Seize and Desist podcast

S&D E7 - Chasing criminals across the blockchain

Author
Lo Furneaux
Marketing - Associate

“Crypto will be a piece in almost every investigation.”

In this episode, Ari and Aidan explore the pivotal role of blockchain analytics in crime prevention. 

They delve into why traceable technologies like the blockchain appeal to both criminals and law enforcement agencies, shedding light on how mixing services can be used to facilitate money laundering and examining the evolution of digital currency investigations using real-world examples like Bitcoin Fog and Bitfinex. 

Ari shares insights from his experiences in both the public and private sector, including his first encounter with investigating crypto-enabled crimes.

Throughout the episode, they emphasize the importance of striking a balance between financial transparency and individual privacy and advocate for increased education and resources to enable law enforcement agencies to effectively tackle crypto-related crimes.

‍

‍

Timestamps

02:30 - Networking and motivation through Ari’s running club

05:30 - Tackling the complexities of illicit finance and crypto recovery

10:00 - Libra's impact on global regulatory conversations

14:30 - Understanding cryptocurrency's regulatory challenges

21:30 - The normalization of crypto technology

30:00 - Cryptocurrency's role in modern asset recovery investigations

35:33 - Balancing privacy, innovation and security in the digital age

46:45 - Combating scams and enhancing crypto asset recovery

50:45 - Ari’s advice for fighting crypto-enabled crimes

‍

Resources Mentioned

‍

About our Guest‍

Ari Redbord is the Global Head of Policy at blockchain intelligence firm TRM Labs and the Vice-Chair of the U.S. Commodity Futures Trading Commission's Technology Advisory Committee (TAC), known for his insights on cryptocurrency policy.

Prior to TRM, Ari served as the Assistant United States Attorney for the District of Columbia and the Senior Advisor to the Under Secretary for Terrorism and Financial Intelligence at the US Treasury, where he regularly collaborated with teams from the Office of Foreign Assets Control (OFAC) and the Financial Crimes Enforcement Network (FINCen) to investigate financial crimes involving cryptocurrency assets.

‍

Disclaimer

Our podcasts are for informational purposes only.  They are not intended to provide legal, tax, financial, and/or investment advice. Listeners must consult their own advisors before making decisions on the topics discussed.  

‍

Asset Reality has no responsibility or liability for any decision made or any other acts or omissions in connection with your use of this material.

‍

The views expressed by guests are their own and their appearance on the program does not imply an endorsement of them or any entity they represent. Views and opinions expressed by Asset Reality employees are those of the employees and do not necessarily reflect the views of the company. 

‍

Asset Reality does not guarantee or warrant the accuracy, completeness, timeliness, suitability or validity of the information in any particular podcast and will not be responsible for any claim attributable to errors, omissions, or other inaccuracies of any part of such material. 

Unless stated otherwise, reference to any specific product or entity does not constitute an endorsement or recommendation by Asset Reality.

‍

Transcription

Speaker: Aidan Larkin

It's not a gold case if someone buys a gold bar. And we're seeing non crypto cases per se that actually resulted in a lot of the big digital asset seizures. 

‍

Speaker: Ari Redbord

It's funny. I saw a case. It was a massive VAT fraud case out of Europol, seventeen countries, massive arrests. And the case involved a yacht, three million euros, several cars, a Rolls Royce, a BMW, a Range Rover, jewelry, luxury watches, two point five kilograms of gold. And there was some crypto. And it struck me when I read this press release being like, oh, yeah. This is kind of, I think, where we're headed with this, where crypto will be a piece in almost every investigation. 

‍

Speaker: Aidan Larkin

It's like saying you have Internet in your case. It's like, no. They've used a smartphone. 

‍

Speaker: Ari Redbord

That's exactly right. So for me, the best example of this is when I was a prosecutor, and this is gonna date myself, I was given a pager to go to court. So if any of my colleagues needed me or I needed one of my colleagues, I could page them. Drug dealers were also using pagers. We started to see a cell phone in cases right here and there. I was issued a cell phone eventually. Then we started to see ten cell phones in every case and then hundreds of cell phones. Right? Now we do cases involving just cell phone bulk smuggling. That is where we're headed with crypto. 

‍

Speaker: Lo Furneaux

Hi. I'm Lo Furneaux, one of the producers of Seize and Desist, the Asset Reality podcast. In this episode, recorded on the thirteenth of March, Aidan is joined by Ari Redbord, the global head of policy at the blockchain intelligence firm TRM Labs. Before that, Ari served as the assistant United States attorney for the District of Columbia. Ari well known for his insights on cryptocurrency fraud and financial crime, as well as his podcast, TRM Talks, where he regularly sits down with business leaders, policymakers, and financial investigators from around the world to talk about the most pressing policy, regulatory, and enforcement issues in the crypto sphere. In this episode, Aidan and Ari will explore why criminals are so drawn to traceable technologies like the blockchain, how mixing services facilitate money laundering, and the crucial role of blockchain analytics in dismantling these operations and seizing their ill gotten gains. Whether you're new to the world of seized asset recovery or you're a seasoned professional, you're sure to learn something from this eye opening episode. Seize and Desist is brought to you by Asset Reality. Thank you for listening. 

‍

Speaker: Aidan Larki

Ari Redbord. I think our paths originally crossed. I was trying to dig it out. I think it was one of the various events that we were hopping about as the world was sort of reemerging from COVID. And I was noticing who's this guy on LinkedIn that keeps running everywhere? There's me trying to do running and then you're basically started this running club as well sort of blazing past me. So, yeah, that's a big part of your life, isn't it? You've done I saw recently you're a big marathon runner. Just one or two under your belt? 

‍

Speaker: Ari Redbord

Just a few under my belt. Yeah. No. it's fun. Look, you mentioned the running club and it's like you and I both are traveling all over the world. You know, you're having conversations. You're having meetings with folks. It's really like the coolest zoom meeting you've ever been on. Right? You're running next to someone. You're talking about their job, their career, their family, and it's just like this fantastic opportunity. And I actually show up for the run. Right? Like you're in Vegas then you're out till, you know, late, late, late, early morning hours. If you've told twenty people that you're going to be in the lobby for a run that morning, you're going to show up. So it's also it's also massive motivation for me. But yeah, no, it's been really fun and just one of those kind of neat things that I don't know, kind of caught fire and people actually show up for this thing. 

‍

Speaker: Aidan Larkin

You started your own, like, do you have a running club now? 

‍

Speaker: Ari Redbord

Definitely. 

‍

Speaker: Aidan Larkin

But it is true because people, especially in this sector, I've noticed now, I'm sure you're seeing the same. There's no the same names, the same sort of people pop up, but the truth is you really don't know people. You really don't know like behind the persona. It is sometimes finding that and I think particularly not realizing that it's a hard job at times, it's tough topics. It's not the no, not realizing that it's a hard job at times. It's tough topics. It's not I mean, there is no there is no nice way to approach terrorist financing. There's no nice way to talk about online exploitation and pig butchering. You sometimes need a bit of likeness and a bit of levity in things. 

‍

Speaker: Ari Redbord

I appreciate that. 

‍

Speaker: Aidan Larkin

We're all humans. Yeah. 

‍

Speaker: Ari Redbord

No. I think you and I have really think, bonded over that, just kind of having that feeling in the space. And look, people ask me all the time. I'm like, oh my God, it looks like you're having so much fun. And my answer is always like, it's because I am. Right? And I am because I get to engage with these really, really cool people who are really smart, who are building cool things. There's a lot of energy around. And the running thing is just sort of like doing cool things with cool people. If you get to do that at any point in your career, you gotta jump at that opportunity. And I see you do that every day, and I'm lucky enough to do that every day as well. 

