AI to Revolutionize Blockchain Crime Detection within Five Years, Says Chainalysis CEO

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Government authorities are set to embrace artificial intelligence (AI) in their efforts to track and solve blockchain-based crimes, according to Michael Gronager, CEO of blockchain analytics firm Chainalysis. Speaking at the Token2049 conference in Singapore on September 20, Gronager predicted that AI-driven investigations will become the standard tool for law enforcement agencies within the next three to five years.

Blockchain Tech to Solve Crimes

Gronager highlighted the transparency and scalability of blockchain technology as key factors making it ideal for solving crimes globally. He emphasized that AI agents could streamline the investigative process far more effectively than traditional government agents, minimizing overlap between departments and providing deeper insights into illegal activities conducted through cryptocurrencies.

According to Gronager, blockchain will soon be “the only way you would want to solve crime.”

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The CEO also pointed out that AI could play a role in tracking crypto tax evaders, especially as tax authorities around the world, including the U.S. Internal Revenue Service (IRS), are already adopting these advanced technologies. However, he acknowledged that individuals who cashed out crypto transactions more than five years ago may evade scrutiny due to outdated tracking methods.

“Many early crypto users likely didn’t pay taxes not out of malice, but because they didn’t know how,” Gronager explained, noting that evolving crypto tax tools and legal expertise mean that such excuses are becoming less viable.

Challenges Posed by Privacy Tools

While AI promises to enhance transparency, Gronager acknowledged the challenges posed by crypto privacy tools, such as mixer protocols and privacy-focused tokens like Monero (XMR). He admitted that these technologies complicate AI’s ability to track criminals. However, he noted that privacy transactions now represent less than 1% of all crypto transactions, indicating a relatively small portion of the overall market.

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Despite the challenges of tracking illicit crypto activities, Gronager shared data underscoring the scale of the issue. A report from Chainalysis revealed that since 2019, nearly $100 billion in funds have been transferred from known illicit wallets to cryptocurrency exchanges or other conversion services.