Crypto's hidden role in global deception – and how blockchain is exposing it

While the crypto industry often dominates headlines for its price fluctuations and market potential, there is a lesser-known side to this burgeoning technology.

Valerie Kennedy, the Director of Intelligence Solutions International at Chainalysis, has been at the forefront of investigating how cryptocurrency is being leveraged by hostile state actors to enable disinformation campaigns.

"Typically, when I was thinking about hostile state actors, we're talking about countries and then tangential issues as well, such as ransomware, terrorist financing and other threats," Kennedy told The Crypto Radio.

As a blockchain data platform, Chainalysis provides expertise to government agencies, exchanges, and cybersecurity companies in tracing these nefarious activities.

Transparent for better or worse

One of the key advantages that Kennedy and her team have is the transparency of blockchain technology. "Due to the transparent technology that is blockchain technology, we're able to glean a lot more about actors that are waging these campaigns," she said.

This allows them to better understand the payments, transactions, and connections behind these disinformation efforts.

However, this transparency is a double-edged sword. The same properties that make cryptocurrency useful for investigations - its borderless, fast, and efficient nature - also make it an attractive payment method for bad actors looking to fund their activities.

The sophistication of these disinformation campaigns is only increasing, with hostile state actors leveraging emerging technologies to their advantage. "High-quality, deep fake videos or high-quality personas that are meant to appeal to a specific user group, in other cases, using AI to ensure that the actual wording sounds exactly like a native speaker," Kennedy revealed.

She provided the example of the "doppelganger campaign" waged by the Russian government, where they created websites mimicking trusted American sources like the Washington Post to launder disinformation. "They're really thinking about how to subvert some of the efforts that we've put in place to be able to counter these types of efforts," Kennedy said, emphasizing the need for constant adaptation.

The importance of partnerships

Combating these threats requires a collaborative approach, with Kennedy highlighting the crucial role of public-private partnerships. "We have to have fast exchange of information. We have to be able to understand these threats in real time, because they are changing so quickly."

The government often takes the lead in these investigations, with Chainalysis providing expertise on the blockchain side. Kennedy noted that this public-private cooperation is essential in staying ahead of the evolving tactics of bad actors.

Despite the efforts of Kennedy and her team, significant challenges remain in combating these threats. "I would so love to sit here and say that I think, we've become really good at countering these threats, but I think we have a long way to go in educating the public," she admitted.

The lack of public understanding and trust in the information landscape is a major hurdle. Kennedy emphasized the importance of media integrity, the role of social media companies, and the need for government involvement in educating the public and flagging potential disinformation.

The upcoming US elections

As the 2024 US presidential election approaches, Kennedy is bracing for an onslaught of activity from hostile state actors. "There have been efforts by every hostile state actor to influence the elections. They've all been very active in different ways, so there's been a lot of work to do to counter these threats and also understand them in real time."

These bad actors are using cryptocurrency to finance their disinformation campaigns, from paying for infrastructure to purchasing bulk accounts and influencers. Kennedy's team is working tirelessly to trace these transactions and connections, but the stakes remain high.

The path forward

Despite the challenges, Kennedy believes that blockchain technology can play a crucial role in helping to counter these disinformation campaigns. "I've seen very interesting early use cases of the use of blockchain technology to actually tie information back to its source," she said.

Establishing trust in the information landscape is crucial, and Kennedy emphasized the need for a multi-faceted approach involving public education, media integrity, and the collaborative efforts of the private and public sectors.

As the crypto industry continues to evolve, the battle against crypto-fueled disinformation campaigns has never been more critical. With the stakes high, particularly in the lead-up to the 2024 US elections, Kennedy and her team at Chainalysis remain steadfast in their efforts to leverage blockchain data to uncover and counter these nefarious activities.

Listen to our full interview with Valerie Kennedy on our live player at The Crypto Radio or in our Bigger Picture podcast.