‍

Speaker: Aidan Larkin

I think people, you know, people are often not accountable, not responsible for their own sort of like their own happiness. I mean, people say that to me a lot. I always sort of gush about the fact that no, I love my job and I love doing what I do. And I think a lot of people used to just think that in the past, just when I had an employer, I was like, yeah, of course you would say that. And like when I said even more now that me and a bunch of sort of people have founded a company because it's the same. If you don't enjoy this, it's hard to turn up. Like you have to genuinely sort of have that sense of mission. So that's the whole point of this, this Seize and Desist podcast is that there's no agenda. We're not trying to sell products and sell software. We're truly trying to get to the bottom of why is it that only one percent is this estimate of assets that are actually seized from all of the illicit assets trillions of dollars. And there's just a fundamental problem with asset recovery and that too many people have sort of separated church and state and think that digital asset and crypto is a completely separate conversation where it's just a subsection within that. It's like talking about vessels within asset recovery. And what we're trying to achieve is by looking at it as an asset category but the difference is it does deserve its own deep dive as a subject. It does deserve its entire ecosystem conversation because we're seeing that it can be the sort of beauty and the beast simultaneously. It can be the antidote to all of the problems and the blueprint of tremendous asset recovery and we're seeing all these billion dollar seizures which you know a lot about. But we're also seeing that on the other side it also becomes the easy clickbait that's the problem and it's the terrible issue that is affecting financial crime and money laundering. And you're sort of at the very sort of cross section of all of that. So if you wouldn't mind taking a few minutes, sort of explain to us how you got here. How do you get to this point that you're sitting on sort of these illicit finance hearings in the US? You're sitting alongside my dear friend, Carl Heuser, giving evidence. 

‍

Speaker: Ari Redbord

Yeah. 

‍

Speaker: Aidan Larkin

How did Ari get to this point? Aside of all the running, take me a bit through your career so far. 

‍

Speaker: Ari Redbord

Yeah. No. I really appreciate it. And before I do, I'll just say that, like, I love the beauty and the beast thing, and I've never actually heard that or thought of it that way. Look, the promise of the technology, this idea of cross border value transfer at unprecedented speed and scale is extraordinary, right? For remittances, for humanitarian aid, for all these wonderful things but at the same time illicit actors also love cross border transfer at the speed of the internet at unprecedented speed and scale. And that's the nuance to the conversation. Internet at unprecedented speed and scale. And that's the nuance to the conversation. But what I usually say is, like, look, what takes us sort of over that is this ability to track and trace the flow of funds on blockchains. I love that beauty and the beast part. I think what gets even more complicated oftentimes than what we do at TRM, and I'm sure we'll get into that, this tracking and tracing, is what you do. Right? And that is, how do you take that trace tracking and ultimately have, have a result in a seizure or asset forfeiture or the like. About me. Alright. I could do that. So, by way of really quick background, I currently am the global head of policy at TRM. And we can sort of talk through that, lots in the next, little bit. Prior to that, I spent about eleven years as a federal prosecutor for the Department of Justice in Washington, DC. I spent a lot of that time on kind of the intersection of money laundering and national security, what I call threat finance. So really stopping bad guys from getting the money they needed to do bad things. So terrorist financiers, export control cases, sanctions, criminal prosecutions, narcotics trafficking, anything that sort of had a national security implication and money laundering. Those were the kinds of cases we were working on. It was awesome. Every day I got to go into courtrooms and say “Ari Redbord for the United States” and was able to represent the government for pretty bad actors. I then went over to the US Treasury Department about six years ago now, I guess, always still working on those types of issues. I was a senior advisor to the deputy secretary and the undersecretary for terrorism and financial intelligence. And that's really the office that oversees all the national security apparatus within the U S treasury department. So OFAC, which is the U S sanctions regulator, FinCEN, which is the financial intelligence unit, right? The money laundering regulator for the United States. There was a policy shop called TFFC, an Intel piece called OIA. So, really sort of anything that implicated national security and money is really sort of was, was our major focus. And yeah, it was, it was really an extraordinary opportunity, I think, to move from being a prosecutor where you're just tunnel vision to your specific case. Hey. This is the case I need to prosecute today in court, and I'm not worried about anything outside of that to include policy. Right? I'm not making policy. I'm just prosecuting cases to, hey, this is a very high level view from the US Treasury on the ecosystem. How do we engage with the FATF, the financial action task force, right? How are we engaging with global regulators? Should we do this sanctions designation with treasury or do we go alone? Like there's all kinds of interesting conversations to be had there. And it was fun to sort of, so have the prosecutor piece and the policymaker piece. And then I did this crazy thing about three and a half years ago where I left fifteen years or so in the US federal government and went to what was about an eight person startup. And..

‍

Speaker: Aidan Larkin

…only reason my startup exists is because other people make similar decisions. 

‍

Speaker: Ari Redbord

And, and honestly, it was the best professional decision I ever made. We're about, you know, over two hundred people now across about forty countries, and it's been a real adventure. But I think we kicked this off by talking about, like, doing cool things with cool people. And I've been lucky enough all throughout those different segments of my career to be part of great teams, and that's true at TRM today. 

‍

Speaker: Aidan Larkin

Well, so when you think about that, because that must be difficult because if you imagine did you actually come across or was there any accidental exposure to crypto cases when you were a prosecutor? 

‍

Speaker: Ari Redbord

Yeah. No. It's a great question. So, honestly, for me, it was North Korea. We were looking at North Korea money laundering, and it's not what it is today, right, where they're attacking crypto businesses, crypto ecosystem. It was really money laundering in Bitcoin, 2016/2017. I was like, wow, you know, this is really interesting technology and there are tools to track and trace it, but it's obviously being used by cyber criminals. I wanna understand it more. And I was lucky enough to be a part of a number of big cases involving North Korea and money laundering that had a crypto nexus. Folks like Christian Chesky, who's now a TRM from IRS and Nick Carlson, who is our expert on TPRK. I was working these cases, Kyle Armstrong from the FBI. We were working those cases together when I was a prosecutor and they were agents, investigators, analysts. That was really the sort of first time I will say from a policy perspective, when I got to treasury, Libra launched Facebook sort of failed crypto project for lack of a better description, stablecoin project. 

‍

Speaker: Aidan Larkin

But it helped to at least help to at least push the conversation to a much more public debate. 

‍

Speaker: Ari Redbord

It was critical, Aidan. Like, when they write the book on these early days that we're all sort of engaged in, to me, Libra's its own chapter. Right? This idea of access to stable coins, right. That are backed by a basket of Fiat currencies and the world's most important companies with access to like four hundred million user Facebook users freaked out regulators across the globe. I jumped on a plane with my boss and we flew to Switzerland to meet with Finma, where they had registered. It really, really caused this conversation to mature super quickly. U S Congress freaked out. Maxine Waters was calling hearings and putting Mark Zuckerberg up there. I think it's actually really sad. They ended up putting together the team that you absolutely would want to have running a business like this Stuart Levy, former treasury senior official, was the CEO, all kinds of things. They did everything right. It was just A) ahead of its time. And I think B) associated with Facebook, which was a company that a lot of policymakers were skeptical of. 

