- Blockchain data provider sought to monetise information related to crypto wallets by letting users trade on-chain data.
- Critics lambasted Arkham’s move as an affront to privacy and anonymity.
- “Arkham is not secretly a government project” said company backed by Peter Thiel and Sam Altman.
Arkham, a blockchain data provider backed by billionaire investor Peter Thiel and OpenAI CEO Sam Altman, is scrambling to rebut critics who say the venture is predicated on violating the privacy of numerous crypto users.
Arkham has been under fire since Monday when it announced a forthcoming product: The Intel Exchange.
The offering is designed to be an on-chain intelligence exchange that lets users “buy and sell information on the owner of any blockchain wallet address.”
A cardinal sin
Critics dubbed its latest product as a “dox-to-earn” model. In crypto, where privacy and anonymity are widely cherished industry values, “doxxing” — or publicly revealing information about someone — is often seen as a cardinal sin.
But Arkham said Tuesday that users misunderstood its intentions. It said the trading of wallet information will be related to identification and analysis of wallet movements — or “on-chain analysis and labelling” — but no other personal information.
“This analysis is already widely shared and discussed in the crypto community,” Arkham said on Twitter. “The Intel Exchange is creating a liquid market for it, so that on-chain researchers can more easily monetize their work and exchange information.
Arkham said monetising on-chain research would remove “a major obstacle to increased transparency, which the Intel Exchange is designed to overcome.”
Founded in 2020, Arkham raised over $12 million from investors, including Thiel, the founder of data analytics company Palantir, which sells spyware. Another investor is Altman, a Y Combinator partner who also founded the crypto project Worldcoin. That venture has been criticised for collecting users’ personal data through eyeball scans.
Arkham’s free product has long been popular among those, including DL News reporters, who want to track wallet movements and gain insights revealed by public blockchains.
In preparation of a token sale, Arkham launched a referral programme earlier this year. Another point of contention Monday was whether the referral programme disclosed user’s email addresses when decoded through online tools.
Arkham was reportedly aware of this fact as early as January. However, the company didn’t address those concerns in its statement on Tuesday.
‘Not secretly a government project’
Arkham’s new product has also raised suspicions that it may be linked to government activity in the industry. Arkham CEO Miguel Morel follows the CIA’s page on LinkedIn. While such a link may seem innocuous, it was enough to spur some skeptics to question possible connections with Washington.
“Arkham is not secretly a government project,” the company said in response. “We are not affiliated with government agencies. We’re a crypto-native team and we care about our community and our industry.”
Although Arkham may not be a secret government project, there are certainly other government projects.
In December 2021, William Burns, director of the CIA, told The Wall Street Journal that the agency has “a number of different projects focused on cryptocurrency” but didn’t disclose them.
Burns said the purpose of such projects is to identify and deter ransomware attacks and “get at the financial networks that so many of those criminal networks use and that gets right at the issue of digital currencies as well.”
‘Arkham is not secretly a government project.’— Arkham statement
Ransomware attacks shutdown software by encrypting it and demanding a ransom payment — often in Bitcoin or Monero — for the decryption key.
In one of the most high-profile attacks, a group known as DarkSide took down the largest fuel pipeline in the United States in May 2021, leading to shortages and panic buying across several states. Colonial Pipeline, the company operating the pipeline, paid $2.3 million Bitcoin to DarkSide, which was later recovered by the FBI.
But Burns said the CIA’s work in crypto predates his tenure, which began in March 2021.
Chainalysis and Elliptic on US government contracts
The US government’s interest in crypto isn’t only related to stopping ransomware. Agencies ranging from the US Department of Justice to the IRS also enlist the help of blockchain analytics firms to track on-chain crypto.
Arkham said “government agencies have long had access to tools like Chainalysis and Elliptic that they use to trace blockchain activity,” but noted that its software wasn’t among them.
Chainalysis has provided on-chain data tracking services to the US government since September 2022 and is currently a recipient of $1.3 million funding, according to federal government data.
Similarly, Elliptic is on a $2.4 million contract with several US government agencies, according to data from HigherGov, a privately-funded dashboard tracking government contracts.
“Unlike those tools, Arkham is made for normal crypto users, for free, in order to help protect against scams, rugs, hackers, insider dumping, and other bad behaviours,” Arkham said.
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