Karim Hijazi, CEO of Prevailion, joins Cheddar News' Closing Bell, where he says that crypto's decentralized nature will pose obstacles for the FBI's new crypto unit, but it will also make progress with items such as managing fraudulent exchanges.

Closing Bell

FBI's Virtual Asset Exploitation Unit to Face Challenges in Combating Crypto Criminals

Well, despite its mainstream popularity, increasing crypto crime has remained a top headline Blockchain analysis firm analysis recently reporting that crime involving cryptocurrencies hit a record of $14 billion 2021. And the Justice Department recently charging a married couple for allegedly laundering 4.5 Million of Crypto during a 2016 hack of bit finance earlier this month. Well, it's the latter of those two that's led the FBI to launch a new unit from Blockchain analysis and virtual assets seizure for more on this. I'm joined by Karim Hijazi Ceo Pavilion, a next generation cyber intelligence company, Kareem, thank you so much for coming on this show. How difficult will this initiative be for the FBI to effectively pursue Hi christian, Thanks for having me. Um, it's gonna be challenging for sure because the challenge here is that, you know, crypto by nature is decentralized, that's the whole purpose behind it. It's meant to be something that essentially uh, isn't centralized, it's not in one place where you can actually go see what's transpired. It's, it's this strange dichotomy of a ledger everywhere where everyone can see what's happened and then no one can essentially control. So we saw this with some of the ransomware attacks last year with things like I think colonial, where the FBI was able to get back a certain amount of the Bitcoin that was stolen. Now, Bitcoin is one of those. It's the earliest one. It's the one that essentially has the least amount of anonymity associated with it. There's plenty of others now that have come about. There are a lot harder to track. So I do fear that there may be some over enthusiasm about the technical pursuits of this. I think there will be some really good headway with getting things like fraudulent exchanges, managed unlicensed exchanges where, you know, they're learning in customers to join and put their money in that are actually not real. That's going to be good. I think that effort is going to be fruitful, but I worry that this idea that if you lose your Cryptocurrency, that the government's going to step in and get it back for you, I don't know that we're going to see as much success there. Can it effectively though, Kareem, make it safer. I mean, I think in some circumstances it certainly gives more gravitas to crypto that institutions are recognizing that they're pursuing it. They're trying to surveil it more and more, but on net as it does become more mainstream. Do you think that the FBI can be effective? Yes. With anything that I think gains mainstream adoption, like you're talking about? I think there's the positive side is that yes, there's this general framework being established around how to manage it and I think that does benefit the average crypto investor to protect them in some ways. So, you know, Frances purposes equivalency of an FBI type of approach to the situation is great, but the problem is the nature of it is so fluid and the fact that the protocols are not really well established in terms of government control and I don't know that they never really get there with it. I think that, you know, at least the people that we've spoken with, their skepticism about this pursuit, it's sort of okay, is this really for the betterment of the community in crypto or is this all about trying to find a way to properly tax everyone that has it? Right. And I think it's both. I don't really think it's one or the other. I think there's benefits to both. So I do think that there's value in having an oversight, but I think that we're gonna have to manage our expectations there. Another question here for you in terms of activity that you're seeing in the Cryptocurrency space. How is it heating up in 2022? Is it Kareem, simply because we know the price was on a roller coaster ride last year and 2021 peaking at its high falling significantly and it's been under pressure for most of the year, not even really coming close to that recent high in the spring of last year. Right. And it's interesting crypto, unlike, you know, our stock markets, it's a microcosm in comparison there's a very small subset of people that can fluctuate that we've all seen Elon musk's tweets that changed the entire, you know, sort of trajectory of something kind of in minutes that will eventually change when there's truly truly mass adoption and and you know, the banks get into it where there's a lot more folks in it and it's a lot more leveled out possibly. Um, I think that last year, you know, we saw the rise of the metaverse drive some of that growth again and then it fell off a little. I think we need these, you know, sort of things to take hold to kind of give it that under under push. I mean it's hard to really see where these things are getting their motivation from. Um again, if it can be as simple as a tweet, who knows where it's coming from, there's going to be something else. I think that, you know, the Ukrainian Russian situation also have an impact on these people might be fearful of some of the more conventional investments and organizations that maybe have an impact with this environments. They may put in alternative investments like crypto, so that may actually bolster it for all we know. Well the Justice Department I know announcing here that Yoon young choi is gonna be the first director of the National Cryptocurrency Enforcement Team. What do we know about this person and how they will lead this effort? So choice seems to be a very accomplished. Uh the prosecutor was I think Attorney Assistant or Assistant Attorney General at the Southern district of New york did some very high profile pursuits around the Panama papers if I'm not mistaken. Um also was involved in the whole Silk Road Takedown and and all that. So, so fairly accomplished there. Um Certainly a regulator of sorts, not necessarily, to my knowledge, a cyber security or intelligence professional, probably very skillful and dangerous in that area, but probably will be assembling a team of professionals around around this effort. So I think they've done a really good job picking heart to lead this effort. I'll be very keen to see what what comes of her, her team and what she what she pulls together. We'll be watching closely here on cheddar news and closing Bell Karim Hijazi Ceo of Pavilion Kareem. Thank you again for joining the show.