The collapse of cryptocurrency exchange FTX was the biggest news story of 2022. Given that the multi-billion dollar exchange was the fourth biggest in the world and propelled the owner, Sam Bankman-Fried, right into the Forbes rich list before he turned 30, it looked like a pioneering, fresh company had emerged to challenge the prominent exchanges.
However, as we have found out, all was not what it seemed over at their Bahamas-based HQ, and with the mess and backlash still unraveling to monumental proportions into what many analysts believe to be the most significant fraud case that’s ever seen the inside of a courtroom, is blockchain technology a friend or foe when it comes to battling against cybercrime and rogue agents set on lining their own pockets using the money of hard-working retail investors across the globe.
Blockchain technology is stirring up a revolution in the world of casino gaming. Using Bitcoin to play poker, slots, or roulette might not strike traditional casino gamers as a worthwhile avenue to explore. Still, there is concrete evidence that the popularity of these institutions is continuing to grow. In the United Kingdom, concerns were raised about fixed odds betting terminals being used by criminals to launder cash, which regulators quickly addressed. However, cryptocurrency casinos use the blockchain, with each transaction validated, verified, and noted, which makes it more difficult for these types of people to operate.
These transactions can’t be changed or altered and are publicly accessible to anybody. It is the best of both worlds. The transparency negates any issues of illicit cyber activity while providing a more secure way for casino gamers to use their digital assets on the casino site. Bitcoin casino gaming is becoming a more practical and workable route for those gamers who are disillusioned, perhaps by the time it can take to deposit at a traditional casino or how a bank can stop the transaction from going through. Not only does the blockchain verify this information, but having a live log accessible to anybody helps combat fraudulent activity, not just for casino gaming but for all transactions.
One component that cryptocurrency detractors often bring up in a bid to show that it is ineffective in tackling fraud is the anonymous nature of cryptocurrency wallets. Unlike a traditional bank account, where you need to provide evidence of your identity, bank information, address, and date of birth, anybody can open a cryptocurrency wallet and begin to buy and sell digital assets.
However, as law enforcement agencies and cryptocurrency exchanges begin to work more closely together in a bid to tackle some of the most problematic cases of fraud in crypto, more exchanges are now requesting KYC to allow customers to off-ramp their assets. In addition, there’s now a lot more information about how to keep your wallet secure so that you do not end up giving your seed phrase or password to cyber criminals.
Cryptocurrency wallets may be anonymized, but that doesn’t mean authorities can’t trace the payments. Binance is one exchange that has been able to effectively take action against organizations that use cryptocurrency for illicit means, and by drawing up a web of wallets and tracking where the money travels, it is becoming increasingly more challenging for fraudsters to use cryptocurrency as a means to launder or channel their ill-gotten gains.
One thing that cryptocurrency detractors and enthusiasts seem to have in common is that they believe that there needs to be some element of regulatory involvement. Given that cryptocurrency is a global asset class but lacks a cohesive set of laws and regulations across the West and further afield, it is proving problematic for many companies and exchanges attempting to bring a global audience to their service.
The United States Security & Exchange Commission (SEC) is proving to be a formidable foe in America’s quest to establish blockchain and cryptocurrency innovation on their shores. Despite granting Coinbase access to go public on the stock market, the SEC has now sued the exchange for breaching conditions set out in their original business model when they went public. It is this lack of clarity and other high-profile, long-drawn-out court cases that the SEC has lost against prominent crypto companies that have many enthusiasts disillusioned. However, a clear set of laws allowing companies to operate while allowing authorities and regulators to track fraudsters would benefit all parties. Ultimately, this will only be possible if they’re all singing from the same hymn sheet, a far cry from what is happening now. Still, the groundwork is there to battle fraudsters and display the benefits of digital assets simultaneously, and this must be the horizon that everybody aims for if the industry is going to reach its full potential.