad guys from using it? But 117 00:05:57.399 --> 00:06:01.360 I think as part of that journey, realized how just 118 00:06:01.680 --> 00:06:04.639 incredible a technology is for good and how we have 119 00:06:04.720 --> 00:06:08.439 to really leverage blockchain technology in order to stop these 120 00:06:08.480 --> 00:06:09.360 bad actors. 121 00:06:09.879 --> 00:06:12.759 Yeah, you're not kidding about North Korea being the Banana Republic. 122 00:06:12.800 --> 00:06:15.680 I was just reading about that investigative journalist Nick Sureley, 123 00:06:15.720 --> 00:06:19.480 who everybody loves with all the exposure that he's doing 124 00:06:19.519 --> 00:06:22.000 with the tax fraud, and I think I just read 125 00:06:22.000 --> 00:06:25.199 about the daycares that North Koreans are, the amount of 126 00:06:25.399 --> 00:06:28.680 money being poured into I forget this city. I think 127 00:06:28.680 --> 00:06:30.279 it might be New York City, but the amount of 128 00:06:30.279 --> 00:06:34.079 money being put into that's it's a shame that that's happening. 129 00:06:34.120 --> 00:06:38.000 But can you give us a quick overview of TRM labs, 130 00:06:38.040 --> 00:06:39.079 The history mission. 131 00:06:39.959 --> 00:06:40.199 Yeah. 132 00:06:40.199 --> 00:06:45.680 Absolutely, Tarms a blockchain intelligence company. Essentially, what that means 133 00:06:45.800 --> 00:06:51.399 is we provide training and tools to investigate illicit activity. 134 00:06:52.600 --> 00:06:57.240 We allow law enforcement to trace and track illicit proceeds 135 00:06:57.240 --> 00:07:01.120 in crypto in order to build investigations. He's back funds. 136 00:07:01.600 --> 00:07:03.680 I think what's missing in a lot of conversations around 137 00:07:03.720 --> 00:07:05.639 law enforcement, and Tony kind of got into the clarity 138 00:07:05.680 --> 00:07:08.720 act a little bit is we have never had more 139 00:07:08.800 --> 00:07:12.319 visibility on financial flows, illicit financial flows than we do 140 00:07:12.360 --> 00:07:16.600 in crypto. Every transaction is logged and immutable on a 141 00:07:16.600 --> 00:07:17.959 public ledger, immutable meeting. 142 00:07:18.000 --> 00:07:18.680 It's there forever. 143 00:07:19.360 --> 00:07:22.759 My colleague Christian Chesky, who is a former IRSCI investigator, 144 00:07:22.800 --> 00:07:24.360 probably he hates when I say stuff like this, but 145 00:07:24.360 --> 00:07:27.360 probably the most famous crypto investigator ever. He was the 146 00:07:27.399 --> 00:07:31.519 protagonist in Andy Greenberg's book Tracers in the Dark. He 147 00:07:31.600 --> 00:07:33.879 and I were on this Netflix documentary called The Biggest 148 00:07:33.920 --> 00:07:37.519 Heist Ever together talking about the Bitfinex hack. He calls 149 00:07:37.639 --> 00:07:39.959 blockchains like the greatest crime scene that he ever had 150 00:07:40.000 --> 00:07:43.160 access to, right because you can investigate cases going forward, 151 00:07:43.560 --> 00:07:46.279 you can investigate cases going back in time, right to 152 00:07:46.319 --> 00:07:50.040 the first ever transaction, and really it's an amazing tool 153 00:07:50.120 --> 00:07:55.879 for investigators. So we provide software to law enforcement agencies globally. 154 00:07:57.040 --> 00:08:01.000 We provide software to regulators. They want to understand, Hey, 155 00:08:01.399 --> 00:08:04.800 this cryptocurrency firm, this exchange is looking for a license 156 00:08:05.600 --> 00:08:08.079 wherever it is in the world, New York or Singapore 157 00:08:08.240 --> 00:08:10.600 or somewhere else. They use our tool to make a 158 00:08:10.639 --> 00:08:15.120 licensing determination and then going on to supervise that entity. 