At the recent Dubai Fintech Summit 2024, podcaster and corporate commercial lawyer, Henzelene Healley, interviewed Crystal Intelligence’s CEO Navin Gupta, where he outlined the history of digital assets, discussed his personal and professional involvement in the field, and explained his company’s vital role in this ever-evolving industry.
Who is Navin Gupta, the Crystal CEO?
Navin began his entrepreneurial career as co-founder and CEO of Autoload, an e-based, on-demand commercial transport start-up in India’s trucking industry. He then joined Ripple, the global financial settlements solution company, in 2017, where he was the managing director for South Asia and the MENA region. He held this position until February 2024, when he came aboard as CEO of Crystal Intelligence.
Doubling down on the cryptocurrency myth
During the early years especially, Navin said people considered the digital asset world in primarily negative terms such as laundering the proceeds of hijackings and kidnappings. He described this association in the way that Napster was perceived in the 90s.
“In 1995 the internet was born when Napster, the illegal music downloading platform, destroyed the music industry as we then knew it, paving the way for advancements we all enjoy everyday.”
So, although the technology had at first been used for illegal purposes, it matured and became more accepted, and legal uses began to proliferate.
This is the same for the blockchain and crypto worlds – for example, the more recent inception of stablecoins such as USDC and USDT.
Today the adoption of cryptocurrencies enables the near-instant remittance of money around the world by ordinary people. In Dubai, for instance, 90% of the citizenry are foreigners earning money to remit funds safely via crypto back to their homelands from the UAE.
What is Crystal’s role in the crypto industry?
Crystal’s solutions help governments track crypto’s progress. While crypto is largely used for the right reasons, it is still sadly also used for wrongdoing.
He explained that Crystal provides governments with blockchain analytics to trace where crypto has been sent, informing investigations and supporting the work of the police, regulatory agencies, and central banks. This gives these agencies the correct data to do their work.
Crystal works with exchanges, so-called over-the-counter (OTC) desks, and mutual funds to ensure that they don’t erroneously send funds to or receive funds from illegal wallets which could be associated with sanctioned entities, tax evaders, the drug trade, or other forms of criminality.
“We are that enabling force; we are that data analytics company that empowers many of these governments to make the best decisions and for law enforcement to catch bad people,” he said.
How does Crystal identify suspicious wallets?
Crystal accesses multiple sources of data, such as blockchain, where such information is publicly available, proprietary and other sources; and data from the fiat currency world. Algorithms are generated once the data from all these sources is gathered and analyzed.
Navin then remarked on the interesting operational similarity between legal multinational corporations and illegal industries such as tax evasion and drug dealing, which all move money around the world.
He explained that the algorithms recognize these patterns and provide such information to law enforcement, who use their investigative powers to hunt down criminals. They can then track and trace the funds. Even when crypto goes into mixers, the funds can be ‘demixed’ using various algorithmic techniques, all of which help Crystal’s clients get results by providing them with the necessary analytics.
Navin clarified that Crystal does not undertake law enforcement operations but provides the analytics and actionable intelligence to the relevant authorities, who can then make the best-informed decisions.
In providing an overview of the cutting-edge of fighting financial crime on the blockchain, he described this process as a “cat-and-mouse game” in which the criminals are smart, but “we have to be smarter.”
Referring to the high volume of publicly available data on the blockchain, he quipped that “the best antiseptic is sunlight”, since transparency makes risky or illicit data and behaviors on the blockchain more readily visible.
How does Crystal recognize when virtual assets are involved in risky transactions?
“We run our own nodes,” was Navin’s succinct answer to this question, “often we get 100% of the data from running the noughts on most of the blocks we cover, then we do the analytics.”
He added that Crystal has a rich and storied history to draw upon, noting that Crystal was founded in 2016 in Amsterdam, the Netherlands, and dedicated the first two years of its existence purely to research.
Once the many reams of data were gathered and harvested, Crystal developed all its analytics tools, products, and services. In the process, Crystal came to understand how crypto is used from one place to another, what some common patterns are in different regions and countries, and how different types of exchanges, including fake ones, work.
Thus, Crystal accrued in-depth knowledge and understanding of the inner workings of this cyberworld which is invisible to the average person. These insights are then used to benefit the governments, law enforcement agencies, regulators, and exchanges themselves in the fight against crypto crime.
Navin also mentioned that clients can require Crystal to assign risk scores for potentially suspicious wallets. For example, Crystal might assess some wallets as “bad” because of associations with criminal activities such as drug dealing or illegal gambling, etc., or wallets can be assessed as “good” when their users have never been accused of any crime anywhere the world, which supplies peace of mind for our clients. (You can read more about Crystal’s labelling process here.)
Ensuring the safe development of the crypto industry
With the global uptake of crypto increasing, Navin highlighted three areas that authorities worldwide must also address:
All governments must develop and publish regulations to safely govern crypto use, addressing issues such as legal use of crypto and appropriate consumer protections. He added that the UAE’s Virtual Assets Regulatory Authority (VARA) has done exceptional work in this area.
With more companies coming online in the crypto ecosystem, industry leaders such as Crystal need to be on hand to assist them with registration, licensing and running safe, secure operations.
The world’s law enforcement community, from the police to counterterrorism agencies, must improve their understanding of crypto to better identify, investigate, and prosecute financial crimes when apprehending wrongdoers.
He added his hope that “as more would-be crypto criminals realize they will be caught, so the appetite for doing such crime will reduce.”
While Navin acknowledged that global progress is being made across governments, he said there is still a long way to go.
Crystal’s role in the implementation of MiCA
Navin explained that Crystal has been very much involved with EU’s Markets in Crypto-Assets (MICA) Regulation implementation, helping all stakeholders understand how to safely and sustainably evolve the necessary regulations.
“We are mainly involved with regulators in an advisory or educational capacity. Our goal is to help EU members gain a solid understanding of crypto, as this will enable them to create effective laws and establish a better monitoring system,” he said, adding that Crystal also provides some pro bono advice to governments to help them develop their own capabilities in this critical area.
Regarding the future of MiCA, Navin highlighted an area of MiCA implementation worthy of praise: “While all crypto trading entities within the EU must be appropriately licensed, traders engaged in reverse solicitation (i.e., trying to attract crypto investment) with EU companies, whether from within or outside the EU, are also protected, which he described as progressive.
Navin also cautioned that Crystal provides analytics at regulatory, exchange and law enforcement levels, and does not conduct law enforcement operations, referring on this issue to the clear delineation and division between “analytics and the state”.
Scam prevention support
In a final comment, Navin appealed to all journalism and social media areas, asking practitioners to advocate strongly for scam prevention. Many individuals are prone to falling for cons such as romance scams where people get drawn in by individuals who, while professing love, gradually get round to soliciting more and more money from their innocent victims, until eventually that person gets badly hurt both emotionally and financially.
