Criminals are early adopters and in some ways they make great beta testers for new technology. They’re always looking for a way around the system. Frankly, law enforcement officials actually really like when payment is made in Bitcoin as opposed to fiat. I think it’s funny because as a former prosecutor, I take this for granted. There’s a real false sense of security where wires are used or traditional financial services are used. People think, “Oh, we know everything about that. So we’ll just go subpoena. The bank will give us these records and we’ll just go get the money.” That is just so far from the reality of the situation.
So you don’t believe that these ransomware attacks are a function of crypto?
I think you are asking if crypto is the cause of ransomware, and it’s absolutely not. I prosecuted many of the Justice Department’s largest online money laundering schemes. In fiat systems, 99.9 percent of money laundering claims succeed. Actually, the thing that really stands out about the ransomware attacks — the Colonial Pipeline is a great example of this. It is unprecedented that the Justice Department would be able to recover the proceeds from international criminal activity so quickly. That timeline is usually years, if ever.
When you think about risks in crypto, how much leverage do you think is in the crypto system?
Just like in traditional financial services, of course, there’s leverage, I’m not going to deny that. But people can get a lot more leverage with platforms overseas. So I think it’s in U.S. regulators and consumers’ interests to foster responsible innovation here in this country. So don’t say you can’t have any leverage, but let’s talk about what limits are — what are some good rules of the road that we could agree on.
One of the only things that unites Congress lately is China, and I think U.S. policymakers and lawmakers are starting to realize that China and other countries are moving forward, recognizing that crypto and blockchain is a real priority, and that we are behind, unlike in the internet, where Darpa and the U.S. government had a hand in helping create it.
What do you make of the memeification of crypto? When you see Elon Musk tweeting about Dogecoin, do you say this is great or terrible?
Somewhere in between. There’s something fundamental going on right now with the internet and culture, and I think crypto is at the epicenter. It’s easy to dismiss things as games or memes. I myself was kind of guilty of that a few years ago. And, you know, I’ve been proven wrong a couple of times. So one of the things I’ve tried to learn is to keep an open mind.
You’ve raised two billion dollars for this crypto fund amid this almost euphoria over the past couple of months around crypto and the future of crypto, NFTs, the price of Bitcoin going to 60-plus thousand dollars. This week a lot of the air has come out. Can you contextualize the fund and fund-raising in this environment?