Jack Solowey, a policy analyst at the Cato Institute's Center for Monetary and Financial Alternatives, has proposed that the U.S. government could bolster national security through the implementation of blockchain solutions in collaboration with the private sector. Speaking to Federal Newswire, Solowey highlighted that law enforcement agencies can leverage the transparent and immutable characteristics of blockchains to disrupt illicit activity involving cryptocurrencies.
"The first step is recognizing that there's a lot of engineering and cryptography talent within the U.S. crypto ecosystem and that this is a strategic asset for the U.S. and its allies, particularly in an age of evolving cyberthreats," said Solowey. "The U.S. government should embrace this strategic asset by pivoting from regulatory uncertainty and hostility vis-à-vis crypto to clarity and openness. Major blockchains typically record crypto transactions on open and auditable public ledgers, enabling forensic analysis of transaction data that can be used to identify and interdict criminal activity."
On an episode of the Crossing the Chain podcast, Erin West, a deputy district attorney in Santa Clara County, underscored the importance of collaboration between law enforcement and crypto companies. According to Federal Newswire, West stated that such cooperation is crucial not only in assisting victims of scams but also in proactively identifying and disrupting criminal networks. "That's one of the beautiful things about the blockchain," said West. "We're able to trace funds in a way that we never would have been able to before, and at a speed that we would never have been able to before." She added that training sessions provided by crypto companies are equipping more members of law enforcement with the skills necessary to investigate crypto-related crimes.
Binance, recognized as the world's largest crypto exchange by trading volume, reported on its website that private-public sector partnerships have been successful in apprehending scammers and aiding victims of crypto scams. In 2023, Binance's investigations team supported an operation conducted by the FBI and U.S. Department of Justice (DOJ) targeting scammers. The team managed to identify and restrict stolen funds' movement, enabling both agencies to seize over $112 million from scammers and return it to victims.
Chainalysis, a leading blockchain analytics firm according to its website, partners with law enforcement agencies providing tools that enhance their ability to detect illicit activity. A U.S. government special agent expressed how beneficial this partnership has been: "The use of Chainalysis has allowed my case to evolve in ways where my unit didn't have the bandwidth due to the volume of tracing involved." Chainalysis aids law enforcement in tracking illicit activity across blockchains and linking such activities to real-world identities.
Similarly, Elliptic, another top blockchain analytics firm as stated on its website, provides a team of in-house financial crime investigators to support law enforcement efforts. Elliptic assists in identifying wallet owners and tracking suspicious activity across blockchains.
According to the Cato Institute's website, Solowey's work at the Center for Monetary and Financial Alternatives focuses on decentralized finance, financial technology, and artificial intelligence. His research has been featured by various publications including CoinDesk, Cointelegraph, Law360, and the New York Daily News. Prior to joining the Cato Institute, Solowey practiced as an attorney in the cybersecurity field.
