Government prosecutors and tax authorities are poised to leverage artificial intelligence for blockchain analysis to combat crime within the next five years, as stated by Chainalysis CEO Michael Gronager.
When Cointelegraph inquired about the potential for generative AI to assist governments in examining blockchain data, Gronager responded, “It’s not much further away.” He emphasized that, in the coming years, cryptocurrency may become the preferred method for investigating crimes due to its scalability, ease of use, transparency, international applicability, and the wealth of insights it provides. This insight was shared during the Token2049 conference in Singapore on September 20.
Gronager explained that utilizing generative AI for these investigations would streamline processes, reducing the likelihood of overlapping efforts among various government departments.
Gronager speaking with Cointelegraph at Token2049 in Singapore. Source: Cointelegraph
These AI systems could also identify individuals evading cryptocurrency taxes. However, Gronager noted that those who completed standard crypto transactions five years ago or earlier might “probably get away with it.”
Yet, with the advancements in both crypto tax lawyers and software tools, Gronager believes such justifications will no longer hold water. The U.S. Internal Revenue Service, along with other tax agencies, is already employing AI to monitor potential tax evaders.
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Gronager acknowledged that the presence of crypto mixer protocols and privacy-focused tokens like Monero (XMR) complicate the task for AI agents attempting to trace criminal activity. Nevertheless, he pointed out that while the “absolute amount” of crypto-related crime is on the rise, privacy transactions currently account for less than 1% of all crypto transactions.
According to a report by Chainalysis on July 11, nearly $100 billion has been transferred from known illicit wallets to cryptocurrency exchanges or other conversion services since 2019.
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