Co-founder of Chainalysis Jonathan Levin attempted to counterargument the anti-crypto narrative used by U.S. Sen. Elizabeth Warren, but he was constantly interrupted by the senator who seems reluctant as ever to change opinions.
During the hearing “Understanding the Role of Digital Assets in Illicit Finance”, Sen. Warren presented a hypothetical scenario about the use of cryptocurrencies by sanctioned oligarchs.
The Senator’s hypothetical case pictured “one of Putin’s cronies who already has $1B or so in crypto” and the tools he could turn to in order to hide the funds.
Levin was starting to answer when he was first interrupted by the Senator, who was firmly expecting him to agree that crypto makes it easier for this oligarch to launder his money and harder to trace the transactions.
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Levin charged back with a clear “no”, explaining that in the painted scenario the oligarch would still need to transparently provide a token in order to move funds across blockchains.
Sen. Warren refused to believe or hear why CSO Levin argued that blockchain technology does not make it harder to track someone’s money. Warren kept jumping from one side to the other of her fixed anti-crypto narrative.
Levin managed to explain that the daily liquidity value of mixing services globally is about $30M, not much for the billionaire oligarch’s current needs, and added that Chainalisys has done “extensive work in tracking large sums of money through mixers that have led to the arrests of people and the disruption of their activities.”
Warren claimed that Chainalysis charges a lot of money to “untangle and track assets through the system and the system keeps developing more ways to obscure them,” and added that Levin is “advertising” this. However, the Chainalysis official statement easily opposes that argument.
Not All Senators
Earlier, Levin had explained that the prosecutors can leverage the permanence of the blockchain, using it as a tool to collect information.
Sen. Hagerty seemed to oppose Warren’s hostility and said that when you compare cryptocurrency to cash, the latter being fully anonymous, an individual who wants to conduct an illegal activity without being traced would probably find cash a more attractive alternative, and added that “you don’t hear anybody saying that we should outlaw the use of cash”.
The senator does not want for the “mischaracterization that crypto is the wild west” of finance to turn into harsh restrictions “for an industry that possesses so much potential for America.”
Senator Tester also wanted a clear answer from Levin to whether he believes Russian oligarchs are currently using crypto to bypass sanctions, to which the CSO responded that Chainalysis has not seen evidence of “Russia or Putin systematically using cryptocurrencies to evade sanctions.” Michael Mosier, Deputy Director of FinCEN, agreed with Levin and added that “there just isn’t the liquidity.”.
Levin’s Statement
Chainalysis had previously stated that it’s unlikely that sanctioned oligarchs would move large quantities of crypto now.
“Russian elites and financial authorities have likely been preparing for sanctions, and would have carried out those transactions slowly over the past few months.”
The company claimed that they are currently monitoring “for on-chain indicators of crypto-based sanctions evasion by Russian actors,” and added that they will provide updates on any relevant activity.
Similarly, the statement co-founder Levin delivered to the committee, gave a background regarding digital assets, sanctions, and illicit activity tracked on the blockchain, which reduced to 0.15% in 2021.
The report also addressed “how blockchain data and analysis benefits investigations into illicit activity involving digital assets” as well as how “Congress and regulators can act to better detect, disrupt, and deter illicit uses of digital assets, including sanctions evasion.”
It also contrasted how a traditional finance investigation could actually result in less effective, more expensive, and slower mechanisms than “the real-time monitoring capabilities of blockchain intelligence.”
The Matador Bills The Bull
None of the points addressed in the reports introduced to the committee seemed to even touch Sen. Warren’s opinion.
Claiming that “no one can argue that Russia can evade all sanctions by moving all its assets into crypto”, Warren announced the introduction of a rushed bill for digital assets sanction compliance to prohibit crypto-related companies to conduct business with foreign sanctioned companies.
The Director of Communications at Coin Center, Neeraj K. Agrawal, commented that the bill “would place sweeping restrictions on persons who build, operate, and use cryptocurrency networks even if they have no knowledge or intent to help evade sanctions.”
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