Despite Uproar, Crypto Bounties to Unmask Bad Actors Starts to Get Traction

• Arkham stirred controversy with its new service that placed bounties on identifying the owners of anonymous crypto wallets.
• However, despite the crypto community’s privacy idealism, people are starting to use it to figure out who was behind some major exploits.

Arkham Intel Exchange, a new platform that incentivizes the unmasking of anonymous crypto users, stirred up controversy recently among the famously privacy-sensitive digital asset community.

But despite those concerns, some people are using it in service of a seemingly good goal: figuring out who’s behind rug pulls and other crypto exploits.

On Arkham’s marketplace, which debuted on July 10, there are seven bounties, collectively worth about 168,000 ARKM (or $92,400), focused on identifying people who engaged in some kind of bad behavior, according to CoinDesk calculations.

Read more: Arkham Intelligence Rolls Out Crypto Data Marketplace; Privacy Advocates Cry Foul

The story orbits around the age-old conflict between idealism and pragmatism. From its earliest days, crypto was pitched to and well-received by people who cherish their privacy. It didn’t take long, though, to realize it was possible to figure out the owner of superficially anonymous crypto wallets, giving rise to services like Arkham, Chainalysis and Nansen. Law enforcement and Arkham users alike have used this fact to try to chase down crooks and scammers by piercing the veil of blockchain anonymity.

In one example this week, a meme-coin project called TOWELIE is accused of being a rug pull (a scheme in which investors pour money into a project, only for the project backers to abscond with it). Someone put a bounty on IDing its backers on the Arkham platform, worth 580 ARKM (which equals about $324 of Arkham’s token).

TOWELIE keeps a low profile. There’s no official social media account on X (née Twitter) or Discord. A message sent via the Blockscan Chat to the project’s addresses asking whether they were engaging in a rug pull wasn’t immediately returned.

Read more: Arkham Intel Exchange Shows 11 Submissions Since Debut Including Finding Elon Musk’s Wallet

A lack of communication conduits underscores why figuring out who’s behind a project can be important, particularly when something goes wrong.

Other bounties on Arkham include identifying the individual or entity responsible for exploiting about $415 million in cryptocurrency from FTX during its collapse as well as pinpointing who is behind the addresses that hacked crypto market maker Wintermute for about $160 million.