159 00:08:15.319 --> 00:08:17.399 And finally we work with the private sector. So we're 160 00:08:17.439 --> 00:08:22.120 a compliance solution to think every large major cryptocurrency exchange, 161 00:08:22.720 --> 00:08:25.240 think every large financial institution that's all of a sudden 162 00:08:25.240 --> 00:08:29.480 sort of coming on board into the crypto ecosystem, and 163 00:08:30.639 --> 00:08:33.159 they use us to ensure that bad actors aren't accessing 164 00:08:33.200 --> 00:08:36.279 their platforms. So you mentioned North Korea, and you know, 165 00:08:36.559 --> 00:08:41.679 every large financial institution that's providing crypto custody, providing access 166 00:08:41.679 --> 00:08:44.039 to assets to their customers. They want to make sure 167 00:08:44.120 --> 00:08:47.519 that North Korea, the terrorist financiers, that ransomware groups, that 168 00:08:47.559 --> 00:08:50.879 cartels are not accessing their platform So we provide that 169 00:08:50.919 --> 00:08:53.799 type of service. To think of it as you know, 170 00:08:53.840 --> 00:08:58.120 anti money laundering for crypto and really more and more beyond. 171 00:08:58.759 --> 00:09:01.559 I think we can get into this as well later. 172 00:09:01.559 --> 00:09:04.639 But AI has really enabled us to not just take 173 00:09:04.639 --> 00:09:08.159 that rich on chain data, but combine it with really 174 00:09:08.240 --> 00:09:11.639 rich data sets off chain to do holistic investigations in 175 00:09:11.679 --> 00:09:12.679 crypto and beyond. 176 00:09:13.360 --> 00:09:16.519 Pardon the interruption. Hi, I'm Tony. I'm the host of 177 00:09:16.559 --> 00:09:19.000 the Thinking Crypto podcast. I wanted to ask you if 178 00:09:19.039 --> 00:09:21.440 you can please support the podcast by hitting the like 179 00:09:21.480 --> 00:09:24.000 button subscribing. If you haven't as yet, you can leave 180 00:09:24.039 --> 00:09:26.159 a comment below as well. And if you're listening on 181 00:09:26.200 --> 00:09:29.240 a podcast platform such as Spotify, Apple or wherever you 182 00:09:29.279 --> 00:09:32.240 get your podcasts, please be sure to follow and hit 183 00:09:32.279 --> 00:09:34.360 the five star rating. I'll let you get back to 184 00:09:34.399 --> 00:09:36.000 the content. Thank you so much. 185 00:09:36.240 --> 00:09:38.120 From a tech perspective, and I don't know if this 186 00:09:38.159 --> 00:09:40.360 is a dumb question, we'll see, but I know that 187 00:09:40.399 --> 00:09:43.159 blockchains are limited in terms of the data that they 188 00:09:43.159 --> 00:09:46.559 can actually extrapulate, so they partner with companies like chain 189 00:09:46.600 --> 00:09:48.879 link Labs so that there's more data that they're able 190 00:09:48.919 --> 00:09:54.519 to actually to receive. Does that affect in your investigations 191 00:09:54.519 --> 00:09:56.639 at all as far as when you're using the blockchain 192 00:09:56.679 --> 00:09:58.840 as a starting point to investigate. 193 00:09:58.679 --> 00:10:00.919 It was interesting? Yeah, no, I mean we have the 194 00:10:01.039 --> 00:10:04.559 largest database of fraud and financial crime and human history. 195 00:10:04.919 --> 00:10:07.519 I know that sounds crazy, but every transaction on a 196 00:10:07.519 --> 00:10:10.279 public ledger is logged. 197 00:10:09.840 --> 00:10:11.320 And immutable, like it's there forever. 