Unchained - How Much Money Are Terrorists Actually Raising in Crypto? - Ep. 570

Episode Date: November 14, 2023

The recent Wall Street Journal article that claimed Hamas raised $130 million via cryptocurrency has sparked considerable debate, especially after Sen. Elizabeth Warren used it as her sole source to ask for tighter regulations around crypto. However, the veracity of this claim has come under scrutiny.  Yaya Fanusie, Jessi Brooks, and Andrew Fierman delve into the veracity of reported figures, the methodology behind them, and the subsequent industry responses that sought to correct the public record. They examine the political implications of cryptocurrency, its use in funding organizations, and the nuanced role of stablecoins in this digital economy. Additionally, they address the broader challenges in regulating crypto to prevent illicit funding, emphasizing the need for factual accuracy and a comprehensive approach to understanding and tackling such complex issues.  Listen to the episode on Apple Podcasts, Spotify, Overcast, Podcast Addict, Pocket Casts, Stitcher, Castbox, Google Podcasts, Amazon Music, or on your favorite podcast platform. Show highlights: how the Wall Street Journal article claimed that Hamas and other militant groups in Palestine raised $130 million via crypto why Yaya, who spent some time in his career doing research on terrorist financing, found those numbers odd why Jessi believes that there's been a loss of focus on facts and accuracy Andrew's explanation of the post by Chainalysis that corrected the record why it's so difficult to make a confident assessment of how much money is being funneled to terrorist groups whether crypto has become politicized  why is it so important to focus not only on the crypto fundraising but also the other avenues, according to Jessi the role of USDT and other stablecoins in fundraising terrorist organizations how North Korea is a much more sophisticated actor than Hamas in its know-how about crypto how the government has tried to respond to the illicit usage of crypto, such as the OFAC sanctions on Tornado cash the challenges to creating regulations to prevent the use of illicit activity in crypto Thank you to our sponsors! Crypto.com LayerZero Popcorn Network Guests: Yaya Fanusie, Director of anti-money laundering and cyber risk at the Crypto Council for Innovation Previous appearance on Unchained: How Widespread Is Money Laundering in Crypto? Hamas has been experimenting with crypto for years: Yaya Fanusie, appearance on FOX Business Jessi Brooks, CCO and Legal Officer at Ribbit Capital Previous appearance on Unchained: How This DOJ Strike Force Hunts Down Cryptocurrency Criminals Andrew Fierman, Head of Sanctions Strategy at Chainalysis  Links Fundraising report and corrections: WSJ:  Hamas Militants Behind Israel Attack Raised Millions in Crypto Cryptocurrency Feeds Hamas’s Terrorism Questioning Two Senators on Crypto Terrorism Washington Post:  U.S. to warn crypto firms against financing Hamas, terror groups  U.S. Cyber Command helps prosecutors seize stolen cryptocurrency traced to illicit N. Korea nuclear weapons program FT: Israel orders freeze on crypto accounts in bid to block funding for Hamas Fortune: Stricter verification laws in the U.S. won’t stop international terrorists from using crypto DOJ: Global Disruption of Three Terror Finance Cyber-Enabled Campaigns Elliptic:  Setting the record straight on crypto crowdfunding by Hamas How Hamas has utilized crypto, and what may be coming Chainalysis:  Cryptocurrency and Terrorism Financing: Correcting the Record DOJ Takedowns Terrorism Financing with Blockchain Analysis Learn more about your ad choices. Visit megaphone.fm/adchoices

What the Israeli government was able to do here and in prior actions was work with finance and Tether to freeze the funds. Now, what does that mean? Tether has, and USC and Circle have it as well. They have something written into their smart contract that allows them to freeze the funds from getting to the end user or to make sure that the end user, a bad actor, potentially, does not get access to the tether. Now, think about how that does not work in traditional finance. Think about the opportunities there for industry and regulators to leverage this technology to actually stop crypto from getting into the hands of bad people through some sort of automated compliance tool or a smart contract. Hi, everyone. Welcome to Unchained, your no-hype resource for all things crypto. I'm your

host Laura Shin, author of The Cryptopians. I started covering crypto eight years ago and as a senior editor at Forbes was the first Main Tree Mead Reporter to cover cryptocurrency full-time. This is the November 13th, 2023 episode of Unchained. Defi just got way easier with VaultCraft. Popcorn's no-code DeFi Toolkit for building, deploying, and monetizing automated yield strategies. From institutional service providers to Defi DGens, anyone can use VaultCraft to supercharge their crypto with custom cross-chain yield strategies. Learn more on vaultcraft.io. The game has changed. The Google Cloud Oracle built for Layer Zero is now securing every Layer Zero message by default. Their custom end-to-end solution sets itself up to bring its world-class security to Web3 and establish itself as the HTTPS within

layer zero messaging. Visit Layer Zero.network to learn more. Buy, trade, and spend crypto on the Crypto.com app. Users can enjoy zero credit card fees on crypto purchases in the first seven days. Download the crypto.com app and get $25 with the code Laura. Link in the description. Today's topic is how much crypto Hamas has actually raised. Here to discuss are Yaya Finusi, Director of Anti-Money Laundering and Cyber Risk at the Crypto Council for Innovation, Jesse Brooks, CCO and Legal Officer at Ribbett Capital, and Andrew Fehrman, head of sanctioned strategy at Chain Ellison.

Welcome, Yaya, Jesse, and Andrew. Thank you. Thanks for having us. So over the last month, there's been quite a firestorm in the cryptic community that has put a spotlight on the industry in the midst of the Israel Hamas War. And it all started with a Wall Street Journal article that was published on October 10th. Why don't we just go into what it was that the article said and why it was that it created such a stir? Yaya, do you want to start? Yes, thanks, Laura.

And maybe I'll start it off in my copy. colleagues can jump in to, you know, add some more nuances as I just give maybe an intro. It was probably less what was said, but how it was said and what wasn't said, what was left out. Because, you know, the headline really just insinuated, Hamas, basically used crypto for these attacks. I mean, that was sort of the message. Those weren't the exact words. But, you know, you know how headlines are. But deeper into the article, numbers were mentioned figures that, basically, basically inferred or really said that Hamas and some other militant groups in the area of Palestinian Islamic Jihad had raised about $130 million worth of crypto combined. That was the message. And that's a huge figure. You could imagine that people were, you know, just shocked, just your everyday reader, obviously thinking, wow, Hamas got, you know, $130 million worth from crypto fundraising. You know, that was the message in terms of how the article was written, the nuance that it sort of left out.

