I continue our special bitcoin podcast series by exploring the perceptions, realities and implications of bad actors in bitcoin with Jake Chervinsky. In addition to serving as General Counsel at Compound Labs, he works on regulatory policy for the crypto industry through the Blockchain Association. So, he spends a lot of time working with legislators and has a great sense of how they view crypto.
Are There Bad Actors in Bitcoin?
One of the outcomes of the Colonial Pipeline in the May 2021 hack was the renewed storyline of bitcoin as a platform for illicit activity. Naysayers, blamed bitcoin for the increasing number of hacks being experienced due to its ease in use of facilitating and collecting ransom demands.
The hack shined a light on bitcoin’s role in the hack, both in the ransom paid and in the ransom recovered. The fact bitcoin was recovered seems to suggest that bitcoin isn’t quite the perfect criminal solution some have made it out to be. Perhaps that helps explain the data point Jake shared, that illicit activity in bitcoin made up less than 1% total activity.
So, then what? If you are considering an investment in bitcoin, should you care if the bitcoin you receive was previously used in criminal activity? Whose responsibility is it to monitor for the possibility of tainted coin? These are just a couple of the topics Jake and I cover. We also talk about regulations he’s monitoring globally and his thoughts about the possibility of seeing a China-like crypto crackdown here in the U.S.