198 00:10:11.639 --> 00:10:13.120 So when you start to talk about, like, all right, 199 00:10:13.159 --> 00:10:16.559 where are databases for fraud and financial crime? Right, finn Send, 200 00:10:16.559 --> 00:10:19.240 The US Treasury Department holds something called the SAR database, 201 00:10:19.320 --> 00:10:22.799 the Suspicious Activity Report Database. It's alerts that are coming 202 00:10:22.799 --> 00:10:26.960 from banks, financial institutions, crypto businesses. We are magnitudes larger 203 00:10:27.000 --> 00:10:29.960 than that because we see every transaction in real time. 204 00:10:30.480 --> 00:10:34.440 So every transaction that is occurring on a blockchain, is 205 00:10:35.360 --> 00:10:38.360 on a public blockchain, is visible to us. So think 206 00:10:38.519 --> 00:10:44.240 you know bitcoin ethereum, Solana polygon tron. Where we lose 207 00:10:44.360 --> 00:10:47.360 visibility today is when funds are moving in and out 208 00:10:47.360 --> 00:10:50.840 of cryptocurrency exchanges, right, because those are going off chain 209 00:10:50.919 --> 00:10:55.679 and onto order books. And that's that's fine when you're 210 00:10:55.679 --> 00:10:57.639 talking about a coin base or a binance or a 211 00:10:57.679 --> 00:11:00.960 crack in or someone who's responding to law enforcements. But 212 00:11:01.679 --> 00:11:05.639 harder when you're talking about sort of non compliant exchanges 213 00:11:05.679 --> 00:11:09.440 in Russia or Chinese OTC brokers right that aren't that 214 00:11:09.519 --> 00:11:13.759 don't have KYC, that aren't doing compliance controls. But you know, 215 00:11:13.840 --> 00:11:16.039 DeFi comes up in a lot of these conversations, and 216 00:11:16.080 --> 00:11:19.039 I always come back to, look, we can see every 217 00:11:19.080 --> 00:11:23.080 transaction occurring in DeFi that's happening on blockchains, right, those 218 00:11:23.080 --> 00:11:25.679 are the ones we see. I think where things get 219 00:11:25.720 --> 00:11:27.919 a little harder is when funds are moving off chain. 220 00:11:29.279 --> 00:11:30.919 But I think now, as I said, like things we 221 00:11:30.919 --> 00:11:34.919 couldn't even do six months ago, like take rich threat 222 00:11:34.960 --> 00:11:40.360 intelligence human intelligence data and combine it with on chain activity, 223 00:11:40.440 --> 00:11:44.360 using AI has really revolutionized the way you can do 224 00:11:44.440 --> 00:11:45.600 these types of investigations. 225 00:11:45.639 --> 00:11:47.279 Hopefully that was helpful in. 226 00:11:47.200 --> 00:11:51.919 Regards to the evolution of blockchain intelligence. Are criminals getting 227 00:11:52.039 --> 00:11:55.279 more educated about this that they're trying to avoid crypto 228 00:11:55.360 --> 00:11:57.600 now maybe going back to cash and other means of 229 00:11:57.919 --> 00:12:00.759 exchange of value or you think that that education is 230 00:12:00.799 --> 00:12:02.600 not there, and he still continue to try to use 231 00:12:02.639 --> 00:12:06.240 the technology, but they're getting caught because the applications and 232 00:12:06.279 --> 00:12:08.879 what tier M labs and you folks are doing has 233 00:12:09.440 --> 00:12:11.559 you know, obviously grown and evolved and you have more 234 00:12:11.600 --> 00:12:13.159 advanced technologies and so forth. 235 00:12:13.440 --> 00:12:16.039 It's interesting, like not the wax too philosophical, but you know, 236 00:12:16.120 --> 00:12:19.519 like bad actors are always early adopters of transformative technology. 