And I think, you know, my colleagues can say more about that. And of course, it sort of lit a firestorm on the hill. Policymakers obviously mean crypto unfortunately has been a bit of political football for the past few years when it comes to illicit finance. And so this sort of just sort of provoke things a lot more. But those figures, I think what the how the crypto space reacted was just that those figures didn't really seem to add up. And maybe I'll just say from myself, the reason why I found those figures odd, you know, a few years ago, I was doing research on crypto and terrorist financing, crypto crowdfunding. In fact, I mean, it's interesting because that's kind of how I got into crypto. The terrorist financing angle, and this was, you know, actually back in 2016, I started, I was

working at a think tank doing national security research on finance and I stumbled upon on a terrorist crowdfunding campaign that was active on Twitter. This was 2016. I think this may have been really the first publicly verified crypto crowdfunding campaign. They didn't earn a lot of money. It was like $600 worth of transactions. But so I had been following this, following this, I don't know if you call it trend or maybe this experimentation.

A few years later, I'm sure our guests could also talk about by 2019, Hamas really publicly it was discovered was also doing crypto crowdfunding. And in all of those campaigns, it was a double-edged sword because those campaigns could start very easily, right? You just put up a wallet address and tell people to fund you. But then that always would raise the profile of the campaign, of the people donating, right? And so obviously with folks like chain analysis and others, you know, there are ways to kind of go after those campaigns. So I sort of ended, you know, looking at that years ago, I sort of came to the conclusion that, crypto crowdfunding is not is a bit of a risky endeavor for a terrorist group it's it's you know it's easy

to do but really vulnerable to potential disruptions and so that that's why these campaigns have you know always been a little muted i would say so that 130 million dollar figure just seemed to be a bit odd i will probably pause there because i guess we'll talk about why it was odd and maybe what was left out of the article but that was what really started the storm initially a few weeks ago And last bit on that is when you do the crowdfunding, because you're putting out an address, it's sort of like if you're an actual physical fugitive, it's a similar thing to like putting up, you know, a campfire and then everybody can see the smoke and where you are. Exactly. But so, Jesse, you're a former senior assistant U.S. attorney and you were in the National Security Department.

So I wondered what your reaction was to the article. Yeah, it's really great. And to be at this conversation, I'm really looking forward to it. because I'm sure you remember the last time I was on this show was to talk about the Hamas crypto fundraising campaign that has now come back into the news. And so I guess, Laura, you and I have come full circle in some ways. What I've sort of noticed from the conversation, from the Wall Street Journal article, from other things that have come up since politically, is that there's just been a loss of strident focus on facts and accuracy. And that's what we really need to bring back into the

conversation today as a lawyer, former prosecutor, someone that really cares about this space. Like, facts are a device that's most paramount. And they're especially important here because every dollar, every donation, every monetary flow to terrorists can lead to another weapon, another human death. Like, this is what we're dealing with here. This is what is at stake. And so that's why I think the numbers are so important to get right and the facts are so important to get right. And chain alice, and I'll have Andrew speak to that, you know, did a really good job at sort of talking about what all the numbers mean. But just to take a step back, like as a former prosecutor that worked in this space and worked with Israeli government as well on these related

issues, a lot of this came from reports from the Israeli government and things that they did to seize assets and ensure that terrorist financing wasn't perpetuated October 7th and following, but also prior, they've been working on this issue for a long time. And their job is not to make it clear to U.S. politicians or to the crypto community how much funding is going to terrorism. Their job is to stop terrorist fundraising at its core. And so what that meant for their action is that they seized and sought forfeiture on wallets that belong to Hamas, but also potential financial facilitators of of Hamas or brokers that were working with Hamas, but probably working with dozens, if not hundreds of other entities, some potentially criminal, some potentially not criminal. And so what

happened was there was a seizure of these millions of dollars, as reported by Elliptic and Wall Street Journal and others that included money that maybe had nothing to do with Hamas, but was mixed in with it. And so the important thing to remember here is that it turned into a bit of a game of telephone because the Israeli government came out and said, we have seized this much money associated with the attacks from October 7th and prior. And in their assessment and legal determination, that was sufficient under the law for them. From what we know, obviously, we don't have all the information, but that did not mean what it has been interpreted into throughout this game of telephone. So that's what I think is really important here is the Israeli government can do what it can

under the law to stop terrorist financing. And we, you know, in the crypto community can do what we can to stop whatever percentage of crypto is going to terrorist financing. That doesn't mean that those numbers necessarily overlap. Rather, it's a different interpretation and discussion of what the purpose and motive is here. Yeah, it's like, you know, if any bank is found facilitating money laundering to seize the assets of the bank, and then, you know, I think what happened with the Wall Street Journal article was they interpreted that that full amount was, you know, associated with the terrorists. And it wasn't. So Andrew, you work at Tainelysis, which as Jesse mentioned, did try to clarify what the actual facts were. And we should also mention that you are a competitor to Elliptic,

whose initial blog post was kind of the source of the game of telephone. So, you know, what were your thoughts when you saw what happened there? Yeah, I mean, I think, yeah, yeah, and Jesse made some really great points in that, you know, at the end of the day, we have to be really careful when we are analyzing what may be actually terror financing. I think I saw a number around that it takes about $400 to $1,200 a month to pay an ISIS fighter. And so when we're talking about such small amounts of money having such a large impact on these organizations, it's really important to take those numbers, not with a grain of salt, but to make an in-depth assessment. And so I think when it comes down to the numbers that we saw from the article,

ultimately, when you're interpreting the list, Jesse was mentioning, it explicitly states that these wallets belong to the terrorist organization themselves or the perpetrator of a terror crime. So that very well may be that money service business, that Hawala, an over-the-counter trader, some sort of intermediary that, while they certainly may have facilitated a funds flow from a terrorist organization or an individual actor, it doesn't certainly mean that everything they've ever done has done. So when we start looking on chain and taking that step back and looking at some of these wallets, you've got wallets that have thousands, tens of thousands of transfers going through them with tens of millions or more in the wallets. When you analyze those,

they look more like service providers than they do something that might be individually controlled. And then when you actually can place a dollar amount or a specific wallet on that terrorist organization. You see that the funds flowing through from the terrorists may only be, you know, $10,000 or even $100,000. But if the wallet itself has 50 or 60 or 70 more million dollars in it, are you going to just automatically say that all of those funds are terrorist financing and belonging to Hamas, Palestinian Islamic Jihad, or any of these other groups. And I think the answer is obviously no, and there needs to be that more holistic analysis on those wallets accordingly. And if I could just add a point here on the legal side of it, so under U.S. forfeiture law and I believe Israel and UK is also expanding this as well, if any funding in an account touches terrorist financing, it can be seized and forfeited. Whether it had anything to do with the actual terrorist crime or not, it is under the forfeiture rules. And so when you think about it, even if $1 had gone through one of these accounts or wallets or exchanges,

changes, that could have been sufficient for the seizure order to seize everything in it, whether it was 1% of it or less or more than that. So I think that's just sort of important to keep in mind as we talk about these numbers, especially for all the reasons that we're talking about how important the facts are here, for understanding, like, where the money is going and how we can stop this from actually hurting people. Yeah, yeah. So, you know, now we've, you know, kind of revealed what actually probably was the more accurate version of what that article should have said. However, before the facts got corrected on the following

