Transparent, auditable, tamper-proof money trails are something regulatory bodies previously could only dream of. Blockchain technology certainly could have helped put away Al Capone—who famously practiced what we now refer to as “money laundering”—much sooner. Al and decentralized finance (DeFi) have something in common: the desire for anonymous transactions. Blockchains can limit theft and assist regulatory authorities in taking action when necessary, but DeFi was built to promote anonymity. In some cases, the source of the data trail is an anonymous wallet with an unidentifiable owner. As is the case with most new technologies and industries, bad actors find a way to use it to their advantage. In creating accessibility and decentralizing authority around financial assets, there was also a space created for illicit actors to remain anonymous in illegal or unethical funding practices. Similar to Al laundering hundreds of millions of dollars from his criminal empire by stashing cash, blockchain can potentially mask the true owner of a digital wallet, preventing said person or company from being stopped by authorities.
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