From reports of multimillion-dollar deficits to legal dramas featuring discredited crypto leaders, the public’s view of blockchain can frequently resemble a series of incessant controversies.
In the most recent installment of The Clear Crypto Podcast, hosts Nathan Jeffay and Gareth Jenkinson sift through the distractions with guest Jennie Levin, chief legal and operations officer at the Algorand Foundation, to delve into what’s truly happening and why it’s often less about cryptocurrency and more about human wrongdoing.
Familiar schemes
While mainstream media frequently focuses on imploded exchanges like FTX, Levin emphasizes that the core malfeasance typically isn’t exclusive to crypto; it merely carries fresh, sometimes perplexing names.
“Front-running securities trades occurs regularly in traditional finance,” she stated.
“This is simply a method of conducting it using the cryptocurrency sector. It’s inherent to the crypto sphere, yet the motif of the fraud exists elsewhere as well. There are just methods to execute it now within the technical facets of the crypto ecosystem.”
Indeed, many of today’s most harmful crypto offenses are intricate manipulations of blockchain protocols, often perpetrated by individuals with extensive knowledge of the code.
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“If you interfere with the foundational system and the arrangement of blocks, then yes, you can leverage that to your benefit,” Levin remarked.
“It requires understanding the protocol code, knowing the various participants, and possessing a profound grasp.”
Offense and retribution
This technical complexity has spawned legal and ethical gray areas, particularly in scenarios involving so-called white hat hackers, who exploit weaknesses, then return the ill-gotten funds. “A crime is a crime is a crime,” Levin pointed out.
“Claiming benevolent intent doesn’t diminish the wrongdoing or the elements of the offense. From a strictly legal perspective, charges can still be brought.”
However, enforcement isn’t always so straightforward. “Maybe the DOJ or other investigators don’t prioritize these types of white hat hacks,” Levin added, particularly when the lost funds are recovered or fall short of federal thresholds.
Nonetheless, regulation continues to lag. Jenkinson observed that in certain jurisdictions, regulators misunderstand the functionality of decentralized systems.
“If you’re violating rules regarding data retention, you might have to erase the blockchain,” he mentioned. “But it doesn’t work that way.”
To listen to the full discussion on The Clear Crypto Podcast, catch the entire episode on Cointelegraph’s Podcasts page, Apple Podcasts, or Spotify. And don’t forget to explore Cointelegraph’s comprehensive lineup of additional shows!
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