week on October 18th, Senators Elizabeth Warren and Roger Marshall, published an opinion piece, also in the Wall Street Journal, and was titled, Cryptocurrency feeds Hamas's terrorism. And they wrote, quote, last week the journal reported that crypto wallets linked to Hamas and Palestinian Islamic jihad collectively received more than $130 million in digital assets in the two years before the attack, including millions in the months leading up to it. Then they said, quote, crypto has become a crucial pipeline for financing terrorist organizations. And researchers agree that the publicly reported numbers are likely a small percentage of the actual total. So after, you know, talking about more ways that Hamas raises money in crypto and then adding in that Iran or Korea and other bad actors are also doing the same,

they then also, they had another 100 senator sign a letter to the Biden administration asking the, these particular officials to address the financing of terrorism with crypto. So obviously, now this has kind of escalated, went from just an article to kind of a, you know, a real ask with the government. So let's maybe then talk about, so Chainllis eventually published a blog post to kind of try to correct the record. So, Andrew, can you explain what it is that you guys found in your analysis and talk a little bit about how you even kind of conduct that. You know, are there assumptions you're making? Are you only counting stuff that is like verified this is a terrorist crypto wallet or, you know, there's probably some kind of band of confidence. So just talk a little bit about how you do

that kind of analysis. Yeah, absolutely. So I think Jesse really pointed it out well earlier, which is kind of the intent of Israel's National Bureau of Counterterrorism Financing list, which is to really have a blunt force impact on terrorism at whole. And when they include wallets on their lists, it includes, like I mentioned before, both those who might be the terrorist organizations themselves or the perpetrators of the terror crime. So they may not necessarily implicate who is who in those seizure orders. And so, I mean, at the end of the day, we can't make that determination without having the information of who is who. But you can certainly look at wallets based on their total volumes, based on the way that the funds move throughout

those wallets, to make some sort of assessment to say, listen, this looks more like a money service business or a service provider rather than it does someone's individual wallet. You know, kind of taking a little bit of a step back and talking about Hamas's public donation campaigns, they did start in 2019, but in April of this year, they announced publicly that they'd no longer be accepting crypto in donations because of the fact that their donors were getting prosecuted. And so essentially, at the end of the day, the blockchain is not the best medium to launder terror financing funds because once you know the wallets that do belong to them, so in the case of those public campaigns, that was pretty straightforward, you have a list

of all of those who donated to them and you can follow the money wherever they attempt to cash out. So at the end of the day, it ends up not being an effective approach. So while we can certainly make assessments where there's clear indicators like those public campaigns that are published on their website with a QR code and a cryptocurrency address, but when we're looking at a seizure list, we have to take a little bit more caution and certainly aren't going to jump the gun in making an assessment that a certain wallet may belong to the terrorist versus another one that doesn't. It's simply just information that isn't available to the public and something to make an assessment to give you an actual number off.

So, but when Chenelis did come up with a number, it was about $450,000, how did you guys calculate that? So that $450,000 was an example specific to one of the seizure orders where there was an individual listed as the terrorist finance here. in that specific instance, a Hezbollah financier. So there was a wallet that they explicitly stated was associated with this individual who was affiliated with Hezbollah. And so we were following, you know, his movements of funds to the other wallets that were being included in that designation. So that was an example, not, it wasn't a wholesale assessment of how much Hamas has received.

But was that example, that particular seizure order that, because so the original blog post from Elliptic was, I think from July of 2013. and it referenced one specific seizure order, and that was for the seizure of about $94 million in assets. So is that the seizure order that you guys analyzed? I mean, so we looked at all of them, but yeah, if you take that seizure order and add all of the wallets totals,

it does come out to just about that number. So, you know, essentially what you're looking at is taking all of those addresses that may belong to the terrorist or the perpetrator of the terror crime and combining them into this lump sum, you know, final, which is $93 million belonging to Palestinian Islamic jihad, whereas, you know, maybe a few of those wallets belong to members of Islamic jihad, maybe the others are the financial facilitators. But that information isn't as specific. It's certainly not, you know, like the OFAC SDN list, where you have an individual or an

entity that's been, you know, put on the designation and they have an identifier, which is a crypto address explicitly stating that address belongs to that individual. You know, the scope of these seizures are a little bit broader when it comes down to it compared to what you would see, you know, for the Office of Foreign Asset Control. Okay. So in that case, because you had the specific address, then you could actually be quite specific. But when you guys are like doing your crypto crime report, is it literally that you've tracked down every single address that makes up part of the report? Or is there any kind of confidence interval? Or do you see what I'm asking? because what I'm trying to get at is if the seizure order represents, you know, let's say some

kind of service provider where maybe they have like, I don't know, 100,000 different customers, then are you tracking all 100,000 or do you see what I'm asking? It's, I mean, it's challenging. It's why at the end of the day we don't issue, you know, numbers around terror financing because I don't think they truly become representative of the actual activity. I don't think anyone who's looked at any of these seizure orders, can make a confident assessment of exactly how much belongs to a terrorist versus a counterpart of a terrorist. And so I think at the end of the day, we have to be cautious with how we make those assessments. So we don't actually end up including numbers, particularly around terror financing,

where there isn't that direct confirmation like there was with all Qasom Brigades, the militant wing. They're posting on their website a Bitcoin address, you know, with donate here. it's on their own website. We can make an assessment about those kinds of numbers. But when it comes to this seizure order, I think it's just a bit of a different beast. Oh, now I get it. Okay, so basically the 450 is sort of like the floor,

meaning that's like absolutely confirmed, but there could be more beyond that. But there's some kind of uncertainty. But then, Jesse, I know you worked on that Al-Kasin Brigade. So at that time, when you did that, you probably actually had like confirmed numbers. So even, so in a way, maybe it's like even when you are doing analytics on this kind of question, the kind of data you have or the kind of question you're asking determines even the confidence of the number that you can get. Is that the way to think about it? So you're all nodding, but because a lot of people are in audio, I will just know you're all nodding.

And I think this is, I think, so this is the crux of the problem, right? I think what Andrew's saying and what you're pointing out, Laura, is that, you know, you don't really talk so much. confidence around numbers is so difficult and slim, right? I mean, you're confident around a very small, a very small number because you can see clearly. And that what had happened was there was, there's this band of activity and that in the article, the upper bound, not even just upper bound, but just this gross number with no, with none of the clarification, none of the nuance, none of the specifics that Andrew is talking about that Jesse has talked about. None of that was mentioned. So because the figures just say, you know, 130 million, 93 million, without any context, you know, the average reader sees that. And they're like, well, the Wall Street Journal just said they've raised 100 million, 130 million, when that is most likely not the case. And again, no one can say what the specific number is, right? The funny thing is that this is the world of illicit finance. I mean, you know, following illicit finance out of crypto or just writ large, you know, people always want to know, numbers. I've rarely mentioned estimates just because you have to think about, well, what's the methodology? And then once you mention a number, how much can you back it up? And so, you know, you can really talk in generalities. Obviously, everyone is concerned about terrorist financing.

