“Companies like Chainalysis and others are basically in an arms race against privacy. And what they’re doing is they’re providing the world’s worst dictators and regimes, either directly or indirectly, with information that violates the civil rights of millions of people.”
He also added that in his opinion, it is immoral to work for such a company:
“Just like I would consider it immoral to work for a weapons manufacturer or a company that builds cages for refugee concentration camps.”
Jonathan Levin, Chainalysis co-founder and chief strategy officer in a statement to CryptoNewspeople, responded to the criticism, referring to a case reported earlier:
“While U.S. agencies represent many of our governmental customers, we also work with other government agencies across the world. This is especially beneficial when law enforcement agencies from multiple countries work together, much like they did on the Welcome to Video case. We have policies and procedures in place that help us determine which governments we work with, and as a general rule Chainalysis does not work with dictatorial governments.”
Levin noted that his company is “often criticized as being antithetical to the spirit of Bitcoin;” however, he believes that regulatory compliance is essential for the adoption of Bitcoin.
It is not clear which regimes and dictators Antonopoulos had in mind. Chainalysis has assisted authorities from various countries in some of the most notorious cases involving cryptocurrency — exchange hacks, sexual exploitation as well sanction evasion. The latter elicits criticism of the company being U.S.-centric.
The fix is coming
In the same interview, Antonopoulos, admitted that Bitcoin’s original design was flawed in terms of privacy protection and that it has been slow to address them because of its inherent conservatism:
“Bitcoin is fundamentally the most conservative system out there because it’s intended to be extremely robust and secure and able to resist attacks by collusion or cooperation between nation-state-level actors.”
Also, he noted that soon this problem will be fixed as new privacy-preserving enhancements are coming to the Bitcoin protocol:
“Fortunately, there are a number of technologies that are likely to make that much better. One of them is a series of changes that are being introduced to bitcoin now. Schnoor signatures, taproots and tapescript.”
Another tool that allows for enhanced privacy is lightning channels. Antonopoulos, a prolific blockchain author, noted that he is currently writing a book about the Lightning Network.
According to Levin, Chainalysis is also watching and anticipating these developments:
“We look at technologies like Schnorr signatures, taproots, and tapescript in much the same way and track their adoption and usage. These have long lead times and will be evaluated by businesses if their customers really demand these as features.”
CryptoNewspeople reached out to Andreas Antonopoulos, but has not received a response in time for publication.