Why Intel Exchanges Raise a Dilemma for Compliance

Intel exchanges have arrived — and with them, a dilemma for compliance.

This summer, a $670 bounty was placed on information identifying Elon Musk’s personal crypto wallet. The reward is offered through Arkham’s Intel Exchange launched in July, which critics have nicknamed “DOX-to-Earn.” The platform encourages users to reveal the identities behind otherwise anonymous blockchain addresses, with crypto payable in Arkham’s native token (ARKM).

Marina Khaustova is the CEO of Crystal Blockchain. Prior to Crystal, Marina was CMO and co-founder of Element Capital Group, a digital finance-focused investment bank and asset manager for emerging blockchain industry capital markets.

While all on-chain information is visible, public forums can be a questionable source for data, and will require multiple verifications, including off-chain methods. Wrong conclusions can be drawn otherwise, putting the integrity of blockchain analytics, and even legal systems, at risk.

As the blockchain industry matures alongside institutional adoption and regulatory clarity, analytics providers need to ensure investigations are done carefully and with even more integrity. With consumer-focused analytics tools allowing any Twitter sleuth to play detective, the stakes are higher for those actors entrusted by public authorities to investigate money laundering, fraud, and criminal activity with real national security implications.

All Eyes on Blockchain’s Surveyors

In a twist of irony, forensics firms — the teams tasked with silently ensuring the integrity of decentralization — have been thrust into the spotlight. In April, a Dutch court allowed Alexey Pertsev, the developer of the Tornado Cash mixer who was sanctioned by the U.S. government last year, to cross-examine Chainalaysis at trial later this year.

Pertsev’s lawyers have argued that on-chain Ethereum transactions cited in evidence did not exist, setting a blockchain analytics company up for a grueling back-and-forth in which even one inconsistency can derail the state’s case, even if all other facts are ironclad. Furthermore, a hypothetical inconsistency can also be used in future legal defenses to undermine an entire process and industry.

Read more: Arkham CEO Defends ‘DOX-to-Earn’ Program, Says Public Blockchains ‘Worst’ for…