It didn't actually even used to be a partisan issue, even in crypto, the early days. I don't know if I'm sort of straying off from your question, Laura, but I mean, I remember 2018. I think it was 2018. I first testified in front of the house on a hearing about terrorist financing. And I was the crypto guy because I've been looking at like all these campaigns, you know, for a couple of years. And it was, it was informative, I think. It was educational. There was no like partisan political football people wanted to know, oh, what have you seen? You know, oh, what do we need to do? And it was just very, you know, objective. Those times have changed. And so because I think crypto has such a name recognition now, just like in the political world, you know,

world and social world, it's a very, you know, provocative thing to talk about if you want people's attention and to score political points. And wait, and just to understand, are you saying that crypto has become politicized like post-FTX or do you think that happened before or what would you say was the catalyst? It's been happening before. I think. I mean, I wonder if others have, it's been happening over the past few years before, even before FDX, I think. I agree with that. I think it's been getting more and more political with time. But, you know, I just want to take a step back for a moment and talk about the fact that like what happened on October 7th was really just devastating and horrible. And as someone that sat in the space of like trying to stop this illicit finance,

there was an attempt at a reaction. And the information shared in those quick moments afterwards and the amount of funding and the numbers just weren't sufficiently accurate. And everybody, including regulators, including politicians, including industry, including journalists, need to take responsibility for leaning in and to providing those facts and when you don't have the numbers to explaining why you don't have the numbers, because this is sort of the moment to be really, really specific for the reasons that we're talking about, because everyone on this call has spent a lot of their life trying to figure out how much money has gone to terrorists and or Hamas as one of these terrorists and has definitely spent the last few weeks trying to dig into these numbers.

And it's really, really important to get it right for all the reasons that we've talked about. Not because there's, you know, not because we need to have a political argument about it, but rather because even a dollar of crypto going to terrorism is too many dollars. And so we as an industry are working together and will continue to work together to stop even that one dollar. Obviously, we might not be able to stop it completely, but it is on. us as an industry as well as on politicians, as well as on journalists and regulators to figure out how to reduce the number to as low as possible. Yeah. And, you know, because you have that experience of being in the government and, you know, working on a case that did involve Hamas in the past,

you know, do you have, I mean, obviously there's, this is a very sensitive time. And I just wondered if you had thoughts on kind of like the real world impact that happens when terrorists do, you know, obtain illicit financing. Yeah, thank you for the question. One of the reasons why I'm really excited to be on this call and talk with you, Laura, and my partners on this call is I just have been frustrated by the fact that humanity and empathy have not been inserted enough into this conversation. So I just want to take a moment, like, partway through this interview to put it back in, because frequently people throw around the phrase illicit finance or terrorist finance without really thinking about what that phrase means and sits in the fact that like terrorist financing means

that terrorists will have the resources, the dollars, the crypto, the financial access to mutilate attack and murder humans, like humans that we might know, humans that are on the other side of the world. Like that is what is at stake here. And that's why I don't mean to repeat myself, but the facts are just so important. And to focus in on crypto, if it's only a. small amount is important as we focus on every single amount going to terrorists. But I don't want that to overshadow the millions and millions of dollars that is going to Hamas and other terrorist groups from other avenues. And that is really the conversation that needs to get broader because we all know on this call how Hamas is being funded and what the big sources of revenue are. And sure,

crypto is a percentage of that that we need to stop as an industry. But that doesn't mean that that should overtake the conversation because there's a lot that needs to be done in the other avenues as well. Yeah, I think one of the big ones as far as I understand. And I got this, frankly, from an interview that I watched with Yaya, but I guess at state backed financing, Iran, I guess, has been funding them a lot? So one thing that I did want to ask, though, is has anybody figured out kind of over time how much it is that any of these entities, terrorist entities in the Middle East? have actually been able to receive in crypto, you know, because some of, so that original number that was quoted was actually over two years. But has anybody done that kind of analysis to see overall time or just even over the last two years? I know that the blockchain analytics companies

have been doing a lot of work here, as well as there's been a lot of investigators online that are doing their own work, pro bono, I guess, like, and leveraging the investigators on chain. I think that there isn't a clear number. Like you can point to a few addresses that we know are related to Hamas. You can point to a few addresses that we know are related to a fundraising campaign like Gaza Now, which is something that popped up in social media over the past few years and has become somewhat prolific since the attacks on October 7th. And so there are segments of the space that people can point to.

Unfortunately, because of what Andrew was talking about, in that being specific and trying to not overstate the numbers is important, as well as what Yaya was speaking to of like the numbers are important, but like you don't ever want to be nailed down too much to the numbers because you don't have the certainty that you really should have for like a scientific argument. And if I can say something just because this question, what you're asking, Laura, is a question that's even hard to answer just generally with terrorist financing. I mean, and I have a good sort of anecdote a few years ago. I actually worked on a project.

We called it. It was the terrorist financing briefing book. And the task was to look at all these different terrorist groups and to assess their finances. And it was the toughest job because, and this was not in government. This was think tank policy work, right? And so it's interesting because we went through, I think it was about maybe six or seven terrorist groups. Most of them, Al-Qaeda, we did Hezbollah. Hamas was like the one we, we did.

didn't do. It was like the last one and we never did it. But in that process, just in the public, it's very difficult. Even if you know that it's, you know, the state sponsorship from Iran, you know, is definitely a huge amount for Hamas or Hezbollah and some other groups. You also know a group like Hamas is governing territory. So you know that they're making, they're taxing businesses. They're taxing cigarettes, smuggling. But even with that, a lot of these sources are not in public view. So what you're not, you're not. really have just tends to be estimates of how much terrorists are getting in general. So even zeroing in on one source, even if it's Iran, like, you know, do we know exactly how much Iran is given?

We just have to point to it. So it's an elusive question even in just regular currency. Okay. And so Jesse kind of said earlier, you know, this is used, I guess, for, you know, perpetrating the kind of attacks that they, especially, you know, in recently, have done in a big way. I just wondered for crypto in particular, is it just that they're converting it to local currency and then spending it that way? Or are there actual, you know, kind of purchases or things that they're doing where they're actually using the crypto itself and not converting it? I mean, listen, at the end of the day, you know, Hamas is not North Korea when it comes to, you know, crypto capabilities here. They're not doing these extensive laundering schemes where they're, you know, using mixers or chain hopping or, or, or, any other, you know, advanced technique, what we're seeing for the most part is, you know, an attempt

at a cash out at a mainstream exchange. And, you know, unfortunately, from that point, we don't know what they do with that money in fiat currency. But as far as on-chain goes, it looks like they're just using it as another avenue. And, you know, taking a step back, thinking about how these types of organizations, whether it be Hamas, Hezbollah, Isis, Al-Qaeda, like, they all have different techniques as to how they utilize different financial systems or cash systems. And when we're looking at someone like Hamas, they use things like money service businesses, whether they're based in Gaza or in a third country somewhere. They use Hawalas.

