Note: This transcript was automatically generated by artificial intelligence (AI) and therefore typos may be present.
Rob McNealy
Hey, today we are talking to Joe McGill. He is the CEO of side chain, which is a consulting company focused on the crypto space. So I’d like to welcome to the show. I’m real excited about this interview. How are you today? Joe?
Joe McGill
I’m good. Thanks for having me.
Rob McNealy
Well, you know, we met kind of on social media, and seems like all this stuff meets these days. But I really wanted to have you on the show, because I really like kind of where you’re focused. And I think this is the security side of crypto, I think is one of those things, and that in a lot of places gets over looked. And I’m not talking about necessarily the technological security, but the physical security, how do people protect themselves, that kind of thing? And it seems like that’s something you guys are focused on. Tell me a little bit about your background and how you, you know, got into starting this company.
Joe McGill
Yeah, so I’ve worked for the US government for the last I guess so 12 years in various capacities from counterterrorism to working cyber criminal cases. And about five years ago with the Secret Service, I first became exposed to crypto currencies and Bitcoin and how criminals were using that to launder funds. by most people, I was skeptical. But as I learned more about the technology actually became an advocate for it, and started reading as much as I could about it. And it’s interesting, you know, when you think of federal law enforcement, you always hear about the horror stories about how agencies are targeting the coins and not necessarily the people using it for nefarious purposes. But it’s actually not like that at all. From a much broader perspective. There’s actually a lot of pro crypto in the federal government and in law enforcement and a lot of people just want to see the the people that are using it to exploit innocent people and and using it to evade detection from law enforcement that are committing crime. That’s that’s typical. The focus. That’s how I got into it about four or five years ago.
Rob McNealy
So what are you doing with CyChain? What kind of is your area focus and from the least the consulting side who Guess who’s your customer.
Joe McGill
So we actually have a few different products that we’re coming out with. And we have a consulting risk and advisory side where we do everything from operational security, where we take a holistic approach to your online footprint will do social media pin test, we do physical security assessments of your company and your location to develop plans and procedures, and the invest something happens we’re also to make sure that your infrastructure is secure. We also have a blockchain analytics app that’s coming out next Friday. And that’s geared towards the everyday consumer. And we’re going to be one of the first to market in that space, because the big guys right now are focusing on enterprise type customers and making sure banks can stay compliant. And our app is going to focus on China. Find ways where users can find out if an address is a scam, receive alerts, fall reports. And so they’re going to be able to interact directly with the sidechain team through the app. And so that’s our other aspect is we do investigations, from due diligence to recovery. And we hope this app will help users identify scams before they send money to the wrong place.
Rob McNealy
I think that’s probably very useful. You know, as is I go out there and I’m talking to people what about our project Tusk? The one thing that I’ve noticed is that there’s not a lack of knowledge of Bitcoin In fact, I see right now, almost every single person that I talked to just out in the wild has heard the word Bitcoin they got a general idea that it’s a digital kind of money thing. But almost every one of those people have a negative stigma attached to Bitcoin. When you say Bitcoin, they’ll say, Oh, that’s that digital funny money. It’s a scam. I mean, have you have us come across that too. Because I think your app might will help, you know, dispel some of that that fear and concern that people have out there about.
Joe McGill
Yeah, that’s definitely interesting. You know, when you think about the left coast and in the East Coast, California Silicon Valley, there’s a lot of people there that know about Bitcoin and cryptocurrency and as you shift sometimes to the south, it’s it’s, you know, a bit pain, Atlanta. So you have a lot of people that are starting to get exposed to the cryptocurrency. There are a lot of skeptics out there. They only hear about the horror stories on TV and documentaries, or people getting hacked. But you know, I think the report came out today. I don’t know if you saw it. I remember what it was called. It basically talks about how there’s a working group together that identified only point 4% of transactions were fraudulent. I read that this morning as a matter of fact.