‍

Speaker: Aidan Larkin

We're purposely targeting a specifically non crypto audience. We're trying to help the generalists, in this sort of, in this sphere. So you've got Facebook coming along who want its own stable coin, its own currency effectively and everyone freaks out because there is the sheer power that they would have because they have already got so much data. There's already Netflix specials and the Britney Kaiser exposes and you've all this no storming towards like you know Brexit and countries being overthrown and you know manipulations in Cambridge Analytica and all of this sort of like juggernaut. But like help me understand from a layman's perspective, take out the social media company. What's the difference between that and one of the big and I'm not trying to name names to pick on people but, USDT or something like that or any of the other big stable coins that are fundamentally backed or private companies, private organizations underneath with their own complex corporate structures. I'd ask you to hide them play inside a little bit and sort of have crept up and, not not the opinions of CRM, your own personal opinions as a former prosecutor. Is it a case of where all of a sudden we kind of lost our banks, it was too early, but over here it's like, well, what's the difference? Like, why is there not the same level of scrutiny? Maybe there is, but I've just not seen it in the public domain. Yeah. 

‍

Speaker: Ari Redbord

It's interesting. Look, from what I saw at Treasury and still, like, having engaged with Libra, which eventually became called DM, even in my time at TRM, we were working really closely with them. I thought it was an incredibly responsible player. Right? Like, I remember when I was at treasury, we were having conversations. I don't talk about this very often, but it's crazy stuff. Like, we were having conversations about exactly what we expected from an AML program for Libra. And at every turn, they essentially did what we asked. I think that they hired the right team. They were putting in the policies and procedures. And I think it was doomed to fail because of sort of the association, as you mentioned, with the sort of what was happening in the social media space and the concern around big internet companies, essentially big social media companies during that timeframe. For, look, the sort of purpose of the layman, you have a circle today, which is to me, one of the very best, most responsible players we have in the space, which is doing a lot of the same things with some of the same team that Libra had back then. I think probably just, a, the time was not right then, and the time is much more right now. And again, it doesn't have the sort of connection to a giant social media company like Facebook. So I think a company like Circle is doing it in an incredibly responsible way today, but so was Libra, frankly, in many respects back then. 

‍

Speaker: Aidan Larkin

Even just participating in these hearings, getting involved, having people on the ground. Because I think that it is that classic thing and I think that's why people get confused because they look at something and go, well, hold on. If I apply the same metrics to both of those things, why was there different outcomes? And it is accepting that sometimes it's just timing. If you did if you tried to get a Bitcoin ETF off the ground, you know, five years ago, you wouldn't have had the same sort of reception. And we keep trying to sort of tell people. I still personally on the side do visiting sort of lecture work because I enjoy. So I really enjoy seeing people having that oh heck sort of moment. I remember when I was an investigator and the concept of realizing you trust all of this. I often use the example of like pinning the tail on the donkey. All this stuff's going around, you just gotta connect the offline identity with this online transactions and you can see investigators eyes light up and then they start to realize like the sheer opportunities for this. And that's why with me, as you sort of hinted at this, it does need to have its own special category because never every time something new comes along there's always that threat first, risk first. Whereas when you see what's happening right now with some of the stable coins, again, they've just got so big that it's people that kinda don't know what to do with it. I was just, I was looking up before the show, Tether is a private company and it’s now making a 6 billion dollar profit and it’s just posted 2.8 billion dollars just in the last quarter, a hundred billion dollar market cap and was it BVI registered company? And I think this is where people just sort of their minds get blown because they're like, but hold on, didn't we hear all this with a company called FTX? And they had lots of assets and lots of money and what should we do? No, that's different. Different how? Is it regulated? No. And it's actually banned in New York? So this is where I think people forget that when we're trying to tackle asset recovery, we're speaking to prosecutors and judges and police officers. Maybe this is their first time coming across this. And we get into the habit of throwing all this stuff across people's desks and expecting them to not go, all seems just peculiar. How do you, when you're in your role, you do this so much more than me. How do you sort of have those first conversations? Let's say that you're going into a country for the first time and you're trying to help someone sort of understand getting the balance of that, embracing the economic opportunities but also not being too open for business or sort of bad actors. How do you sort of like do that dance when you first meet a country?

‍

Speaker: Ari Redbord

I think it's really important. It's not even when you first meet a country. I mean, these are ongoing conversations over and over in places that super sophisticated policy makers and regulators like the US, like the UK

‍

Speaker: Aidan Larkin

As people retire and people move in and out of jobs. Yeah. 

‍

Speaker: Ari Redbord

All kinds. It's a constant conversation, but I think it's an important one in that, look, you know, I'm not a rip and replace kind of guy. Right? Like I know that this idea was like, hey, we're building an entirely new financial system and it's going to displace intermediaries and banks and financial institutions. I've sort of never seen it that way. Right? Like I think there are opportunities to do financial services, to move money on blockchains, which to me is like a true tech upgrade on the current rails that we have today. And it's important because open public blockchains are these immutable ledgers where you can track and trace funds in ways you never could before. That's good for anti money laundering, for sure, which is obviously the software that we build at TRM. But it's also good for a lot of other things to include market integrity and consumer protection, understanding markets, right. Being able to measure the impact of the actions that you take. Right. You know, we can get into some of this, but over the last few years, we've seen the US treasury FCA, Europol, FBI, others take pretty significant actions against crypto related businesses. In the past, we would pretty much have to speculate as to the impact of those actions. Today, we could actually see the volumes on blockchains pre and post sanctions or enforcement action or criminal prosecution. We can never do that before. You know, we'd spend hours and days and weeks sitting around, you know, conference rooms and secure facilities at Treasury trying to understand the impact or potential impact of sanctions. We could do that today by just looking in real time at volumes through exchanges, through mixers. So there's a lot you could do now. 

‍

Speaker: Aidan Larkin

Yeah. That actually a lot of people will appreciate like the simplicity. I often get called out if I sort of say this at events or webinars, get people coming up and ask me afterwards and sort of fact checking, but I don't think people realize that you'll be better placed than me to describe it. Like a Madoff style case where you're trying to unpick a corporate veil with a series of financial transactions in different jurisdictions. What is the timeline of what that normally takes versus unpicking a large scam that's been run, and involves the blockchain? 

‍

Speaker: Ari Redbord

It's absolutely extraordinary. And you're absolutely right. Look, when I was a prosecutor, I investigated cases involving networks of shell companies and hawalas and high value art and real estate and diamonds. Right. There are no TRM to trace those things. Right. You can't do it. You know? But at the same time, crypto allows you to move funds faster and in larger amounts than ever before. And those transactions are very hard to undo as opposed to sometimes in the traditional financial system where you can undo wire transfers and the like. So it's this really interesting paradox. I fall on the side of, look, Blockchain technology provides so much value to investigators. You know, anti money laundering to me is actually a feature of this technology, not a bug, despite what you hear from policy makers. So I usually fall on the, Hey, you know, moving funds on blockchains is safer, is more secure and is easier to regulate and do financial crime investigation on. But I get that, you know, now ransomware actors can ask for larger amounts of funds much faster than they could, in the traditional world. So it's a paradox. 