They get cash. And so back to Yahya's point too, it's hard to really make a wholesale assessment of how much they're receiving. But the one thing we can talk about on the blockchain is see where we do know. So like in the case of the public donation campaigns, how they were receiving money, how they were moving money. And so, I mean, I think the most complex thing we saw out of Hamas was at the very beginning, they started with a single address. So again, they had a nice little banner with some soldiers holding guns and a cryptocurrency wallet to send to. It's probably that one got disrupted.

So they moved to a new address. But then after that, in 2020, there was the DOJ seizure, which included some funds seized in crypto involving Hamas. And then they moved to a single-use wallet, which I think is the most complex piece that I've seen, at least from Hamas, which essentially is they don't have a QR code with a single address on it. They have a generated address if you choose to donate. And so basically, if you want to donate, you have to click a button. It generates a brand new address. And that address won't end up being on the blockchain until it's used to receive a single donation. And then once that receives those funds, it can move it on on on onward from there.

And we did see Hamas attempt to do that. But again, that didn't work either. And, you know, again, we ended up at that point where in April of this year, they announced they were no longer doing any kind of crypto fundraising. Oh, and we and it didn't work what? Because when they would try to cash out, they would be caught at that point? Is that like, why? I did that not work? I could speak to that because that was the case I worked on. It was essentially we saw them sort of learn as we were beginning to track their fundraising campaign. So initially it was just send to this one address that I'm posting on first Twitter and then a website, the website that we ended up seizing that we've talked about. And then on that website,

they then realized that like you could track just all the incoming donations being sent to that one address. So instead it was like generate new address each time. And that's how the clustering tools of chain aliasis really work in a place like this, because then you can cluster all those generated addresses together. So that's sort of how that worked. And so I guess when we talk about where the money actually goes, we definitely don't know. But what we can say is, and lots of terrorist groups did that, Al-Qaeda has historically done this on Telegram. But a lot of these charitable fronts or fundraising campaigns will say that this amount of money will go to buying a weapon or this amount of money will go to this mechanical part. And so, So you sort of have a sense of how much that cost. It sort of goes to what Andrew was talking about before with like funding a terrorist and how much that actually costs. So we know it's going to violent attacks.

It's sort of hard to see because we're not in the room with Hamas figuring out how to like dole out their money. But it's worth keeping in mind that they're not being quiet about the fact that it's being put towards violence. And that's what we're frequently seeing on the social media campaigns. And what I will say additionally is that although what Andrew said is completely right that we're not seeing Hamas have the technological or cryptographic like expertise that DPRK, for example, has shown through crypto, it is our job to not be complacent here.

And it's particularly important to not be complacent because it is true that right now cashouts are being used like by cash that was sanctioned by OFAC, like other Hawalas, etc., because you can't really buy much with Bitcoin and Ethereum. But industry is going to have to come to terms with the fact that like stable coins are now a big thing in the space. And stable coins could sort of change that calculation. And so we need to start thinking about, okay, maybe Hamas hasn't quite figured it out now. But what is that going to look like in five plus years? And we don't want to be caught on our back foot here.

This is a really important issue that we need to lean into as an industry. Yeah, so in a moment we're going to talk a little bit more about the role of stable coins in terrorist financing, but first a quick word from the sponsors who make this show possible. The game has changed. The Google Cloud Oracle built for Layer Zero is now securing every Layer Zero message by default. Their custom end-to-end solution sets itself up to bring its world-class security to Web3 and establish itself as the HTTPS within Layer Zero messaging. Visit layer zero.network to learn more. Popcorn just made Defi way easier with Volcraft, your no-code DeFi toolkit for building, deploying, and monetizing automated yield strategies in a few clicks. Forget spending months of R&D, capital, and human resources when you can now instantly

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Download today. 19 plus Ontario only. If you have questions or concerns about your gambling or the gambling of someone close to you, please go to conicsonterio.ca. Back to my conversation with Yaya, Jesse, and Andrew. So in the wake of that news, we did also see that one of the ways they've fundraised quite a bit is actually through Tether. And Tether, the company ended up freezing 32 wallets trying to

attempt to cut that off. And so I wondered if you had a sense of how important Tether or stable coins generally were to terrorists, but frankly on the flip side to the authorities trying to stop those terrorists from using crypto. I mean, I think it's important. I think where this conversation is taking us is that the whole, you know, crypto crowdfunding issue is one dimension. And if we can sort of be clear about one thing, which is terrorists, they adapt, right? I think that's just what Jesse was saying, and Andrew, right? They are adapting their methods. They're getting more sophisticated. That means finding what works better. And also, the fundraising is really a small dimension, right? I think that's one thing that I was, you know, I've been saying for a while, which is, okay, some of these fundraising

campaigns haven't earned that much. But if we're really thinking about, okay, well, what could they do next? It's really less fundraising and more laundering, right? how they're going to use the funds that they're getting elsewhere. Because, you know, I don't think as just an analyst, like, I don't think that, you know, millions and millions of people are sending, you know, Bitcoin to Hamas. That's not the thing. And that's with most terrorist groups, I don't think that's the big risk. The risk is when these groups have fiat cash, when they have other sources, businesses, investments, what are they going to do to try to disguise it so they could use it in some form? money is fungible. And so whether it is taking that cash and putting it in a state, you know, purchasing stable coins so that they can hold value, they can move it elsewhere, et cetera,

whether it's, it's, you know, again, just transiting, taking their cash and they want to get it to an operative that is outside of the area, right? Crypto, you know, there are benefits to crypto as opposed to fiat, fiat cash and peer to peer transfers as opposed to wire transfers. These are things we have to think about. So it's less about, you know, know, there's this, the crypto is the source. And it's this question of, well, how can, you know, how are they going to adapt and try to figure out different ways? So, I mean, I don't know if others want to stay more on stable coins, but just generally speaking, yes, they're, they're obviously going to be thinking about different, different means of using crypto. I think, I think you hit on a great

point there. And it's actually was kind of the start of my career in financial crimes compliance. I was on the banking side for about a decade. And I think when I first came in, I was doing sanctions work. And you look at the sanctions list and you think, well, like if Osama bin Laden was still alive, like, is he going to just go try to open a bank account at like an American bank? And I think the answer is obviously never. So then it becomes, well, how would, you know, that organization try to get around getting flagged and utilizing financial systems? And so I think then the the question really turns to, you know, financial crimes compliance and what kind of know your customer controls financial institutions have in place, what kind of anti-money laundering controls