Joe McGill
Yes. And so I think there’s probably a lot of people that read that. They get nervous about how wall forcement exchanges are tracking this but I look at it as a good Because it helps the industry. People that are skeptical say, Well, look, we took a we analyze all these transactions, we looked at a lot of different information. And we found that only point four 9% of transactions are associated with criminal activity. I think that’s good. I see that it’s positive for the industry versus being concerned about being tracked. So I think stuff like that, that continues to come out that shows it’s not all for the various purposes and hopefully pushing out our app will help show people that it’s not it’s not all for criminals. There’s, there’s everyday use that helps meet technology issues that some customers are facing that being unbanked and you know, remittance there’s all types of things that I think customers will be exposed to.
Rob McNealy
So when you’re working with the Secret Service D, is there a general percentage of transactions done with cash dollars that they know are fraudulent or illicit?
Joe McGill
Yeah, what’s entering with the Secret Service you think of protection, protecting presidents and then you think of counterfeit currency. So when I think of cash, I always think of counterfeit, and how criminals are using fake money to pass it in. And lot using that to launder money and carry out crimes. But in the crypto side, we really didn’t see too much cash transactions unless it was what you call BTC to plastic to where criminals will launder their money and then set up cash out networks across the globe and ATM. But that’s kind of looking back at the old school carding side on the dark web. That’s how they operate. And these will organize teams and every now and then we would see a crypto to cash type transaction as a way to monetize OR gates.
Rob McNealy
Well, I was saying just as far as comparing crypto versus Fiat, how much of US dollars like what percentage of US dollars are used for illicit activity? You know, if we know it’s point of four, nine or whatever, and crypto what is it what dollars right now?
Joe McGill
I would say it’s much more significant. I mean, the US dollar is the most laundered piece of currency. See across the globe, it’s also my opinion, it’s much harder to track crypto currencies very transparent. And only a small percentage if you take a holistic approach is being used for criminal activity.
Rob McNealy
So I heard, you know, way back in the day that pretty much all the Fiat paper money dollars in circulation are generally contaminated with some sort of drug residue. Is that kind of like an urban legend, or is that a is that a factual kind of statement?
Joe McGill
I’m not sure about that. I haven’t heard that. But, you know, I wouldn’t be surprised as much. You think about how much some of the dollars been passed around. And, you know, I think that’s certainly possible.
Rob McNealy
You know, I, at one point, as an entrepreneur, my wife and I actually owned a retail store in an urban setting in Denver. And it was one of the grossest jobs touching that currency every day. And it was ironic that, I think two or three occasions we actually had fake bills come through that We lost like, we took it to the bank like, this is fake. Screw you. And I’m like what? You know. And so I think it’s interesting just in our little, our little store, this little neighborhood store that we owned, you know that we just had that level where, you know, dealing with fake dollars, you know, kind of thing. And to me, that must mean that a huge chunk of fake currency must be circulating out there, among the real stuff and figure out what do you mean, what do you have any knowledge of what that looks like? Does the government release that kind of information or is it really bad?
Joe McGill
I don’t know off the top of my head, the statistics of it, but I do know that counterfeit currency from my experience of Secret Service is still being circulated. But the Secret Service I’m obviously biased because I used to work there, but they do a very good job in tracking counterfeit currency. And these networks that use it to launder money across the United States, but it’s still it’s still going on. You don’t really hear about it much because it’s more of an old school type investigation and Most people nowadays like to hear about the big cyber cases and ransomware. But counterfeit touches narcotics, and it hits about every type of old school car you can think of. And it’s still being actively used.
Rob McNealy
Yeah, but we don’t we don’t hear the politicians bad mouthing dollars. Do we now? You know, that’s that’s a very good point.
So here’s the question. I guess the big thing is, you know, what are the biggest security threats that you’ve seen with crypto currency?