237 00:12:19.840 --> 00:12:21.159 I tell this story all the time. I want to 238 00:12:21.159 --> 00:12:26.720 say it was like nineteen eight the model t Henry 239 00:12:26.720 --> 00:12:30.200 Ford's model t rolled off the assembly line. And that 240 00:12:30.240 --> 00:12:32.120 was actually the first year that we created what they 241 00:12:32.159 --> 00:12:35.639 called the Bureau of Investigation, which has now the modern FBI. 242 00:12:36.480 --> 00:12:39.399 And it was because we realized that policing was no 243 00:12:39.480 --> 00:12:43.360 longer local, that bad actors can move across state lines 244 00:12:43.480 --> 00:12:47.240 at unprecedented speed and scale. I think Body and Clyde 245 00:12:47.279 --> 00:12:50.559 and al Capone and machine gun Kelly, right, So we 246 00:12:50.639 --> 00:12:54.480 needed a federal police force that could, you know, jump 247 00:12:54.480 --> 00:12:57.320 in those vehicles and follow the as bad actors across 248 00:12:57.360 --> 00:13:02.399 state lines, you know, move fastward to pagers. I'm old 249 00:13:02.519 --> 00:13:04.759 enough to have used a pager when I was a prosecutor. 250 00:13:04.759 --> 00:13:06.679 In the early days, the only people using pagers were 251 00:13:06.759 --> 00:13:10.360 US and the drug dealers, right, cell phones and to 252 00:13:10.480 --> 00:13:14.600 end encrypted messaging apps. Today it's crypto and AI right. 253 00:13:15.399 --> 00:13:17.600 So I'd say there's always this cat and mouse game 254 00:13:17.840 --> 00:13:21.480 between bad actors and law enforcement. Bad guys are always 255 00:13:21.480 --> 00:13:24.399 trying to use transformative technology, and we're always trying to 256 00:13:24.440 --> 00:13:26.559 catch up. And I think what we're seeing with crypto 257 00:13:26.639 --> 00:13:30.159 is essentially that we still see illicted activity as a 258 00:13:30.200 --> 00:13:34.720 tiny percentage of overall illicit activity somewhere around two percent 259 00:13:34.879 --> 00:13:38.759 or so is pretty conventional wisdom. That's significantly less than 260 00:13:39.519 --> 00:13:41.960 what we're hearing out there in terms of fiat currencies 261 00:13:42.360 --> 00:13:46.440 or traditional currencies, which I think you usually hear about 262 00:13:46.440 --> 00:13:49.919 five to eight percent in terms of that type of activity. 263 00:13:50.080 --> 00:13:52.120 But when I'm when I tell you what we see 264 00:13:52.159 --> 00:13:54.919 about two percent, and when it's like, well, five to 265 00:13:54.960 --> 00:13:57.320 eight percent, it's because you don't have visibility the way 266 00:13:57.320 --> 00:14:00.200 we do in crypto, right, Like we're talking about at 267 00:14:00.200 --> 00:14:03.279 works of shell companies and jwalas and bul cache smuggling 268 00:14:03.320 --> 00:14:06.720 and high value art. So cash is a lot better 269 00:14:07.799 --> 00:14:11.559 for money launders than crypto. And that's that's very much 270 00:14:11.559 --> 00:14:14.600 a conversation I'm having a lot with policymakers and have 271 00:14:14.679 --> 00:14:17.720 for years in Congress and other places, particularly around clarity 272 00:14:17.799 --> 00:14:19.399 right now as well as you mentioned. 