Talk to me about how you think this is going to show up in conversations in D.C. area.

You know, it's interesting.

As you know, like politics has a life of its own, particularly when it comes to crypto policy.

But I think when I think about crypto policy, you know, you have the Genius Act, right, that essentially requires stable coin issuers to burn and reissue their native token to essentially freeze.

What we saw in the first, really, moments of this attack was Tether and Circle taking back about 40% of the assets that were stolen because of those unique capabilities in using them.

So I think when you think about politics, you think about the only legislation we have today is genius.

I also thought about clarity in meetings.

Just talk to us about how this happened and what people who interact with crypto but also exchanges need to be thinking about and doing as we move away from this.

So like what's left to do today and this weekend and next week?

So I hope you're not entirely right.

I do think it's going to be really hard.

It's always becomes harder and harder to recover in that sort of decentralized ecosystem where funds are starting to spread out, starting to move other places where you're using smaller OTC brokers to off-ramp funds, to convert funds from crypto to cash.

I can get into that in a moment.

But the reality is that, you know, between the Beacon Network and just the way that law enforcement works with the exchange community today, I still believe that there's hope.

I mean, just to give your listeners a sense, as this attack happened, we're watching funds flow from Binance.

I'm sure entities like the FBI are just not happy with crypto because as a result of crypto, North Korea keeps on ending up with billions of dollars.

I think we could see exploding cell phones and all kinds of fun and frolic that secret law enforcement agencies can get up to and with their help from the private sector on the technology side.

Yeah, we wrote a little bit about that case on our blog.

I believe it was Hansa Market where the FBI kept continuing to operate.

It was Europol.

I think it was Europol action also, if I remember correctly.

But yeah, absolutely.

And we're doing, the US government is doing this in so many cases now, taking over infrastructure, going directly after the servers.

I'm

Here's Ari Redbord of TRM Labs, who spent over a decade as a federal prosecutor on why the math on this problem is about to get much, much scarier.

AI has supercharged all of our activity, right? It allows an individual person to do so much more than we could do even a few months ago.

And it's also true with cyber criminals.

And criminals are always early adopters of transformative technology, right? One of my favorite stories is that in 1908, the Model T Ford rolled off the assembly line.

And that was the year that we realized that we also needed to create a federal police force.

We called it the Bureau of Investigation.

It's the modern FBI.

How do you know if something you're doing is working? Some policymakers want to see fewer scam reports, and Ari has sat across from them, and he explains why that whole way of thinking is actually backwards.

Grainger, for the ones who get it done.

Um, I don't-- I've never seen anything move as fast as, as, as AI, not the internet, not crypto.

And, um, of course, we're seeing bad actors really adopt it at scale.

And, um, y-you ask anyone, I'm the most positive guy in crypto, um, you know, I think, I think sort of famously so.

That's why I'm terrible on Twitter, uh, or X.

Uh, [chuckles] but, um, but this is an area that I, that, that, that makes me very nervous.

And i-if you ask me sort of what keeps me up at night, it's exactly this question.

What are, what are your thoughts?

So what are you tracking most when it comes to clarity right now?

Yeah, look, you know, uh, I think over the last couple years, uh, I've tried to carve out a pretty c- a pretty specific lane here for, for where, where I should be really engaging, and that is on the law enforcement front.

And obviously, we've seen a lot of conversation around law enforcement over the last few weeks, and really even beyond.

I would say the latest draft of the bill even strengthens it further when it comes to law enforcement provisions.

I mean, original drafts had language around Bank Secrecy Act, right? Like every crypto firm is now under the Bank Secrecy Act directly, real-time information sharing.

You know, we built this Beacon network, uh, about a year ago in TRM.

It's essentially codified within Clarity today.

So what are you thinking about this week?

Here's Ari Redbord, who heads up global policy at TRM Labs, and before that led financial and terrorism investigations at Treasury.

You know, in the Sony Pictures context was, "Hey, we could create disruption, or maybe we could steal usernames and passwords on the internet," to all of a sudden, "Wow, we can actually steal money that we can launder and use."

Here's TRM Lab's Ari Redbord again.

I blanch now when people use the term state-sponsored or even Lazarus to describe what's happening in North Korea, because to me, that sort of has a state-sponsored feel to it.

It's not state-sponsored.

It is the state.

Can you give us a lay of the land for all of these various groups in North Korea, how they're incented, how they're structured? Like, what do we know about them?

Absolutely.

And it's interesting.

I think my own views of this have evolved over time, particularly recently.You know, going back even a few years, I've just always thought to myself, "This is North Korea." And I've kind of rejected this idea that these are North Korea state-sponsored, right? I would never use that term in our writing or the way we talked about these things.