Joe McGill
Well, I think if we just take a step back, and we look at how much data is being used, and how much data has been shared on users of social media, I think data is the biggest threat to cryptocurrency users. There’s been so many leaks over the last even just year, five years of personal information being put out there that you’re exposed online footprint i think is your biggest threat. And that’s mostly because the data that’s out there can be used to sim swap your phone it can be used to compromise your Bitcoin exchange accounts. There’s all different types of crimes that can be used to compromise your data. So I
Rob McNealy
have always told people that and this is something that we’ve talked about at our off chain conference last this last year in our last March, and we’re going to probably address it again and next year. But, you know, with crypto, what we’re asking is we’re asking the average person, right, if the adoption, mass adoption to happen to now be responsible for not only you know, what, maybe only a couple grand in cash at their bank holds, we’re now asking people in in some instances to basically physically be responsible now for their entire life savings for their equivalent of 401k value. But yet, I don’t really see a lot of knowledge and education to people at least from the crypto community talking about what that really does for people, you know, as far as you know, Making them a bigger target for, you know, the level of security they need to upgrade. What’s your take on that? Because the risk to me seem huge. From you know, not only physical security but losing keys and things like that. Why is the crypto community not really talking about this? Like, to me, this is the biggest, biggest scary thing about the whole thing.
Joe McGill
Yeah, you’re absolutely right. And my personal experience on the law enforcement side first getting into crypto was when I was running accounts where I needed to make transactions for undercover type purchases. Me purchasing crypto, even though it wasn’t my money. I was terrified. The very first time I did it. I was terrified about transferring it to another wallet. I was terrified about pulling it off an exchange and then even putting on an external device. But you’re right. I think the reality is that a lot of people are not yet comfortable with being their own bank. And it sounds great to not to say hey everybody use a physical device. Never keep your keys or your money on exchange but Reality is, in my experience that there’s a lot more people that keep their funds on an exchange than they care to admit, because it’s popular right now to say, yeah, it’s not your keys, not your coins, but not everyone’s doing that. And so, I like to teach people Hey, look, let’s let’s be realistic, if you’re not gonna, you’re not going to use an external device, which in my opinion, I think you should, you’ve got to implement a lot of basic security steps, you’re going to lose your money, and you know, the unbanked and the people that crypto is targeting, there’s got to be a lot more education out there. So they understand the risk of being their own bank and make it more practical.
Rob McNealy
Well, I would say just from a simplistic standpoint, right, and I’m a former you know, EMT and a former firefighter and things like that so I always you know, I always look at things from the the worst case scenario right, your house burns down, and your hardware wallet is in your your house. Okay, so your house burns down, and now your 401k is gone. So what Would so what do you do to mitigate that, you know, kind of thing. And so for instance, you know, what if your house burned down, and you had your hardware wallet in a safe, but the safe was in the basement and the firefighters put two feet of water now in your basement, you know, how do you deal with that? And these are the things that I get concerned about, even with my own stuff, right? That’s not just about everybody else. But to me, these are those there needs to be more solutions and more discussion about this because we got to get ahead of this because as mass adoption happens, you’re going to have more people in that situation. I don’t know if you saw last year but there was a couple reports. I think they’re mostly in like Europe or Eastern Europe, where literally some guy was flashing their wealth on social media and guys like broke into their house and bought a gun to their head and you know, got the Bitcoin right. Have you heard of any other cases like that? That’s happening right now.
Joe McGill
Yes, within the last year, I’ve heard of the few just the law enforcement channels of ransom type cases happening, where people on social media saying, Hey, I’m traveling to this city, let’s do a meetup. And then the next thing you know, because of where they’re operating at some criminals take advantage of that. And so I think that’s one thing that a lot of people do not realize, especially in the influencer space, advertising where you’re traveling before you get there is a risk. So I always say tell people, you’re there after you’re there. But the physical threat is huge.