‍

Speaker: Aidan Larkin

It is like the, I often use this sort of cheesy movie quote. I think it's Spider Man, which I always remember. One of my first bosses told me when I first became a criminal tax inspector, they were like, with great power comes great responsibility. Exactly. And also with my Northern Irish accent, I can't say power. So I say I basically do the thing that in golf, if you get the same score as the golf course, it's said it's like power of power. And I think that that's I've sort of sat in the position that you often talk about if we're helping a country and it's kind of like, you've got one side of the house over here demanding Bitcoin is banned and all crypto is bad and it's all awful for money laundering and terrible things. Then you've got the other side going well, the middles are going well, it's a new thing and we can investigate it. And if anything, it has more guide rails and more possibility to track and trace and shut down and find and recover assets. And people often forget as well, it's even just the evidential opportunities. Even if the money's gone and there's no assets to seize. Like being able I've seen people, really brilliant investigators take what they found on the blockchain and say, well, we've we've seen that he emptied the wallet after we kicked in the door. It's been put onto a we think it's been put onto a hardware device and we can't find it right now. But that's been enough to get international freezing orders in different countries because they've now been able to prove to a judge they're trying to put their assets beyond use. Like this wonderful sort of like set of breadcrumbs that's been left. Like, do you think that because again, thinking back to my I always use my dad as the benchmark. Like, if I was explaining to him, like, why is it that banking you know, we have this traditional sector. New technology came along in sort of internet computing and mobile devices and it's like everyone can accept. That's just an upgrade on the technology that allows these sectors to work. Why do you think that and it's not a trick question because I know a lot of people will be going, well, because it cuts banks out. But seriously, why is it that we're not seeing or are we starting to see it now with JPMorgan and BlackRock? Is it treated with skepticism? But because to the layperson, it just looks like if we flip it the other way, instead of going Bitcoin and it's a them or us, if someone looks at it as this new technology's come along, actually allows us to do AML KYC much more accurately. It actually allows us to move transactions even faster. Like if you banks and financial sectors go build on this and build in all the automated screening data, we are actually gonna do a very much better job than we're doing in the current global financial sector where we have trillions laundered in TradFi that we kinda just give up. And it's like, could be two to five trillion. We don't why do you think there's that skepticism? I don't think it's just cost. Surely, it's not just, like, commercial opportunities? 

‍

Speaker: Ari Redbord

No. It's a great question. I actually don't think it is necessarily commercial opportunities. I think you see some of the banks sort of you can see some of that happening, the lobbying and all of this sort of against tech. I think it's a couple of things. One, look, you know, Bitcoin in particular was born out of the financial crisis and the sort of distrust of large institutions of governments. It came alive with this sort of libertarian ethos. And I think for the most part, that was great and the technology was fantastic. But I think that we developed sort of this meme crypto bro sort of culture, crypto Twitter around it that caused a lot of and and talk about it a lot of tech jargon and sort of new vocabulary where, look, if we only talk about it the way you just did, Aidan, like it's, this is just a new tech stack to a very old problem. And that is how do you move money or how do you really move anything? And to me, it's all a big tech upgrade more than anything else. You know, you talk about central bank digital currencies, for example. I don't know if we should have one or we shouldn't, but I know it shouldn't be a red meat political issue. It's just a tech upgrade potentially on what we have today. 

‍

Speaker: Aidan Larkin

Traditional banking, you've now you're paying for a coffee with an Apple Watch. Like, no one's losing their but there always will be those people that script. 

‍

Speaker: Ari Redbord

It's all digital money. 

‍

Speaker: Aidan Larkin

Yeah. It's all digital money. Like, when was the last time you withdrew cash? 

‍

Speaker: Ari Redbord

That's exactly right. We all use digital money. I still have to pay to get into my kids' basketball games with cash. For some reason, they make me pull it out. That's about it. You know, I was paying babysitters for a while, and now they just want Venmo. And the fees I pay on that, right, I think we've done some bad job in messaging as an industry over the last, you know, decade. But I also think it's early. And I know we keep saying that, but it really is early when you talk about the internet. Right. I mean, it was years before the average person was engaging with the internet in a meaningful way. 

‍

Speaker: Aidan Larkin

I actually have a Daily Mail article that I use in presentations. And I think it was something like early nineties, mid nineties, and it's like the internet, it's a fad that we'll never catch on. Yeah. Was the headline. Yeah. And it's true. We talk about, okay if you think about what banking has gone through since the early 70s. Like to say to someone, you're gonna have a plastic card you can tap, you're gonna pay with your phone, you're gonna be able to, you can go to an ATM and not even find your card anymore. Even if you wanted to withdraw cash, it's the advances. But I agree that because it started off in that polarizing position, it's kind of like I have two teenage sons and I sort of think about kids using Snapchat. And, like, before, like, the grandparents use it. And it's just gonna go through that cycle that it's just gonna become normalized. 

‍

Speaker: Ari Redbord

I think that's exactly right. And Jeremy Allaire talks about this from Circle. And I did a TRM talks with Dante pretty recently, and I asked him about this as well. They talk about the tech has to recede right from the conversation. We got to stop talking about protocols and blockchains and mixers and bridges and all of this tech and mining. And it just has to be like, you pull out the phone and you tap it and you keep it moving the way you do with Venmo today. That's when my mom will start using this technology. 

‍

Speaker: Aidan Larkin

It's like sending a WhatsApp. No one sits down and goes, I've got WhatsApp on my phone. Let me talk to you about encryption. 

‍

Speaker: Ari Redbord

WhatsApp is an awesome example. Look, when I was a prosecutor, WhatsApp was being used basically by terrorists and law enforcement. Right? Simultaneously. End to end encrypted. 

‍

Speaker: Aidan Larkin

Law enforcement has a group. The terrorists have a group. Everyone's using WhatsApp. 

‍

Speaker: Ari Redbord

I now use it for my child's, like, parent teacher association. Right? Like, bad guys are early adopters of great tech, and that's what we're seeing to some extent today in the crypto ecosystem. But like everyone now uses WhatsApp, signal, these types of messaging apps, because they're great. They're good tech. 

‍

Speaker: Aidan Larkin

It is kind of like ignorance is bliss. Like the amount of people that have no like pinned their location or shared their location with me. And you're like, do you know who's actually looking at that or tracking it? Whereas the same people like lose their mind over the government's trying to pile up new crypto and trying to take my privacy. And you're like, the irony that you're complaining on Twitter or X about your privacy, unless you are actually in a Bunker Can Peaches guy, like you didn't get the right to have that argument about privacy at the extent at which you want them. And they said in an episode with Carl, we were talking about, I think when you've worked in our collective worlds of law prosecutors, I mean, you've seen the horrors. I think it's a valid price to pay at an entry point when you see what people do, when you don't enforce efficiently, we can't live in this utopian world. In the same way, you know, one of my favorite comedians is Jim Jeffries. His gun control argument, which if you haven't watched it, you should look on YouTube. And he sort of poses that no Lewis Hamilton should be able to drive his car two hundred miles an hour if he wants. No because he has the ability but he can't. He has to walk as society can only walk as fast as its slowest member. And he's gone to the same reasons we have to have gun control and the same reason we have to have controls on cars. And the government tells you what you should eat and what you should drink and they tell you what age you should get married at. And if you want to be a normal society, if you want mainstream adoption, you gotta accept that you can't have your own special category. But I also agree that some governments don't do a good job by just having an overly simplistic view and kind of ignoring the atrocities and TradFi and sort of pointing at centralized exchanges whereas like only years ago are we still seeing recent prosecutions in banking. And it's had decades to get it right. And we still have Sinaloa Cartel. We still have no great money laundering scandals affecting banks and 1NDB. 