These are state actors, hard stop, right? This is the North Korea government who's realized that...

You know, I, stepping back for a moment, right, like when I talk about the enemies of the United States and our allies, I think about China and Russia and Iran, and I put North Korea in there as well, which is crazy, right? This is a country with absolutely no economy whatsoever, and yet they're competing on the global stage because they've professionalized cyber crime, essentially.

There is absolutely no economy, so it's always been, how do we steal and then ultimately launder funds? And crypto's just the latest iteration of that.

I mean, is this just, in your mind, giving a gift to the bad guys? Do you see some upside here? Like, what would be your take specifically on something like Tornado Cash or Zcash?

Who's doing it? What kind of people are on this team, this FBI Bitcoin team?

It's a great question.

It's called the virtual asset unit within the FBI, and there's a team of crypto tracers, and they're the best in the world.

They've built investigations involving ransomware and North Korea hacks and terrorist financing, and what they're doing is they're using TRM to track and trace the flow of funds to ultimately identify that individual.

The problem is, and you mentioned this, is that it really needs a payment.

A transaction must occur in order to start that tracing and tracking.

Because ultimately what you want at the end of the day are those funds to be cashed out at a cryptocurrency exchange.

So what information do you have to input in order to get that Bitcoin account, if any?

Is it, um, is it as untraceable as, as people have said?

It's really not, but it's, it's one tool in a toolbox that investigators have.

The first thing that you look for in a letter like this is, is there a Bitcoin address? And if there is, what you know is that every transaction to and from that address, it moves on an immutable public ledger, right, a blockchain.

So you're able to use tools like TRM to track and trace the flow of funds, and it becomes this cat and mouse game, right? The bad actors are moving funds in and out of addresses, and you're tracking them, hopefully, potentially, to a cryptocurrency exchange, which actually might have the underlying user information.

'Cause right, at the end of the day, what you wanna do is take that cryptocurrency address and associate it with an individual actor, so then you can go ahead and use all the law enforcement authorities that we typically use in the real world, right? Get cell records, get email accounts, and really start to understand who the person is behind that account.

So it really...

A lot of it depends on, uh, is this a criminal network? Is this address already associated with illicit activity, or is it actually sending funds to a cryptocurrency exchange that might have that underlying data?

And ultimately, is there a financial institution or a, a cryptocurrency exchange that one could serve a subpoena on or ask for cooperation from?

Can you share for the benefit of our compliance audience, what is the Beacon Network? How does it work? And maybe what problem it's trying to solve?

No, thank you.

It's awesome and probably the thing I'm most excited about right now in a long time.

So about three weeks ago, TRM announced the Beacon Network.

And essentially what we did is we looked around the ecosystem and we brought together compliant players, those who wanted to stop bad actors, those who want to be involved in the solution as opposed to the problem.

So we started with Coinbase and Binance, large important global exchanges, and then reached out to Kraken and OKEx and HDX and Poloniex, Ripple, blockchain.com, crypto.com. And then we looked around and said, all right, where else are we seeing crypto activity? So we went to fintechs like PayPal and Stripe and Robinhood.

We went to global law enforcement agencies really across the world in the US and globally.

Is it happening a lot in OTC desk in Russia at that Federation Tower building in Moscow? Or are you seeing a lot of lax compliance process procedures and implementation at the various OTC desks that we have globally now?

So if Hoala was a kind of whisper network, then crypto kind of shouts.

There is a great paradox when it comes to crypto.

On the one hand, crypto is really good for criminals because now you can move funds faster across border and in larger amounts than ever before.

But on the other hand, it's terrible for money laundering because every transaction is logged, immutable, and traceable.

And we're just seeing this cat and mouse game play out that's always played out in the real world play out now in the digital space.

And at first, they didn't exactly try to hide it.

Hamas would, you know, put out solicitations with oftentimes a picture of a wallet address, a Bitcoin address, and say, send the funds here.

They show Mujahideen holding a flag up with a big Bitcoin symbol with a QR code on the bottom.

Talk a bit about what it is, both overview, but also from a practical standpoint, what you think it is yeah what direction it can go and then i know that you've also just posted when we recorded uh this the day we're recording you posted an open letter to the working group that was created so i wanted you to talk about that as well but first talk about the executive order what what it is and from your perspective what what it's not i guess because some of these orders are very specific others are sort of uh goal oriented and so i'm very curious of your uh your view on that

No, I appreciate the question.

It's been a wild week.

I have not slept a lot in the last few days trying to keep track of all of this.

But essentially, yes, this week, the Trump administration dropped a really much anticipated executive order on crypto.

And it did a number of things.

One, it really sort of set out the processes that we're going to see play out over the next year.

And so what do you think now, knowing full well that in a month you could change your mind and adjust your views?