Rob McNealy
I did that this morning. As a matter of fact, and I normally don’t. But I wanted to promote this event, but that is something that I can I definitely think about. But on the other hand, I’m driving and I’m always armed when I’m traveling when I’m driving, so I’m not as worried about it because it’s driving from Salt Lake to Vegas isn’t a big deal, but I’m always armed. So you know, but that but I am very welcome. Aware and concerned about my physical security most of the time, and very, whereas most of the influence I see out there don’t, they’re just not that kind of mindset, you know, and, and I and I get concerned about it, because I’m trying to look at the future of 345 years from now, what are going to be the problems that, you know, are kind of going to impede adoption? You know, I think there’s two main ones, I think the physical security thing is a problem for the average person. And I think the other thing is the how the IRS handles crypto transactions, I think those two things are going to be the biggest impediments for adoption. And yet those two things are where people aren’t even really talking about yet. And I don’t think they’re talking about the IRS very much because people aren’t really using crypto for buying and selling goods and services to any great degree right now. But I know as a former retailer, myself, that’s going to be probably one of the biggest things that that’ll be the biggest complaint of retailers is how to deal with the transactions and the accounting piece. But I think the These are things that we need to deal with as a community if we want this technology to move forward, and I think that there’s just not enough time and attention being brought to this. So, scams, I mean, you know, as a project now, we’ve been a project for almost two years. And I can tell you that as a project, we’ve almost been scammed multiple times. We’ve never have been, but there’s been multiple attempts as a project or people that are in you know, public about being involved with the project. People try to scam us all the time. What are you seeing out there as far as the scams that are pretty common, you know, around crypto,
Joe McGill
Right, well, phishing still dominates right now the crypto space where attackers now have shifted. Let’s take a look back two years to 2017, the big Ico craze. I know law enforcement, social media cannot keep up with the amount of scams and most of them were driven by phishing just fake websites. And I’m still seeing that a lot just talking to former college exit from the Secret Service, they’re still seeing a lot of phishing links where attackers are now pivoted though. They have these nice, nice web pages that actually looked very sophisticated. In some cases, they look better than some current websites that are up there right now. I know there’s a scam right now that my crypto is tracking. They’re very good, very good security conscious company, but they’re tracking a scam that I think is is targeting about seven or eight different phishing websites and couldn’t be more than that by now. But it’s definitely I think one of the greatest risk for crypto users.
Rob McNealy
So if someone does become the victim of a scam, what can they do? Is there any resource for them right now?
Joe McGill
There is and a lot of it’s tough because a lot of it depends on where they’re based at if we talked about the United States, it depends on their geographical location, the amount of theft they’ve lost and the type of exposure from a federal perspective to get a case taken federally, typically the last amount has to be pretty significant. So you know your depend on working with If your local law enforcement department and they usually have very good investigators, and so the first thing you can do when you’re scammed is make sure you just save all the information, take screenshots of the scams, record all your IP addresses and try to have as much information as possible to provide the law enforcement and my experience of the Secret Service. You know, we were very successful. I was a recovering stolen money from attackers, but it’s a very long process, it can’t happen. But the people that are out there that are probably still waiting to get their money, know that it’s not just something that happens overnight, you have to be prepared for, you know, several months to a year, sometimes you get the money back.
Rob McNealy
So how can you get the money back is that, you know, require the, you know, cooperation of the exchanges somehow or are they able to, I guess it would be dependent on the chains, but what would actually that look like how do they get the money back from a scammer?
Joe McGill
Yeah, so, it’s interesting. A lot of exchanges have to make a business decision and if they’re working with individual customer that provides information They could have the discretion if they wanted to assume to provide the money back. But typically, you know, in my experience exchanges like to work with law enforcement to make sure there’s a legal legal record. So a lot of it is done by issuing legal records such as warrants to recover the money for the individuals. So the exchanges will send it to law enforcement, the law enforcement will give it back to the the people who lost her funds.
