Observations at Chainalysis Links 22

Who is taking crypto compliance seriously?

Posted by Daren Firestone

I had the opportunity to attend the Chainalysis Links conference in NY this week. I may have been the only whistleblower attorney there. Investigators can use tools like Chainalysis to expose fraud for the government. Not all whistleblowers are insiders. SEC rules, for example, make it clear that “independent analysis (evaluation of information that may be publicly available but which reveals information that is not generally known)” is eligible for a whistleblower award.

My takeaways from the conference:

  1. Government is investing in crypto enforcement. Speakers at the conference included: CFTC Acting Chairman Rostin Behnam, OFAC Director Andrea Gacki, FinCEN Associate Director for Enforcement and Compliance Alessio Evangelista, and White House National Security Council Director of Cybersecurity and Secure Digital Innovation Carole House. All of them stressed the importance of a safer crypto environment and support for robust enforcement.
  2. Traditional finance is investing in using blockchain forensics to identify and trace suspicious activities. I spoke to a number of representatives of large traditional finance companies, including several large banks and PayPal, who all use Chainalysis to go above and beyond their sanctions and AML compliance requirements. Their compliance programs aren’t passive; they look for and investigate suspicious activity on the blockchain.
  3. There were very few crypto exchanges present. BlockFi was at the conference, likely because past enforcement actions against them have inspired a proactive approach to compliance. But I didn’t see too many others. I might have missed them. But it’s also clear that some in the industry still doesn’t take compliance seriously. One compliance consultant confided in me, “I have clients [in the crypto space]…I don’t know why the SEC hasn’t gone after them yet.”
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