Speaking on Yahoo Finance Future Focus, Jim Lee, former head of the Internal Revenue Service’s (IRS) criminal investigations division, said that many regulators and lawmakers associate cryptocurrencies with criminal activity.
However, according to Lee, this is fundamentally wrong. He explained that unlike cash, blockchain provides transparency of cryptocurrency transactions, making it more difficult for criminals to launder illegally obtained funds. Many blockchains are open, and law enforcement agencies can track the source of the cryptocurrencies received.
Lee explained that most transactions are pseudonymous. They are recorded on the blockchain and are publicly available, and with additional data and in-depth analysis, these transactions can be used to trace criminals.
Despite the advantages of blockchain, Lee acknowledged that attackers continue to abuse innovations to steal crypto assets. Fraudsters often use crypto mixers to hide transactions. However, Ethereum co-founder Vitalik Buterin is convinced that crypto mixers are just a tool for increasing privacy.
Lee also emphasized that initial coin offering (ICO) scams have become the most common threat in the crypto space as everyone is looking to get rich quick in the growing market. The increasing incidence of ICO scams is undermining trust in cryptocurrencies, Lee noted.
He concluded by saying that Chainalysis’ tools make it possible to transparently track suspicious cryptocurrency transactions, helping law enforcement agencies catch criminals.
Recall that in 2022, Chainalysis introduced the Storyline tool for tracking transactions in DeFi protocols. That same year, the company released tools for tracking sanctioned crypto wallets.
Source: Bits
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