Rob McNealy
So would you know, pivoting to like the privacy concept, one of the main benefits of crypto at least is how was originally reported was that the anonymity or pseudo anonymity that using crypto for payments allows. Now that seems to be you know, completely at odds with what most governments want with OFAC and funding of terrorism and things of that nature, sanctions, that kind of thing. What do you see the future of privacy coins look like?
Joe McGill
Yeah, so first of all, this isn’t me endorsing a specific privacy coin. But I think the challenge we see out there right now is you look at coins, like z cash. I know they’re very regulator friendly, because you have the shielded transactions and the non shielded transactions. And so I think if from a government perspective, speaking generally that if they can look at a privacy coin and say, well, they’re there is the opportunity to look at transactions that are transparent, then they can also have privacy mechanisms. I think that’s a plus. But there are coins out there that offer 100% privacy, which, you know, I’m torn. I think that’s a good thing. Because if for you as a merchant, it’s none of my business how much money you’re making per year, or what type of transactions you’re doing, and I shouldn’t have free access to that without the proper legal disclosures. And so, I think there has to be a balance and I’m not exactly sure what that answer is, but I do know privacy coins are probably going to continue to see some, some interest from the government because of their use for criminal activity. But I think we also need to remember that there’s a lot of pro reasons for using privacy coins. If we’re going to have mass adoption, we have to have something beyond pseudo. pseudo privacy, it has to be complete privacy. You know, a big bank, like Bank of America is not gonna work. If they switch to crypto for some reason, the next few years, you know, they’re not going to want their competitors to know what their daily remittance looks like, or how much money they’re sending back and forth. And so I think a privacy layer is necessary. I just don’t I just don’t know what that answer is. But it’s it’s definitely of interest to the government, I’m sure.
Rob McNealy
Well, you know, as a project, that’s something that we are concerned about, you know, same deal. Like and I think because and this is my opinion that we’re so early in mass adoption hasn’t happened, that these big valid concerns really aren’t being super talked about right now. You know, it’s all about theory, right? But To me, I always kind of put myself you know, I put my mindset is a former retailer and someone who is concerned about privacy, there’s real security risks. If someone like for instance, if you can try to trace back every transaction to someone’s basically 401k one, you can figure out how much money your neighbor has conceivably you know, if they if your neighbor now has you know, a million dollars in their quote unquote hard, you know, their wallet somewhere. Now, you as a sophisticated criminal or burglar might not know that they keep that off site at a bank deposit box and cold storage, you might think and hope that it’s at their house, and you could plan you know, a home invasion based on that information. And I think the same thing with you know, retailers, you know, you there’s strategic competitive reasons why you wouldn’t want to know what your you wouldn’t want the public to know what your daily sales are, for instance, and so to me, there, there needs there are very absolute safety concerns and security concerns around that privacy piece. Because if you can trace back these purchases back to one hardware or one wallet, you kind of can unravel, you know, all the all the main transactions. And to me, it seems that there, you know, as from a retailer standpoint and our project today, we’re really focused on retailer adoption, that’s kind of our thing. And so we’re concerned and we’re trying to figure out on one hand, the government’s been pretty clear, they really don’t like Mineiro. And they really have concerns about privacy coins, and I we’re already seeing the moves with, you know, exchanges that want to deal with the American, you know, banking system that they’re starting to delist privacy related coins. But on the other hand, what do you do at that situation? And so this is something I’m really, you know, I’m interested in, you know, as a project, you know, we want to be able to implement those kind of features later on. Because we think there’s a real security risk around, you know, not having privacy, but on the other hand, we’re trying to balance Figure out what will the government allow? For instance, we don’t want to, you know, get in trouble for violating sanctions, for instance, if someone does, you know, use our crypto in some manner. So these are those things that we need people like you to tell me what to do. So that’s an interesting con, you know, thing I know that recently you’ve been, you know, posting about that theory and developer, Virgil Griffith, what’s your take on that?