they have, and what kind of proactive sanctions investigative work are they doing? And understanding the ecosystem of that organization is so important. And like I mentioned before, you know, Hezbollah has a very different method of financing than does an entity like Hamas. And so when it comes to crypto, whether it be Bitcoin or a stable coin, realistically, you know, it's just another attempted mechanism, right? They're creative. They're going to look for a new way to circumvent identification. And so they'll try new methods and approaches until they fail. And Jesse mentioned an interesting one before, which is this entity, Gaza now. And I think they're a really interesting case. So just quick overview on them. There are a pro-Hamas, pro-Al-Kasam Brigade's

media, social media outlet. But we don't really know if they are controlled, operated by Hamas, or fundraising for Hamas. But at the outset of the war, they were soliciting donations on a mainstream exchange. But then they moved their funding to other private wallets once they had funds frozen from that mainstream exchange. And they tried a few different methods on crypto and then ultimately just gave up because it just wasn't working. And so I think, you know, these groups will continue to be creative in trying to utilize everything, whether it's crypto or traditional financial systems to try to evade identification. But again, to Jesse's calling, that's what we're here for is to, you know, try to figure out how they're doing it and try to stop it in its tracks. And I don't want to

ignore the tether part of your question either. They're definitely, you know, for the fact that the numbers aren't specific. What we do know is that a lot of the crypto that was seized was tether on Tron, which Tron is a separate blockchain. And essentially what we're seeing is that terrorists are increasingly using tether on Tron because it's quick and it's cheap. And the more that we look into it, the more that we realize is that these terrorist groups are not operating in silos, but rather they're learning from each other and working with each other. And Tether on Tron has just gotten a reputation of providing easy cash out points and access for terrorist groups and bad actors. With that being said, however, I think it's really important to focus on the unique attributes

of using something like Tether on TORN or otherwise. What the Israeli government was able to do here and in prior actions was work with finance and Tether to freeze the funds. Now, what does that mean? Tether has, and USC and Circle have it as well. They have something written into their smart contract that allows them to freeze the funds from getting to the end user or to make sure that the end user, a bad actor, potentially, does not get access to the tether. Now, think about how that does not work in traditional finance. Think about the opportunities there for industry and regulators to leverage this technology to actually stop crypto from getting into the hands of bad. people through some sort of automated compliance tool or a smart contract. That is possible because

they use crypto, not standing up for the use of tether on Tron by terrorists by any means. But what I am saying is that the use of Tether on Tron or Tether or a stable coin versus cash that is handed out in a bag by an MSB cash out point is that through work with the government and industry and government collaboration, they were able to freeze the funds. That's pretty incredible. I think it also speaks to, well, then where are the gaps that we should be looking at and most concerned about? And, you know, Jesse's sort of laid out, you know, when you have law enforcement able to cooperate or an exchange, an entity that's able, that will cooperate, then that's, that's a win that, you know, that's going to cooperate with law enforcement. You have a win because

they have a way to potentially stop or at least find out more, see what you can go after. The big challenge is that every jurisdiction around the world, one, does not have the same, you know, a level of compliance, enforcement may not be as cooperative. And as we've been saying, right, terrorists are going to look for the best, for them, the best sites, the best platforms, and they're going to operate in those countries where they think they're going to get away with it, where there's less, where the KYC with those institutions and brokers isn't as strong. So there is a gap. Maybe this gets back to kind of what we talked about in the beginning.

The risk is really in these jurisdictions with weak enforcement, weak compliance. So, you know, obviously kind of what we've been talking about so far is at least the initial number was overstated. Although, you know, it's also still larger than the 450K. So unclear, you know, what the actual number is. And also it seems like at least Hamas, maybe isn't a very sophisticated actor. However, as we've alluded to throw out, there is another entity that is a bad actor, which is North Korea, that has been able to steal a gargantuan amount of money to billion dollars in crypto. And they're probably putting that to use in their nuclear program, which is not great. It's not great news for the world.

And on top of that, they're much more sophisticated in how they're using it. And, you know, Andrew alluded to this with their use of mixers. and other technology. So, you know, at that, when you have that kind of actor, then how do you think that should be handled? What should the industry be doing? I can jump in here because we are doing a lot, which is a great thing to see and something that I'm really passionate about.

So we should probably separate what DPRK is doing from what Hamas is doing right now with the understanding that that could change on Hamas part. Yeah, and DPRK is, yeah, North Korea. North Korea, yeah, like an official. Sorry, my national security brain is using far too many acronyms. So DPRK, North Korea, as we know, and I'm sure you have talked about on your podcast many times, Laura, is hacking a number of exchanges and DFI protocols, et cetera, and leveraging cybersecurity and other tools, right? So in a much more technological way.

And the good news here is that one thing that both industry and regulators can agree on, which is not always something easy to find in the crypto space is the importance of cybersecurity. And this is being buttressed all the time. But it's never enough, right? And we need to think about how crypto is different. First, on the cybersecurity front, individuals that put out code and think about smart contracts and work on protocols, etc., like the importance of making sure that that code is safe and that people understand where the vulnerabilities are is essentially. And so I think the focus on cybersecurity is essential. The focus on fast information sharing is

essential. And three, the focus on new compliance tools that are leveraging the transparency of the blockchain, as well as the speed and immutability of it are really, really important. And I could talk about that topic forever, but I'll just pause there. Anything either of you want to add on how, I mean, this, I know it's like a seemingly it just feels like a huge problem. And who knows, maybe it is that the industry has learned its lesson, because I think at least so far in 2023, we've seen that North Korea has gotten its hands on much less crypto

than it did in 2022. But we could also talk about the fact that the government has tried some pretty heavy-handed ways of cutting this off. One is to sanction the tornado cash smart contracts. They've charged the developers for money laundering and sanctions violations, they arrested one of them. And I wonder, you know, if you agreed with those actions or if you felt that the government should handle any of this differently. So I'm going to jump me, that, yeah, that's a, that is a controversial question. I don't know, maybe I'll dodge it. I mean,

because I want. Don't dodge it. I will follow up. Well, so, you know, right, the government is, is looking for, for how to stop this and sort of is usually using the tools that it has, as it should. right now of course there are going to be questions about the appropriateness of all of those tools maybe some of those actions make more sense than others i would say that the the the designation in 2022 was different than what happened with doj in 2023 i think you know just sort of different angles different different types of actions one i think the one the more recent one was was was more appropriate but i think the the other part of this is that there's still more that the government should be doing or can be doing i think because crypto you know blockchain

analysis tools or they're sort of, it's sort of part of law enforcement today. I don't think people realize how still there is a gap, I would say, in terms of how much expertise does law enforcement have around the world, right? So that's the idea that there actually needs probably to be more expertise, more tools, more training, because crypto is still, crypto analysis is still sort of a niche thing. And I think what we're seeing is that it's not, you know, crypto is not a niche part of the financial system now. So it has to just to go back to early on in your answer where you said that you disagreed with their 2022 action but what felt like