273 00:14:19.399 --> 00:14:22.279 So Aery, are you telling us that tirm Labs is 274 00:14:22.279 --> 00:14:25.399 the modern day digital sing thing? Oh? I like that. 275 00:14:26.600 --> 00:14:27.039 I like that. 276 00:14:27.120 --> 00:14:29.879 I think of more as I like to I think 277 00:14:29.919 --> 00:14:33.200 of myself more as like the elliot ness of of 278 00:14:33.440 --> 00:14:36.039 of of modern day investigators or something like that. 279 00:14:36.840 --> 00:14:40.080 I want to congratulate you on tier M MCP. I 280 00:14:40.200 --> 00:14:43.039 believe you guys announced that early last week. What is 281 00:14:43.080 --> 00:14:44.320 this and what does it do? 282 00:14:44.639 --> 00:14:44.840 Yeah? 283 00:14:44.879 --> 00:14:46.679 Absolutely, I think it's like it actually is like a 284 00:14:46.720 --> 00:14:50.080 broader conversation, which is really cool. And that is how 285 00:14:50.120 --> 00:14:55.480 we can integrate AI into tooling. And I think this 286 00:14:55.559 --> 00:14:57.480 is a great example of how you can integrate AI 287 00:14:57.600 --> 00:15:02.799 into compliance workflows. We have built in capabilities in our 288 00:15:02.879 --> 00:15:05.919 actual tracing tool where now law enforcement can click on 289 00:15:05.960 --> 00:15:09.840 a button and auto trace transactions using AI. But to me, 290 00:15:10.000 --> 00:15:13.200 I think the most really revolutionary piece to this is 291 00:15:13.720 --> 00:15:18.360 how we can use AI tools to combine that on 292 00:15:18.440 --> 00:15:20.759 and off chain component. And this is all sort of 293 00:15:20.799 --> 00:15:22.679 building towards that, and that's what we're really working with 294 00:15:22.759 --> 00:15:26.159 law enforcement and financial institutions today. You know, we don't 295 00:15:26.200 --> 00:15:29.679 think of it necessarily as blockchain intelligence anymore. It's now 296 00:15:29.759 --> 00:15:32.639 this sort of AI powered intelligence where we could build 297 00:15:32.679 --> 00:15:36.240 out networks not just of on chain activity. You know 298 00:15:36.360 --> 00:15:39.159 that Like you know, think about our the graphs that 299 00:15:39.240 --> 00:15:40.919 you see in the public domain all the time and 300 00:15:40.960 --> 00:15:43.159 the reports that we put out. Now we can take 301 00:15:43.200 --> 00:15:45.120 those and say, well, hey, now we see that on 302 00:15:45.240 --> 00:15:49.279 chain picture, let's marry that up with beneficial ownership, information 303 00:15:49.440 --> 00:15:53.440 about the business, where's the corporate registries? Is there shipping data, 304 00:15:53.799 --> 00:15:57.600 is there, threatened intelligence data, human sources? And that's really 305 00:15:57.639 --> 00:16:01.240 I think this evolution, and this is a great example, 306 00:16:01.559 --> 00:16:03.840 is really building towards how do we use AI power 307 00:16:03.960 --> 00:16:07.559 tooling to do investigations better and to do compliance better. 308 00:16:07.960 --> 00:16:11.919 How are you preparing for the AI agent economy where 309 00:16:12.000 --> 00:16:14.759 where you have KYC where you can track a customer 310 00:16:14.799 --> 00:16:16.440 and some of the things that may be doing the 311 00:16:16.480 --> 00:16:20.080 connected wallets. But if I have a hundred AI agents 312 00:16:20.159 --> 00:16:22.080 doing different things for me and some of them are 313 00:16:22.120 --> 00:16:24.879 doing bad activities, I'm a bad actor. I'm trying to 314 00:16:24.879 --> 00:16:27.240 take advantage of companies and so forth. How do you 315 00:16:27.600 --> 00:16:30.120 kyc so to speak the AI agent and track that 316 00:16:30.159 --> 00:16:31.039 back to the bad actor? 317 00:16:31.480 --> 00:16:35.120 Tony, we are in just an extraordinary moment in human history. 318 00:16:36.320 --> 00:16:38.440 I don't I've never seen anything move as fast as 319 00:16:38.519 --> 00:16:43.360 as as AI, not the Internet, not crypto, and of 320 00:16:43.399 --> 00:16:46.080 course we're seeing bad actors really adopt it at scale. 