Should Big Cryptocrime Sow Doubt in Crypto’s Safety?
The Feds have seized nearly $3.4 billion in stolen bitcoin, raising concerns about the security of the decentralized crypto infrastructure. Omid Malekan suggests that while crypto enables some illicit activity, its transparency makes it easier for law enforcement to trace than traditional banking systems. As tools improve, efforts to trace illicit activity are becoming more efficient, challenging the notion that crypto is safer for criminals.
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Key takeaways
Law enforcement seized $3.4 billion in stolen bitcoin, questioning the safety of decentralized crypto systems.
The transparency of crypto transactions aids law enforcement in tracing illicit activities.
Improved tracing tools may drive criminals back to traditional banking systems, despite the current crypto narrative.
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The Feds just seized nearly $3.4 billion in stolen bitcoin from a cryptothief. This is clearly bad news for that thief, but it also begs the question: Is this a PR problem for the crypto industry? If you can steal billions in crypto assets, is the decentralized infrastructure really all that safe for companies to engage with? Should companies expect cryptocrime on their decentralized ledger of choice?
Crypto Explainer-in-Chief, Columbia Business School adjunct professor, and author of Re-Architecting Trust: the Curse of History and the Crypto Cure for Money, Markets and Platforms, Omid Malekan, says: take a pause. Don’t let cryptocrime deter you from seeing the value (and safety wins!) in decentralized finance.
Omid’s Thoughts
“Everyone’s heard the cliche that crypto is an enabler of illicit activity, and if all you do is read headlines like the one today that the Justice Department just recovered billions of dollars worth of stolen Bitcoin, then you might think that it’s true. But if you read past the headlines and look at the sophisticated tools that the government has developed to take advantage of unique features of crypto, like total transparency of every transaction, then you’ll see that increasingly.
It’s foolish to try to use Bitcoin for illicit activity because in many ways it’s easier for law enforcement to, quote unquote, ‘follow the money’ on the blockchain than it is through the traditional banking system. Project this forward a few years, assume that the government, with the help of private companies, will keep improving its ability to trace illicit activity through crypto, and it’s not unreasonable to assume that criminals will be more likely to use the existing banking system where trillions of dollars still get laundered every year, and the opacity makes it hard for the governments to stop.”
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About the author
Daniel Litwin is a journalist of multiple disciplines focused on finding and telling engaging stories for B2B communities. He has interviewed executives from Fortune 500 companies including Honeywell, Microsoft, John Deere, and Chipotle, and leads editorial direction at MarketScale. Litwin hosts weekly shows and podcasts while helping develop new content approaches across the MarketScale platform. He holds a B.J. in Radio/Television Reporting/Anchoring and a B.A. in Spanish from the University of Missouri-Columbia.