Joe McGill
situation? You know, so obviously, you know, I think it’s important to take a step back and say, Look, I’m also very supportive of your innocent until proven guilty, but just looking at what was in the actual criminal complaint. You know, if that stuff is true, it’s definitely pretty dangerous for someone to do that type of thing. I know it’s not popular to say that teaching someone to evade sanctions is not is not popular right now. But the reality is teaching Someone about blockchain is very different than teaching someone about how to launder money, especially when you’re talking about a rogue rogue regime. That’s a threat everywhere, not just United States, but South Korea across the border. There’s many countries that are threatened with this rogue regime. And so if you’re going out and you’re teaching people how to launder money, using crypto currency, I would strongly advise against that it’s different than educating people on the benefits of Bitcoin and other kryptos but sanction evasion is not a not a good look.
Rob McNealy
Well, My take is this and I’m someone who’s, I’m Can I can be pretty anti government, my own political views because I think government does a lot of dumb stuff. But I also realize there’s a spectrum here, right? You know, I’m in crypto because I actually believe in that concept of decentralization. But on the other hand, if you’re going to be out there and saying, Hey, this is just you know, free speech and you know, I’m gonna Help a government get involved with crypto. To me, I think helping that particular government is not the key. You know, I don’t want any government getting into crypto Personally, I’m just kind of like to me, I just don’t think government manages things very well. Let’s just start there. It’s not a good steward of the money that they have. And they’re not and regulations can often be counterproductive. But in the case of that, the Virgil Griffith I, I’ve been very outspoken about this, that he’s like these. This is like one of arguably one of the worst governments on the planet. Now, I’m not a fan of government at any level, and I got lots of criticisms of the American government for sure. But Kim Jong Hoon is not a nice guy, and he’s not very nice to his people. And in anything you do to help that guy is not going to, in my opinion, it’s probably not going to filter down and trickle down to the people gaining freedom this might take With blockchain technology cryptocurrency, any communist regime especially that embraces, quote, unquote, you know, celebrates, you know, blockchain and crypto, they are not doing so because they believe in the decentralization aspect of it. They’re weaponizing it, and they will use it in a way that keeps them in power and probably keep subjecting their own people in a more efficient manner. And that Griffith guy, you know, I didn’t know who he was, you know, I but I did do some reading on him. And I guess he did some things with Saudi Arabia few years ago, too. So this guy’s got some interesting you know, if you’re a big believer in decentralization, he sure got some interesting ideas on who he wants to work with that space. And, you know, Saudi Arabia, even though they’re an ally of the United States, I would contend that they’re not a very good country and their government doesn’t treat their people very well. But I digress. So we’re getting close on time. But I wanted to see what would be the main tips that you could offer from a security standpoint for the average person getting into crypto would be the main things that you’d recommend that they do as a way to protect themselves.
Joe McGill
Very first thing I would do and would be to disable SMS verification from all of your devices, you need to use Google Authenticator. Step number one, if if Uber has to FA which they do enable on Uber, you know your to FA you should be able to scroll through Google Authenticator because we have so many apps that are using that. Don’t take any any app for granted use it for everything. The second thing if you store your your crypto on an exchange, if you must whitelist all of your addresses make it a requirement to send money outside of exchange there has to be a delay period of at least 48 hours. The third thing if you have a storage device, an external key use it because it’s very important. If you’re going to be your Be your own bank and you have a lot of money you need to make sure you have a good plan in place and and make sure that you’re using the proper procedures in store that don’t just keep it in Houma, Georgia. Keep it in a fireproof safe, keeping a safety deposit box. Make sure you’re just being responsible.
Rob McNealy
Joe, where can people find out more about CyChain
Joe McGill
CyChain.com.
Rob McNealy
Joe, thank you so much. You can get really good information. And you know, if you’re open, I’d love to have you come back on the show in the future and keep us up to date on what’s going on out there.
Joe McGill
Yeah, that’d be great. Thanks for the opportunity. Thanks a lot.