321 00:16:46.679 --> 00:16:50.600 And you ask anyone, I'm the most positive guy in crypto, 322 00:16:51.720 --> 00:16:53.440 you know. I think I think sort of famously, so 323 00:16:53.440 --> 00:16:58.080 that's why I'm terrible on Twitter or x. But but 324 00:16:58.159 --> 00:17:00.000 this is an area that I that that makes me 325 00:17:00.159 --> 00:17:01.720 very nervous. And if you ask me sort of what 326 00:17:01.799 --> 00:17:04.519 keeps me up at night, it's exactly this question we're seeing. 327 00:17:04.559 --> 00:17:07.039 We saw a five hundred percent increase last year in 328 00:17:07.119 --> 00:17:11.039 AI enabled scams and fraud. So think deep fake videos, 329 00:17:11.640 --> 00:17:16.240 think really tailored phishing attacks, right, you know, it's no 330 00:17:16.319 --> 00:17:21.440 longer like hey, you know, I'm a Nigerian prince scenario. 331 00:17:21.640 --> 00:17:24.839 It's you know, hey, Amanda, this is Tony with your 332 00:17:24.920 --> 00:17:28.000 voice and your image. Can you send me money? I'm 333 00:17:28.039 --> 00:17:30.880 in the hospital, right Like it's your child, it's your mother, 334 00:17:32.359 --> 00:17:35.720 you know, it's it's a celebrity. So we're seeing that 335 00:17:35.799 --> 00:17:39.039 really happen at scale. And what concerns me about that 336 00:17:39.240 --> 00:17:42.880 is it really just takes the friction out of scams. 337 00:17:43.279 --> 00:17:45.480 You know, you don't need a one off transaction anymore. 338 00:17:45.480 --> 00:17:50.240 You can have hundreds, thousands, millions of agents working around 339 00:17:50.240 --> 00:17:52.599 the clock. They don't need food, they don't need to sleep, 340 00:17:53.000 --> 00:17:57.559 they're just constantly scamming. Last year, Americans lost well globally, 341 00:17:58.240 --> 00:18:02.599 we saw about thirty five billion in scam losses. Within 342 00:18:02.640 --> 00:18:07.160 the crypto ecosystem. Only about fifteen percent of victims report, 343 00:18:07.519 --> 00:18:10.599 so that number is probably closer to two hundred billion. 344 00:18:11.000 --> 00:18:14.400 I mean that is a global scourge we're seeing ransomware groups. 345 00:18:14.440 --> 00:18:17.559 Just last week it was reported that the first ever 346 00:18:17.799 --> 00:18:21.920 end to end AI ransomware attack took place where there 347 00:18:22.000 --> 00:18:26.039 was no human involvement whatsoever. So what does that mean. 348 00:18:27.160 --> 00:18:30.279 It means that if hospitals are the number one target 349 00:18:30.599 --> 00:18:34.559 for ransomware actors, which is true today, that means that 350 00:18:35.079 --> 00:18:37.960 we don't have to worry about one actor anymore. They 351 00:18:37.960 --> 00:18:42.480 can have millions of agents attacking hospital systems at scale. 352 00:18:43.599 --> 00:18:48.160 That's not a law enforcement issue. That is a global 353 00:18:48.240 --> 00:18:52.599 civilization level threat and we need to figure out how 354 00:18:52.599 --> 00:18:54.480 to combat it. But I told you I'm the most 355 00:18:54.480 --> 00:18:56.480 positive person in crypto, So I have an answer for that, 356 00:18:57.759 --> 00:19:01.240 and that we have to use these tools right. Law 357 00:19:01.319 --> 00:19:04.160 enforcement compliance professionals need to have access to them. And 358 00:19:04.200 --> 00:19:07.519 that's really that's like how we see that's how we 359 00:19:07.559 --> 00:19:10.119 see our place in the world, is how can we 360 00:19:10.240 --> 00:19:13.880 enable these types of mission outcomes for law enforcement agencies, 361 00:19:13.920 --> 00:19:17.079 for national security agencies to actually stop these attacks from 362 00:19:17.079 --> 00:19:20.480 happening in the first place, to get money back to victims, 363 00:19:21.480 --> 00:19:25.039 and to disrupt the criminal networks that are doing this activity. 