Jonathan Levin, co-founder and chief strategy officer of leading blockchain analytics firm Chainalysis, said during a Congressional hearing that criminal activity represents a small portion of cryptocurrency transactions, and terror-related activity is a small quantity of those transactions. Levin offered several recommendations for the U.S. government to reduce those numbers even further.
"As a general matter, our data indicates that the amount of illicit activity constitutes only a small fraction of all cryptocurrency transaction activity. In 2022, the amount of illicit activity involving cryptocurrencies was approximately $20.6 billion. The vast majority of that activity was attributable to ransomware, scams, and theft. Terrorism finance only made up a very small portion of the total volume of illicit activity," said Levin.
Levin spoke in the Nov. 15 hearing "Crypto Crime in Context: Breaking Down the Illicit Activity in Digital Assets," held by the House Financial Services Subcommittee on Digital Assets, Financial Technology and Inclusion, according to Congress.gov.
The first recommendation from Levin for reducing criminality in crypto is comprehensive legislation for crypto firms provided by the federal government, according to his testimony copy. He stated it would increase contact points between law enforcement agencies and crypto companies.
Levin's second recommendation involves supporting international collaboration on crypto regulation and enforcement by the U.S. He linked successful criminality in crypto to bad actors exploiting "weak points" within the global crypto ecosystem such as non-compliant exchanges outside U.S. servicing criminals.
Levin's third recommendation centers around prioritizing equipping government agencies with knowledge and resources required to understand blockchain value transfers landscape evolution. To disrupt terror financing and illegal activities involving crypto would require real-time data, sophisticated technology and expertise utilizing it effectively, according to Levin. His suggestion included establishing "centers of expertise" fostering public-private partnerships alongside data-sharing,
Chainalysis works with over 70 countries' government agencies, cyber security firms, crypto exchanges and other financial institutions providing research supporting compliance efforts as well as criminal investigations, based on the company's website.
