In the next five years, government prosecutors and tax authorities are poised to harness artificial intelligence to analyze blockchain data and tackle crime, as stated by the CEO of Chainalysis.
“It’s not far off,” remarked Michael Gronager, CEO of Chainalysis, when Cointelegraph inquired about the potential for generative AI agents to examine blockchain transactions for governmental purposes within a three to five-year timeframe.
“In the coming years, cryptocurrency could become the primary method for addressing criminal activities due to its scalability, ease of use, transparency, international applicability, and the wealth of insights it provides,” Gronager explained during the Token2049 conference in Singapore on September 20.
He emphasized that employing generative AI to automate these investigations would enhance efficiency, helping to avoid overlapping efforts among various government departments.
Gronager conversing with Cointelegraph at Token2049 in Singapore. Source: Cointelegraph
These AI agents could also identify individuals attempting to evade crypto taxes. However, Gronager mentioned that those who completed standard crypto transactions five years ago or earlier are likely to “slip through the cracks.”
Yet, with advancements in both crypto tax attorneys and software tools, he believes such defenses may no longer hold water. The Internal Revenue Service in the United States and other tax agencies are already utilizing AI to track potential tax offenders.
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Gronager pointed out that while crypto mixer protocols and privacy-centric tokens like Monero (XMR) complicate the tracking of criminals for AI agents, the overall volume of crypto-related crime is on the rise. He noted that privacy transactions currently account for less than 1% of all crypto transactions.
A report from Chainalysis on July 11 revealed that nearly $100 billion in funds have been transferred from known illicit wallets to cryptocurrency exchanges or alternative conversion services since 2019.
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