‍

Speaker: Ari Redbord

Where I land on all of this is, and you'll hear hopefully comes throughout the program today. The conversation is that like pretty much any issue that we're having in this space, whether it's how to regulate it in the US there's this conversation about what are securities and what are commodities we deal at TRM and you at Asset Reality deal with, you know, the money laundering piece and the criminal enforcement. I believe there are tech solutions to every policy regulatory investigative issue in this space. And I think that like what I love is to see people building it, the kind of stuff that you're building and the kind of stuff that we're building and sort of beyond As we approach these issues, I always wanna approach it from, like, how can we use the tech, which is really good today, to solve these regulatory issues? 

‍

Speaker: Aidan Larkin

And it's the blessing and the curse because the technology that everyone's frightened by also contains all of the solutions. And we've seen this in the sense of I would love to hear your sort of your take from former prosecutor and your policy job and what you're seeing in building a TRM. Is that sort of life cycle just to give people a bit of an example, we wanna sort of zone in on investigating and the possibilities around the blockchain. We've seen these billion dollar seizures and when you come from my regular asset recovery world where billion dollar seizures were not a common thing and they're just happening so much in crypto. What is the reason for this phenomenon? Is it lots of assets, appreciation and value, or is it the tools are making it easier to, you know, sort of fishing with a trawler net as opposed to a pole? 

‍

Speaker: Ari Redbord

Yeah. I would submit all of those things really, honestly. You know, you mentioned billion dollar seizures. Let's just talk about the biggest one ever. Right? The seizure of the funds from the Bitfinex hack. So essentially walking through the life cycle in twenty sixteen, there was a hack on the Bitfinex exchange, which was one of the largest exchanges at that time. The hacker stole about seventy million dollars in Bitcoin and then began to launder those funds. And they launder them through every obfuscation technique you could imagine. So for folks listening, it's like they move them through mixers, which jumble up different cryptocurrencies and send them out. So they're harder to on the other side, so they're harder to track. They move them in and out of dark net markets, which are markets on the dark web through the Tor browser that are drug markets and other types of illicit activity. Move them in and out of there just to obfuscate the transactions. Right? 

‍

Speaker: Aidan Larkin

It's just like someone with a stolen painting just moving it through multiple hands. They're just trying.. 

‍

Speaker: Ari Redbord

Moving it through multiple legs. 

‍

Speaker: Aidan Larkin

Money under 101.

‍

Speaker: Ari Redbord

Yep. They moved the funds across different blockchains to make it harder for investigators to follow those funds. They were able to off ramp some of them and convert them into other things like gold and gift cards, and they used privacy coins, which are harder to trace, one called Monero. They were laundering these funds over and over again, but what they couldn't do is find an off ramp. Right? You need to be able to take these funds and move them through a cryptocurrency exchange because the reality is we can't really buy anything with crypto today. 

‍

Speaker: Aidan Larkin

But it's not exactly the same. It's like me stealing a million dollar heist in cash. I can't buy a house. I can't buy a car unless I'm willing to do tiny little transactions so it’s even when I hear people talk about off ramps, I'm like, it's not just a crypto issue. That's it. 

‍

Speaker: Ari Redbord

It's not. 

‍

Speaker: Aidan Larkin

If I give you a Picasso and go, there you go, buddy. That's your share of the Louvre we've just robbed today. You still gotta get it into the normal system to pay your kids school fees and buy Ferrari? 

‍

Speaker: Ari Redbord

It's very hard. Exactly. And, you know, look, you can layer the layering stage of money laundering. I think you can do at scale in crypto. It just becomes very, very hard to do any of the other stages, right. Particularly integration. And that is you have to find those on and off ramps and ultimately five years later, because investigators were able to track and trace those transactions. They were able to go back in time when the tools like TRM got better and able to watch those funds move. They were ultimately able to trace those funds to a single wallet address and ultimately were able to find out more information about that address. We're able to execute a search warrant and then find information that that they needed to find in order to seize those funds. So private keys, specific information that allowed them to do that. So my point is in large part, look like that's how this works. So an event happens, whether it's a hack or a movement of illicit funds, law enforcement is able to track and trace those funds in real time on blockchains or even go back in time because the blockchain is forever. Every transaction is logged and immutable. So you can go back when the technology gets better to trace through mixers to trace in privacy coins. And law enforcement is able to do that. And to put a point on this, it was the largest seizure of anything in history, 3.6 billion, because that seventy million over those five years increased exponentially in value. And they were able to make arrests and ultimately get a guilty plea and cooperation in a number of other cases. So huge investigation, huge seizure, but really all because of the native qualities of public blockchains. 

‍

Speaker: Aidan Larkin

And I think that's something we're gonna dive into shortly, but it is the evidential piece that I think is often massively overlooked because it doesn't always have to result in a seizure. And similarly, we're seeing a lot of cases right now. The Bitcoin fog case now and the recent big sort of conviction there. It's not necessarily that you're just going after the criminal to get an asset seizure. I mean this is just a category. I was speaking to someone recently, advent of cars coming onto the scene. And you don't go to a court and say to a judge, let me tell you about the internal combustion engine or Henry Ford or the model T to seize a car. We go into the weeds a little bit too much. But then when we think, oh, cars are dangerous and they drive too fast. Well, now we've developed things like camera networks and ANPR systems. And actually we're able to track these cars. We've got serial numbers on these cars and we could track them around the world. And there's always that rat race of innovation and sort of technology sort of always keeping up. I use the example of like the particular Bitfinex hack. It's kind of like dropping gold in the middle of a rainforest somewhere. You know it's in this particular area but it's gonna just wait for the technology to catch up and now you've got like thermal imaging and all this wonderful stuff that you can just fly overhead and go it's there. And I think that's the exciting bit because there are so many cases, there's so many interesting companies being developed at the minute that will retrospectively look at hardware devices and be like, you've got a bag of laptops in a property locker in your current police station that actually could have artifacts for crypto seizures. They could have seed phrases. You could recover those assets. For me, it's incredibly exciting that you basically have struggling asset recovery sector, you’ve got a new category that’s very valuable and that same category has also brought us the tooling that will affect the overall asset recovery cases. And tell me a little bit about them. These are not all just overall asset recovery cases. Tell me a little bit about them. These are not all just crypto cases. And if anything we're seeing when people forget that, yes, there are pure someone running a mixer. There are pure cases where someone but just before we jump on the Bitcoin fog, talk to me a bit about the fact that you're now seeing, you were saying more cases where as just a pure asset category. It's not a gold case if someone buys a gold bar and we're seeing non crypto cases cases per se that actually resulted in a lot of the big digital asset seizures. 

‍

Speaker: Ari Redbord

Yeah. We really are. And this is, I think, something that you and I saw coming for a while. And that is, like, right now, there's a cadre of investigators globally. We know them all essentially from whether it's US federal law enforcement, UK met police, Australian federal police. There's a handful of investigators all over the world who do this power users of blockchain intelligence type tools. And they're dealing with every sort of case where, you know, crypto case, for lack of a better description. We're seeing more and more where every case there's some crypto nexus. Right? Because crypto is being used more and more by lawful users for value transfer. So you're just gonna inevitably see it more in cases. And I think we're just starting to see that more. We recently did a study at TRM about law enforcement engagement with cryptocurrency. And one thing we found is that most cases don't start off as cryptocurrency related investigations per se, but ultimately potentially end up in that way. It's funny. I saw a case, end of February, so really just a couple weeks ago. It was a massive VAT fraud, VAT fraud case out of Europol, seventeen countries, massive arrests. And the case involved a yacht, three million euros, several cars, a Rolls Royce, a BMW, a Range Rover jewelry, luxury watches, 2.5 kilograms of gold. And there was some crypto. Right? There was some crypto. It was part of a much sort of broader case, and it struck me when I read this press release being like, oh, yeah. This is kind of I think where we're headed with this, where crypto will be a piece in almost every investigation. 

