From headlines about multimillion-dollar losses to courtroom dramas involving disgraced crypto executives, the public perception of blockchain can often seem like a reel of never-ending scandals.
In the latest episode of The Clear Crypto Podcast, hosts Nathan Jeffay and Gareth Jenkinson cut through the noise with guest Jennie Levin, chief legal and operations officer at the Algorand Foundation, to explore what’s really going on and why it’s often less about crypto and more about human misconduct.
Same ol’ scams
While mainstream coverage often fixates on collapsed exchanges like FTX, Levin points out that the underlying misconduct usually isn’t unique to crypto; it just features new, sometimes confusing names.
“Front-running securities trades happens all the time in traditional finance,” she said.
“This is just a way of doing it using the crypto industry. It’s native to the crypto industry, but the theme of the fraud happening happens elsewhere as well. There are just ways to do it now within the technical aspects of the crypto community.”
In fact, many of today’s most damaging crypto crimes are highly technical exploits of blockchain protocols, often committed by people with deep knowledge of the code.
“If you mess with the underlying system and the ordering of blocks, then yes, you can use that to your advantage,” Levin said.
“It takes knowing the protocol code, knowing the different players, and being able to have a really deep understanding.”
Crime and punishment
That technical depth has created legal and ethical gray zones, especially in cases of so-called white hat hackers, who exploit vulnerabilities, then return the stolen funds. “A crime is a crime is a crime,” Levin noted.
“Claiming good intent does not negate the crime or the elements of the crime. From a strictly legal standpoint, you can still be charged.”
Still, enforcement isn’t always so black and white. “Perhaps the DOJ or other investigators do not put these types of white hat hacks first on their list,” Levin added, especially when the losses are recovered or don’t meet federal thresholds.
Nevertheless, regulation continues to lag behind. Jenkinson noted that in some jurisdictions, regulators misunderstand how decentralized systems work.
“If you’re breaking the rules in terms of holding data, you might have to delete the blockchain,” he said. “But it doesn’t quite work like that.”
To hear the complete conversation on The Clear Crypto Podcast, listen to the full episode on Cointelegraph’s Podcasts page, Apple Podcasts or Spotify. And don’t forget to check out Cointelegraph’s full lineup of other shows!
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