their 2023. So you're talking about sanctioning the smart contracts was maybe not the way to go, but the arrest of the developers was. Is that what you're saying? So what I'm saying actually so let me yeah let me clarify. So what is the 20, the more recent DOJ, let's just take the indictment itself. I don't want to go down a rabbit hole. But what I'm saying, I'm not, I'm not a lawyer, but the, you know, the charges which are not at a smart contract, right? There are charges about activity that's alleged, right? That's in the indictment. I mean,

that's financial crime. That's just sort of just basic. That's what law enforcement does. That's, I would say, I'm not saying whether or not, you know, I'm not the judge there. I'm not the lawyer there. But I'm saying that that is a very standard of pro what they're doing, what you know, if the charges are correct, like that makes sense in terms of an action. You just mean to go after a person rather than a technology. What was alleged. But you're not saying whether or not the actual people were the people they should have gone after. Yeah, correct.

Correct. Okay. I think what I can say at least, you know, from, you know, the designation of tornado cash perspective, at the end of the day, you can't really just allow somebody, whether you're, you know, a smart contract, permissionless, whatever it might be. the ability to facilitate over $450 million of laundered funds through. And I think that's the message that OFAC was trying to get through there. And we saw, I mean, it was first designated under just the Cyber II program.

And then it got extended when they got delisted and redesignated a few months later to include the DPRK program, Laura, to your point earlier, for financing, you know, the weapons of mass destruction program as well. So wait, I'm not sure if I follow this. So this cyber two, so are you saying the initial sanctions were for one particular, just explain what that means. Yeah. So the initial designation was, you know, for the facilitation of the money laundering. And then when they were redesignated, I believe in August of 2022, it was also including one of the DPRK, North Korea programs. And that program essentially states that not only were they used to. to facilitate the laundering of money through cryptocurrency, but also that those proceeds were, you know, ending up in the hands of North Korea and benefiting, you know, their weapons of mass destruction program as a result. And so I think realistically, the goal of that designation is to say, listen, you know, however you're building your contracts or whatever it may be, you can't let

North Korea launder $450 million through you. But for a decentralized service, then how do you, how do you stop that? Yeah, I mean, there are compliance, you know, protocols that can be built in and smart contracts that can help comply with the use of blockchain analytics, you know, and other capabilities. So I think there is opportunity there. But even a decentralized compliance protocol, is that what that would be? I mean, so we actually, we actually saw that that be an issue from that capability early on in the tornado cash designation where we saw,

individuals dusting celebrities. So, you know, people were essentially sending like $100, which I think is the minimum based on the amount of Ethereum. I think it's 0.1 Ethereum that goes through tornado cash. So essentially individuals were sending, you know, 0.1 Ethereum to people like Snoop Dog and Jimmy Fallon. And now Snoop Dog and Jimmy Fallon's wallets, you know, have this sanctions exposure to tornado cash. And then that was, you know, impacting their ability to use other protocols because of, you know, some of those analytics contracts that they had built in. Yeah. This is why I love covering crypto because crazy things like that happen.

But interestingly, it was a pretty effective sort of way to troll the government on, like, you know, what you're doing here. Maybe it doesn't make sense because then the government had to come out and say if he were dusted, like, we're not going to enforce these sanctions against you. So let's actually now just turn to the fact that, you know, Elizabeth, Warren has this proposed bill, the Digital Ascent Anti-Money Laundering Act. And as far as I understand, it would require entities in crypto, which even would include wallet providers, minors, validators, et cetera, to register as financial institutions. And as far as I understand, the industry tends to view this as pretty extreme or even,

like, not possible. So I wondered, you know, if you were to try to make a proposal on how, you know, crypto could, the industry or the technology or whatever could, you know, prevent the use of illicit funds with crypto, then how do you think that would work? And actually, why don't we do this? We'll do it once for centralized services and once for decentralized. So let's start with centralized. It's probably the easier answer. What do you think that should look like? So for centralized services, what I would emphasize is that before we insist on new authorities, we need to continue to use the effective authorities that we have in place and leverage the compliant

exchanges, which there are many of, that are already imposing the rules. And the DOJ and Treasury have been on their front foot of being the leaders in this space. So DOJ and investigating partners using their actions and seizure and forfeiture, et cetera, forfeiture rules, in my opinion, are just not sufficiently used. Like, for example, forfeiture authorities allow for broad terrorist seizure and forfeiture. And that can be expanded really. really, really far beyond. But that's after the bad activity happens, right? So then, like, to go to Treasury, for example, like, has every, do I agree with everything that Treasury, FinCEN, OFAC have done in the crypto space? No, but they've definitely leaned into learning the technology.

And for example, like the NPRM on Mixers came out recently, which we can talk about. That could be also a whole other show. There, in my mind, are a lot of problems with that. They're seeking comment on how Treasury and industry should think about mixers. I think the definition for mixers is far too broad, but I won't get into the specifics of it. But what I will say is that Treasury, along with DOJ and other regulators, are showing Congress right now that existing authorities already exist in order to be able to regulate this space in the CFI world. And so I think we need to remember that first and foremost, because entities like coin. Base, and I'll just keep coming back to Coinbase because they're a really great example,

are doing so, so much in this space. Like I worked in money laundering and terrorist financing for many years, crypto and before, and I worked with many banks when it was Fiat currency money laundering, and the compliance at Coinbase is far ahead and shoulders above many of those financial institutions I worked with. But if you look at crypto and CFI internationally, I think it's something like only 20% of exchanges and exchange activities are really compliant with general like FATIF standards and AML standards, not just U.S. specific, but globally. And so this is not a U.S. only problem. So regulation that tries to really push on CFI in the United States is just not going to do anything except push crypto abroad and push innovation abroad, et cetera. I'm sure you've heard all these

arguments before. But the more that it goes abroad, the less that U.S. law enforcement will have access to information at compliant exchanges that it can access from subpoenas, et cetera. So I think that, like, for CFI, we have a lot of existing tools that already exist. And just pushing up the international collaboration is just essential. Like, there are a lot of coalitions about other terrorist entities about financial, illicit finance services. And there's not enough on crypto. And Yaya and I have talked about this a lot, so I'm sure he can jump in here. And then just leaning into public, private information sharing in a way that is not currently possible because there's not sufficient resources. But as I said before, like the industry really wants to help. There's a lot of

public facing regulators, investigators that really want to help. So just figuring out a way that under the current information sharing rules, that it can be fast information sharing about hacks, about illicit finance, about potential bad actors, et cetera. So that's where I would start. Not to mention the fact that like when I was at the DOJ, we didn't have a blockchain analytics tool to use. We had to rely on our investigators. And so there's a lot more that we can do to provide resources to the people that are actually looking into this and thinking about how to regulate it. So if we were to suggest how decentralized services were to implement these kinds of prevention measures, like how, you know, how do you think that should look? Well, you know,