‍

Speaker: Aidan Larkin

It's like saying you have Internet in your case. It's like, no. They've used a smartphone. 

‍

Speaker: Ari Redbord

For me, that's exactly right. So for me, the best example of this is when I was a prosecutor, and this is gonna date myself, I was given a pager to go to court. So if any of my colleagues needed me or I needed one of my colleagues, I could page them. Drug dealers were also using pagers in all of their work and everyone had one, right. Doctors had pagers. We had one guy at the US attorney's office that would process all of the electronics. We started to see a cell phone in cases right here and there. I was issued a cell phone eventually. Then we started to see ten cell phones in every case and then hundreds of cell phones. Right. And now we do cases involving just cell phone bulk smuggling. 

‍

Speaker: Aidan Larkin

Well, they, you’re pro EncroChat. Yeah. They are now creating their own encrypted networks. 

‍

Speaker: Ari Redbord

And the reality is that, like, that is where we're headed with crypto, where there's crypto in every single case. It's not some novel. I think, arguably, we're in the golden era of, like, crypto investigations. You know, Andy Greenberg wrote this book, Tracers in the Dark, which I think essentially, like, captured that time. That is a very unique moment in time in my opinion because I think we'll see much more of this but it'll just be part and parcel. 

‍

Speaker: Aidan Larkin

I liken it to right now we've got big railroads going in and out of the wild west. And with these railroads are filled with valuable things and this is why they're attractive and that's why you're seeing like North Korean proliferation. There's like, there's all these asset classes. It's not protected as well as it could be. And they are literally like raiding parties just coming and grabbing the assets. And then if you've got everyday criminals being sold schemes, we've seen cases where these are like money laundering coordinators in sort of certain jurisdictions just selling schemes. And it's like, give me your regular criminal dirty money. We'll convert it in crypto because your local law enforcement, if we keep it low enough, just doesn't have the tools and training. So I still think there's a wonderful game of cat and mouse that we're gonna slow down the road at the back of. I still think we're super, super early with a lot of this stuff. We skirted around the issue a little bit. Tell me about the recent Bitcoin fog case and why that is important and what that sort of means for the analytics sector in general because this was a big piece of evidential discussion. And also just for the layperson, many people said to me, what is a mixer? Why are they not all banned? 

‍

Speaker: Ari Redbord

Yeah. There's a ton to unpack here, so I'll try to do my best. Bitcoin fog was a mixer, a crypto mixing service and a mixer, as I kind of mentioned, is really an exchange on a blockchain that you can move funds in and out of and mix them around so it's harder for law enforcement or other folks to track and trace them. 

‍

Speaker: Aidan Larkin

And these aren't illegal right now? 

‍

Speaker: Ari Redbord

These are not illegal, but I'll get to that in a moment. But, like, imagine taking a bunch of dollar bills, you know, a hundred one dollar bills, and putting them on a table and kind of mixing them all around so you don't know you can't tell which are the ones that were put on by certain people. That's essentially what a mixer does on a blockchain. It's usually a smart contract that sort of runs that. And mixers are not illegal, right? Mixers, there are lawful transactions are done on open public blockchains, people are not going to want to watch people, have people watch every transaction. For example, I think we're going to watch people, have people watch every transaction. For example, I think we're going to live in a world someday where we are paid by our employer in cryptocurrency. Our employer will have our wallet address. We don't want our employer to track and trace every transaction that we do. I don't need my wife seeing how much I spend on sneakers every month. There are reasons you want to obfuscate your. Transactions, but there are very specific mixers and Bitcoin fog is one of them. There was another one called Helix, which was also part of a criminal prosecution that advertised on the dark net alpha bay, which was the largest dark net market at the time to launder funds for illicit purposes. That is not legal. That is money laundering conspiracy, right? That is conspiring with a dark net market in order to launder the proceeds of drug buys and drug trafficking and the like. So ultimately the U S department of justice arrested a individual named Roman Sterlingov, who was the administrator of Bitcoin fog for money laundering conspiracy for essentially conspiring with AlphaBay. Just this week, he was convicted on all counts to include money laundering and operating an unlicensed money service business, really for facilitating money laundering activity for facilitating the ability of dark net market purveyors, drug markets, etcetera, from laundering the proceeds to try to obfuscate them from law enforcement. And one issue that came up really for the first time in a really meaningful way that was litigated is the reliability of tools like TRM, of blockchain intelligence tools to be used in court. In the US there's a very famous decision that we all study in law school called Daubert. There's another one called Kumho Tire, that talks about the reliability of scientific evidence. And this is as close as we've gotten to date for a judge finding that blockchain analytics tracing, blockchain intelligence tools are reliable, are to a scientific certainty in these types of cases, that presenting this type of evidence is something the jury should consider. I would still submit that it's one part of a larger toolbox that law enforcement has. Right? Tracing funds on blockchains, ultimately using search warrants and subpoenas and other types of legal process. The asset seizure and forfeiture process that you're so involved in, Aidan, is all part of a larger process. But it was a huge win for the government for this idea of sort of using these types of tools in court. And the last thing I will say to all of this is, like, I'm a huge believer in the need for privacy and security in transactions on blockchains. Like, we can't live in a world where every transaction that lawful users do is open for everyone to see. But at the same time, we have to stop illicit actors from taking advantage of the technology. North Korea has laundered billions, literally billions through mixers over the last five years. It is a huge problem. So the job for regulators, policymakers, law enforcement is how do we stop bad actors from using mixers and still allow lawful users to operate in a secure and private manner. And I think prosecuting cases like Bitcoin fog is exactly the way you do that. Go after the actors, right? The Bitcoin fogs, the non compliant cryptocurrency exchanges that don't have any AML controls. Go after darknet markets like AlphaBay, like Hydra, go after the illicit underbelly of the overall lawful crypto ecosystem. So in other words, going after the actors rather than the activity. 

‍

Speaker: Aidan Larkin

Yeah. Because it is like the argument around the technology. No. You don't sue the creator of the Internet. You don't sue the creator of email because of their involvement in fraud, but you do expect internet service providers to be a bit of a barrier to entry. You do expect the phone company to have certain things in place and certain controls and that’s very relevant for the US and I know it's an incredibly sensitive topic across the US, but, you know, gun control, the US and I know it's an incredibly sensitive topic across the US, but no gun control. Again, sitting as someone who's a sort of European, when you've got places like Scandinavian countries, for example, and people will be horrified to know that outside of those countries, the tax returns are published. You can see there is complete financial libertarian review? And I completely get that I'm a big supporter of the technology, but why is it so divisive? Why is it that if I Google a sort of Roman Sterling offer, I will literally find like reputable, credible people, the people that run VC funds, people that will be like going, this is a disgrace. No, Ross Ulbrich, he should be freed. And I've got people over here celebrating that, like, not to comment personally on it, but why do you think it is still so polarized? Nor is this just it's so new and has so many moving parts to it that there isn't a symbiotic? I think it's sort of 

‍

Speaker: Ari Redbord

like what's old is new again or however that that thing is. Right? Like post 9/11, where my really career was formed as a prosecutor in the government, this conversation was about airports and city streets. Right? Like what level of privacy are we willing to give up for a level of security? And what level of privacy are we willing to give up for a level of security? And we made decisions around that. That conversation continues, I think today, as we moved into a digital world, this conversation is occurring on blockchains. And that's tornado cash when the US treasury sanctioned tornado cash, which was a truly decentralized mixer. Right. It just ran on software. I think it started this conversation in a really meaningful way. I often go back and forth on ultimately where I land on this other than to say that we cannot allow anything to allow North Korea, Russia, other bad actors to launder billions of dollars that are going to be used for destabilizing activity around the world. People I've often heard people say, well, they use Microsoft word to send ransom letters. Well, if Microsoft word is being used at scale, primarily to launder billions of dollars in North Korean hacked. 