364 00:19:25.720 --> 00:19:28.799 I'll stop rambling, but I'll kind of say this last piece, 365 00:19:28.799 --> 00:19:31.440 and that is like, these aren't one off criminals right 366 00:19:31.480 --> 00:19:34.720 in their mom's basement or something. These are transnational criminal 367 00:19:34.799 --> 00:19:40.599 organizations that have industrialized this type of activity. So the 368 00:19:40.680 --> 00:19:45.160 US government, working with other authorities, the UK and others, 369 00:19:45.640 --> 00:19:47.480 about six months or so GO took down a group 370 00:19:47.519 --> 00:19:50.400 called the Prints Group, which operate at the highest levels 371 00:19:50.400 --> 00:19:53.599 of the Cambodian government. We ended up forfeiting about fifteen billion. 372 00:19:53.599 --> 00:19:56.799 It was the largest seizure in world history or the 373 00:19:56.880 --> 00:20:01.160 largest forfeiture action in world history. But that's that's one 374 00:20:01.200 --> 00:20:05.119 of I don't know, twenty twenty five, thirty fifty compounds 375 00:20:05.200 --> 00:20:08.160 just like this, where there's human trafficked workers that are 376 00:20:08.160 --> 00:20:12.880 scamming you know, Westerners and an American citizens. So these 377 00:20:12.880 --> 00:20:16.119 are huge problems, but we have the technology combat it. 378 00:20:16.119 --> 00:20:18.039 We just make make sure that the good guys have 379 00:20:18.079 --> 00:20:19.079 the technology as well. 380 00:20:19.599 --> 00:20:22.839 With the convergence of AI and crypto evolving so so quickly, 381 00:20:22.920 --> 00:20:25.240 and I didn't even think about that with people use it, 382 00:20:25.279 --> 00:20:27.119 you know, the deep fay. Of course, I understand what 383 00:20:27.240 --> 00:20:29.440 deep fake is. I understand that people are using other 384 00:20:29.440 --> 00:20:32.400 people's voices, but with regard to that type of money, 385 00:20:32.920 --> 00:20:36.519 you know, take away the fraud obviously being a legal activity, 386 00:20:36.960 --> 00:20:40.359 how is it handled when somebody is using your voice 387 00:20:40.359 --> 00:20:42.759 without your permission? Is that is that something that Yeah? 388 00:20:42.839 --> 00:20:46.440 I mean, you know, look like I am, I'm a lawyer, 389 00:20:47.400 --> 00:20:50.640 you know, I think that, Like, there are some really interesting, 390 00:20:50.680 --> 00:20:53.680 thorny legal issues when it comes to AI. I testified 391 00:20:53.920 --> 00:20:56.759 about a year or so ago. It's crazy, it feels 392 00:20:56.759 --> 00:21:00.000 like longer in the first ever hearing on Capitol Hill 393 00:21:00.039 --> 00:21:03.319 on AI crime, and that question arose a number of times. 394 00:21:03.359 --> 00:21:05.000 It's sort of like, you know, it's your name, it's 395 00:21:05.000 --> 00:21:08.160 your image, it's your likeness, you know what what what 396 00:21:08.200 --> 00:21:10.960 do you have there? Conventionally it's like, you know, there's 397 00:21:11.039 --> 00:21:13.559 there's a I think they call it the Elvis law, 398 00:21:14.799 --> 00:21:17.279 where like this whole idea of like someone stealing your 399 00:21:17.319 --> 00:21:22.519 your your voice or you know, you potentially have civil ramifications. 400 00:21:22.519 --> 00:21:25.519 But I think there's all kinds of interesting questions that 401 00:21:25.559 --> 00:21:27.680