at the risk of, you know, starting to get arrows by talking about how DFI should be regulated, you know, let me, let me be very careful. I mean, there is no sort of easy, simple way here. There's not one recommendation for, you know, for regulating DFI for, I think, as all of your listeners, know, right? Very difficult, very different framework. But I think we're sort of the crypto space maybe is at a crossroads, although I kind of feel like every year we can say crypto is at a crossroads. But I will say it. I really think we're at a crossroads, really in terms of defy, because of much of what has happened with tornado cash and the stuff that, you know, what we're seeing now, I think we have to realize that there's a bit of us, I think there's a split. There's a dispute right now

in terms of should Defi simply just remain the same untouchable with not thinking about any sort of, you know, risk mitigation measures or anything? Basically the status quo, is that what is going to, you know, develop? Or should we think about ways to maybe augment add on? I think the first thing, though, to be clear is that I don't think anyone is, or I'm not suggesting, that, you know, protocols, like you could ban protocols. You could say that these protocols should not exist because of X, Y, Z. I think crypto doesn't work that way. We're always going to have different protocols, right, that they're not going to have KYC, they're not going to have anything like anything like that. That's going to exist. We're not going

to get that out of existence. But I think what a lot of people are thinking about is, okay, what about voluntarily? I mean, voluntarily, should there be innovations that could be built on top of protocols, should there be maybe even standards around disclosures that foundations could think about, are there things to mitigate risk that could voluntarily be either built in or on top of protocols that would mitigate some illicit finance risk? And if you had standards like that, would that help the community? Would that help the defy space? I think that's what a lot of us are thinking about. And I can't sort of propose or prescribe like something specific, at least not yet, But I think there's a lot of talk about, well, what are some creative ways to to use zero knowledge proofs, right?

To preserve privacy while, you know, sort of checking some compliance requirements. How can you build that in? How can you build in, you know, even privacy advocates are thinking about things like privacy pools, which I know you've you've talked about on your podcast. And even just probably this, this may be a silver bullet, digital ID, right? digital ID, you know, digital ID systems that could be portable, that could be used, would help to, if that could be infused on top of protocols, right? Maybe not at the protocol layer, but to be, you know, to have someone's ID sort of attested elsewhere and then they can still access a defy protocol, but there's KYC somewhere, right?

It could still be a self-hosted wallet. These are the things that I think industry is thinking about. Again, not one complete package that you can just. implement right now, but I think that that's where the industry may be exploring. Andrew, do you want to add on that? I can add a little bit. I am happy to take some arrows here. Take more arrows.

If I need to. I really think that defy and illicit finance is an existential question right now and something that is really important for us as an industry to address. We all want to keep defy as permission. as decentralized as possible. But I think for too many years, we have said, just wait and learn about defy before you regulate it. And now regulators out of fear, out of political will, whatever it is,

like I don't want to assign any morality to anything, but they are saying it's time to regulate. And so we need to offer some options. And for me, the compliance tools are really, really exciting to me because they allow for this sort of like set it and forget it on top of code when it's initially built. It also allows for some sort of standards to be embedded into the code. And so nobody necessarily needs to control it. But even things like what we were talking about with Tether and with USDA,

and I know that Solana is now overlaying something like this too, but that allow you to seize and freeze tokens based on legal process. There are so many interesting things being done here. And we need to not only as an industry come together and come up with ideas, but these ideas shouldn't be forced on DFI because that's just not going to work. They'll go elsewhere. It needs to include incentive to align on these standards to make DFI want to include it. Otherwise, they're just not going to be in the U.S.

They're like continue to work in noncompliant regimes, which really doesn't help law enforcement or regulators or politicians or getting illicit finance out of the space. And what's an example of an incentive? Like, what would that look like? Potentially, it's something sort of Yaya was talking about. But like, if you're part of a standard setting body and you buy into what they are asking you to do and they check on it, then maybe you can put some sort of thing on your website that says, this is validated by this cybersecurity settings body.

and you can feel that will make consumers feel like their money is safer there because, you know, as much as we talk about defy and people wanting privacy and to control their money, which is 100% true, people also don't want their money stolen, whether it be by DPRK or a criminal, because to them, their money is their life. And if I, and just, I want to, because Jesse mentioned it, you know, actually I'll mention this, it's a bit of a plug, but it's just so relates because at the Crypto Council for Innovation, we came up with a DFI framework white paper just a few weeks ago. And one of the recommendations is, you know, if you think about like how the organic certification started years ago, which was not a government thing, it was the industry basically saying we're going to certify that these foods are organic.

And that is now is like a stamp of approval. So in the paper, that's one of the ideas is if you had a certification body, it doesn't have to be the government, but a body that basically says, you know, these protocols are our, are, our, our, our, our certification. certified by an independent body to have these standards. So that's some of the thinking that's happening right now. Okay. Yeah, it reminds me. My friend wrote this book called To Die for, which I do recommend, and it's D-Y-E as in like die. And I don't know if you know this, but your clothing can actually make you sick. And she stumbled upon this where airline attendants were getting very sick from their uniforms, like severely sick. But anyway, point is guide in the book, you know, she reveals there's actually like certain organizations that the

industry came together to say like, you know, this clothing meets our standards. Like, you know, yes, it has these dyes, but you're not going to get sick or like it. Yes, it's flame return it, but you won't get sick or whatever. So I guess this would be a similar thing where the industry and but is the industry doing any of that where they're coming together in some way to. Early days. Yeah, this is, let's say white paper phase. But, you know, I know it's something that I'm thinking a lot about. Some of the folks at CCI were thinking a lot about. So I guess stay tuned.

Well, this has been just a really meaty discussion. Very interesting. I've had my head in the SPF trial. So I feel like I'm finally catching up to the rest of the world on what is going on. Where can people learn more about each of you and your work? I mean, for me, you know, Cryptocouncil. Cryptocouncil.org. And I'm usually on LinkedIn.

I'm not really on anything except maybe LinkedIn, but Ribbic Capital has a website, but maybe just like go to read Yaya stuff and I'll probably agree with it. Yeah, you can stay tuned to the Chainalysis blog posts around sanctions and terror financing and also like everyone else on LinkedIn as well. Perfect. Well, it's been a pleasure, happy you all on Unchained. Thank you. Thanks for having us. Thanks so much for joining us today to learn more about Yaya, Jesse, and Andrew, and the situation around Hamasas' fundraising in crypto. Check out the show notes for this episode. Unchained is produced by me, Laura Shin, with up from Kevin Fugge, Matt Pilcher, Juan Aranovich, Mechangayvus, Nelson Wong, Shoshank, and Market Korea. Thanks for listening.

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