‍

Speaker: Aidan Larkin

And that's as main use. 

‍

Speaker: Ari Redbord

We might go after Microsoft word. I've liked the U S treasuries playbook for this for awhile. And that is mostly go after, and not entirely, but mostly go after what I would really call the illicit underbelly, right? Non compliant Russia based exchanges like SUX and Chatex and GoranTech and Bitslotto go after mixers like Helix and Bitcoin Fog. Go after services that are being used at scale like Tornado Cash and…

‍

Speaker: Aidan Larkin

The ones that are blatantly in that category. Was like drug enforcement. You don't go after all the kids on the street. Like every now and then, you gotta go after the big bosses, the ones that are so blatantly you know, not someone very liberal view on what they should be able to sort of consume. But it's like, no, no, you're running a heroin empire globally. You know, you're going to prison for a long time. 

‍

Speaker: Ari Redbord

But at the same time, it's like, but then exactly balance that with allowing lawful users to engage with this technology. And I think there are technology solutions to this, right? At TRM, we are doing compliance for defy today. Right? Decentralized finance. We are doing anti money laundering, sanctioned screening. On these front ends. They are building technology to do it sort of more at what they call the protocol layer, right? Where the smart contract exists. I think there's tech solutions to this today. I think mixers are gonna have this type of technology, but I do think it's early and I think we want to be really careful about going after the technology. I testified, as you mentioned, you know, a couple weeks ago before the House Financial Services Committee, and one congressman asked us, all of us, different opinions, different backgrounds, to raise our hands if basically we supported a ban on mixers. And absolutely none of us, to include Carroll, who was probably the toughest of this group, on stopping bad actors, you know, on that on that shift between security and none of us raised our hands to that. Right? I think we all believe that this technology is really important and privacy is really important. We just have to stop bad actors from taking advantage of it. 

‍

Speaker: Aidan Larkin

Let's ban the bad ones. And in the same way, no no one would propose banning the Internet. I think a lot of uncertainty, and it's probably for another show, where governments have to take a bit of responsibility is no uncertainty and inconsistency in enforcement treatment is what's terrifying innovation because I know as we've seen headlines around the world, how some countries react and go from one extreme to another. I'm conscious of our running out of time. It's always so good. It's gonna be a part part one of four but I'm I'm super keen to hear about we always give everyone the opportunity, the sort of magic wand and and the sort of we've been talking little bit about what a lot of the issues are and the fact that we're completely in agreement that the actual industry has a lot of the solutions for how we go forward. But how did you have that first conversation or how do you advise people to have that first conversation? Is it don't go in with the weeds? And what sort of resources, outside of TRM's wonderful resources of course. What what sort of things do you find? We ask people about, like, what podcasts do they listen to? Where do they go for information? 

‍

Speaker: Ari Redbord

I love that. Yeah. Yeah. I'd say a couple of things. Obviously, I always say follow us and TRM weekly roundup and TRM talks and all of that. 

‍

Speaker: Aidan Larkin

We will share as part of the show notes, particularly the reports you talked about, and I really like those recent insights to talk about that these cases don't start off as crypto and they become crypto. So we'll, we'll share that in part of 

‍

Speaker: Ari Redbord

that. That's awesome. But like, look, when you're a compliance professional, I always talk about you need to go read the enforcement actions. Right. The crazy thing about, regulators is that they are always sending a message far beyond whatever the actual action they take. So if you're reading enforcement actions from FinCEN or other global regulators, read what they're saying. They're providing their playbook, their roadmap on how to do compliance well. Right? What you're supposed to have blockchain intelligence, geolocation, your hat, you're supposed to have these tools. Right. So I would say read the enforcement actions and they usually predate guidance sometimes by like a year. Right. Like enforcement actions are guidance and they're absolutely critical to read. If I am a prosecutor or law enforcement trying to understand this stuff, there are so many over the last really few years. They're just starting to build like this kind of like case law around it. There's a lot of good complaints, a lot of good opinions. If you read the statement of facts in the Bitfinex case that we talked about, Aidan, I mean, it literally reads like a novel of, like, tracing and tracking and watching these funds move, read the recent decision from like a couple of weeks ago in the BitcoinFog case on the reliability of blockchain analytics tools. So I would say like, look, if you're a practitioner, read the blockchain analytics tools. So I would say like, look, if you're a practitioner, read the pleadings and the filings and the what folks are coming at. 

‍

Speaker: Aidan Larkin

Is the source of truth with the of actual things that are actually happening as opposed to someone's biased opinion. 

‍

Speaker: Ari Redbord

That's exactly right. 

‍

Speaker: Aidan Larkin

Because that's what I struggle with. I'm just going straight for the author because if I can sort of figure out the author's leaning, it's like, okay, I might be able to extract context from this, but if you don't have any experience in the industry, it can be, but I read this thing and I said it's bad or I read this thing and I said it's good. I get why it's difficult for people. Can I also ask about, you guys have played such an important part in trying to tackle scams? I mean, when we first sort of founded Asset Reality, we were trying to fix asset recovery. And one of the first things we did was sort of try and understand scams more because ultimately they are asset recovery cases. And the sad realization we quickly dawned upon was that the infrastructure wasn't there. So if we go to government agencies and say, here's a thousand cases that you can get these people's assets back. And it's like, we've never done a crypto case before. And all of a sudden we realized that our efforts are better spent actually working with governments and law enforcement and helping them change policy, develop legislation, go after the bad guys and seize assets. You've been involved in a couple of sort of brilliant initiatives and I know that Erin West has an entire episode to herself to talk about this. So we're we're we've dove into victims in a very, very big way. But tell me about sort of your role in terms of that ecosystem of what you're doing with the TRM fellowship, particularly around Op Shamrock as well. 

‍

Speaker: Ari Redbord

No, I really appreciate it. And, yeah, Erin, I'm excited to listen to her episode. She's always amazing and is doing incredible work. I think one of the challenges that she has is resources. It always is right. While federal governments have more resources still could use more state and local prosecutors that Aaron works with really don't have access in most respects to tools like TRM. So what we've done is we've given, I don't know, a hundred or more licenses to state and local law enforcement that have applied to this program, the tracers program, tracers fellowship to allow them free access to our tool. It's one of the things I'm probably most proud of. I think folks who've come to TRM 

‍

Speaker: Aidan Larkin

Do you know I literally I have to cut in. Yeah. I was literally was in a financial crime unit. In a jurisdiction, that I'll not name, but thousands and thousands of miles away from where you're sitting right now. And I literally am chatting to the guy and he's like, “oh, yeah. We're getting some training”. And he's like, “well actually, have you heard of a program called the fellowship?” I have access to this license. And he didn't realize that he was part of the same scheme. So it's cool when you turn up in obscure sort of islands around the world and you're meeting people that have actually, that are benefiting and I think they've just crossed nearly ten million dollars in crypto seizures. And that's the thing I'm reporting back to Ireland going this is awesome. The more people we can get on this flywheel and now they're going to their bosses and saying, we've got a case, can we get another case? Can we get more resources? It's that jump start that I think the asset recovery sector needs. 

‍

Speaker: Ari Redbord

Yeah. There's very little that makes me more proud than this. Like, you know, like, we all got in this space because of the mission and getting to work at a startup that actually is aligned to these types of missions and working with law enforcement. And when you hear these stories about victims of pig butchering, we've put little docu entry type style things on our website folks who have lost funds, but who have been able to trace and recover or law enforcement able to trace and recover some of those funds. This has dramatically affected the elderly population. We have billions of dollars of victims here and just like giving law enforcement the tools that they need is just absolutely critical. So something we're super proud of. This is a huge issue. I think, sadly, by the time it gets to tracing, by the time it gets to where you sit in the asset seizure recoveries place, it's usually too late, sadly. And that is not a very self serving statement. It's just it's a problem that we have today we gotta stop these scams from happening in the first place and that's actually where I think Erin is doing her most important work and you know you and I and others are doing anything we can to support that work. It's what are the red flags? It's education. It's like, Hey, we need you to think before you engage with this platform or this person, you know, I posted something on LinkedIn, which was tons of people actually responded to it and added their own red flags a couple of weeks ago. 

‍

Speaker: Aidan Larkin

We met at the digital asset summit, I saw Denise and others jumping in on that.

‍

Speaker: Ari Redbord

I think it was really great. And I think that we just need

‍

Speaker: Aidan Larkin

It's a collaborative effort. 

‍

Speaker: Ari Redbord

We need more of that. And frankly, just more Erin is absolutely everywhere. We just need more voices, more folks sort of talking about this because sadly, when you send the funds, it's often too late. We gotta get people from stopping sending those funds in the first place. 

‍

Speaker: Aidan Larkin

It is kind of like that prevention. And obviously, we've seen sort of systems and what you're doing. Again, this is one of the benefits of things like chain abuse and some of the good work that's being done across the sector. But as you talk about, it's retrospective flagging. There's investigative opportunities. There's ways of shutting down the bigger networks, but that's not gonna help that one person who's just sent their funds and had sent. And I think that's the most tragic thing about it is that the vast majority of every case I've ever been involved in, there was that red flag. And some of these are such incredible complex social engineering but some or other catching people on the hop when they could have just and I think that's the thing that we wanna keep reiterating to people that prevention better than the cure. And maybe that's where there is more to be done and I know that there's exciting announcements sort of coming from Erin was sort of was teasing up. Like we've sat in those rooms at Digital Asset Summit where we've had the likes of, sorry, Digital Asset Task Force where we've seen all the representatives are there. All the big companies are represented. All the big social media platforms are represented. And I think the more that they can do to sort of take ownership that realizing that they are being abused as an on ramp. It is quite sad that some of them have pegged back on their compliance programs and I think unfortunately until governments sort of create the stick to beat them with just in the same way the cigarette industry profited for years and the oil continues to gain profits, again that’s what I keep dragging it back to, that this is not a new problem. This is a brand new asset category that has all its teething problems that it will find its feet and we are less than ten years in. And what would be your closing sort of thoughts, Ari, in terms of if you had a magic wand? What is the thing that we all probably have that thing that we hear all the time because you work in the sector. Whether it's a guy at a boarding gate or whether it's something you hear at a conference. I used to always hear for example my first crypto conference is in like 2017/2018. The amount of people that were like, oh, I'm gonna example my first crypto conferences in like 2017/2018, the amount of people that were like you're all gonna be out of jobs, no one's gonna work in convincing anymore, the blockchain's gonna replace everything and all this is just ridiculous hyperbole. I don't know. You can't trace it as the one that I always hear and it's anonymous. What's the thing that irks you the most that if someone takes away one thing from this sort of podcast, it's not to listen to that? 

‍

Speaker: Ari Redbord

I think it's queries on. I think it's this crypto allows for, you know, more criminal activity or crypto allows for anonymous transactions. I think the reality is that, like, we can now do financial crime investigations. We could do anti money laundering better in crypto and more transparent ways than we sort of ever could before. That's like that larger sort of piece. If I had a magic wand, I would probably do a lot of what Erin is doing out there in terms of like education, getting the resources to law enforcement, to investigators, state and local, and otherwise that really, really need it. And really start to make and more cases with this stuff. Cause I think we're going to see crypto in more cases and we need folks to have the resources to track and trace the flow of funds, because honestly you could be a lot more effective ultimately in crypto than you can tracing in the traditional, you know, tracing asset and funds in the traditional world. 

‍

Speaker: Aidan Larkin

I often use the example that no Madoff did twenty years whereas FTX was twenty four months. Like that's the sort of differences we're talking about in terms of the speed of the effectiveness of asset recovery. In a positive way involving digital assets because of those breadcrumbs. And it's not just crypto seas, it's houses, cars, castles, play, it's everything that's all been recovered. I hope that we're speaking in a couple of years and we're talking about the hundreds of billions of dollars of crypto that has been seized around the world, but actually that we're seeing evidentially. I think that's where we'll probably see the most benefit is how this impacts. And once that starts to happen like you mentioned, because like Erin's point, if we can have a network of errands and we can have this much more scalable around the world, it might make a bigger difference much, much faster. 

‍

Speaker: Ari Redbord

Very, very well said. Thank you for a super fun, not surprisingly great conversation today, Aidan. It was awesome. 

‍

Speaker: Aidan Larkin

No. Absolute pleasure. Thank you so much for taking the time to speak to us. And like I say, we'll add all of the links into the show notes. Keep up the good work, my friend. And I'll probably, well, I was gonna say I'd love to see you in a run, but I think of the speed you run versus the speed I run. I will cheer you. I will celebrate and add an emoji on LinkedIn. 

‍

Speaker: Ari Redbord

Don't don't believe the hype. You know, couple miles, conversational pace. 

‍

Speaker: Aidan Larkin

I think I'm gonna see you in Consensus. 

‍

Speaker: Ari Redbord

Yes. Yes. Yes. Yes. I have never been to Consensus, Aidan.

‍

Speaker: Aidan Larkin

Neither have I. Neither have I. I will commit to a run right now. 

‍

Speaker: Ari Redbord

Alright. Tacos in Austin on me. Awesome. 

‍

Speaker: Aidan Larkin

Thanks very much, sir. Keep up the good work. Cheers, buddy. 

‍

Speaker: Lo Furneaux

We're grateful to Ari for sharing his time and his insights on cryptocurrency crime with us. Go and check out the TRM Talks podcast on your preferred platform or the TRM Labs weekly roundup newsletter on LinkedIn. Next time, Aidan will be joined by Jared Koopman, the executive director of cyber and forensics at IRS Criminal Investigations. They'll discuss how IRS Criminal Investigations became a world leader in digital currency seizures, why asset seizures are the only real deterrent for criminals, and some of the parallels between cryptocurrency investigations and Brazilian jiu jitsu. If you've enjoyed today's conversation, like and subscribe to the Seize and Desist podcast on your preferred platform, and leave a comment or any suggestions for future episodes. Thank you for listening. The views and opinions expressed by our guests are their own. Seize and Desist is for informational purposes only and is not intended to provide legal, tax, financial, and or investment advice. 

Want to learn more?

GET STARTED