Understanding Arkham: Why is it Controversial?

Introduction

On July 18, Binance launched and began trading Arkham through its Launchpad. However, even before its debut, the project was embroiled in controversy for being able to track users’ personal email addresses and offer information services on wallet addresses. Many privacy-conscious crypto enthusiasts have expressed their dissatisfaction. This innovative service, akin to investing in cryptocurrencies, presents opportunities and potential risks.

Arkham’s Features

Arkham is a startup that provides on-chain data. Its main functionalities are spread across two platforms - Arkham Intelligence and Arkham Intel Exchange.

Arkham Intelligence

Leveraging its exclusively developed ULTRA artificial intelligence system, Arkham currently possesses over 3.5 million wallet tags and more than 200,000 entity pages. Through the Arkham Intelligence platform, wallet addresses are connected to their respective real-world owners.

Users can understand the assets they own and their on-chain activities. From this, they may make investment decisions by observing every move of the tracked wallet addresses. The platform also assists users in tracking the status and historical performance of their cryptocurrency accounts. Unlike other platforms offering similar services, such as Nansen, all these features are free.

Users can search any wallet address, entity, or cryptocurrency for on-chain data on the platform. This includes owned assets, balance, historical performance, transaction data, etc. Currently, Arkham supports eight blockchain networks, including Bitcoin, Ethereum, Arbitrum, Avalanche, BNB, Optimism, Polygon, and Tron.

Source: Arkham website https://platform.arkhamintelligence.com/explorer/entity/binance

Arkham Intel Exchange

Additionally, Arkham has introduced a token system, allowing users to offer bounties in Arkham (ARKM) tokens through the Arkham Intel Exchange marketplace. This system enables users to seek the desired blockchain intelligence, such as identifying the user behind a specific wallet address. Blockchain analysts, who believe they possess valuable information, can also sell this data on the platform, inviting interested users to bid. This transaction data will be exclusively owned by the purchaser for up to 90 days, after which it will be made public.

Source: Arkham Website https://platform.arkhamintelligence.com/exchange

The current bounties on the trading market include identifying the wallet address of Tesla founder Elon Musk, pinpointing the hacker responsible for FTX’s bankruptcy, and locating the top 10 wallet addresses that profited at least $100,000 or by at least 50% on the Tron blockchain over the past 30 days. The bounties range from 1,000 ARKM to 100,000 ARKM.

On July 25th, Arkham announced the completion of its first bounty project. Through blockchain detective work, they successfully identified additional wallet addresses believed to belong to Do Kwon, the main figure in last year’s Terra (LUNA) and UST flash crash, and his company Terraform Labs. A reward of approximately 9,519 ANKR, equivalent to about $5,000, was paid to two individuals who provided the information.

Source: Arkham Twitter https://twitter.com/ArkhamIntel/status/1683555586787487746

Background of Arkham

Arkham was founded by Miguel Morel in 2020, who is also one of the co-founders of the algorithmic stablecoin project, Reserve Protocol, and currently serves as the CEO of Arkham. According to the introduction on Arkham’s official website, they raised over $12 million in their Series A funding round. Investors include an anonymous founder of OpenAI, the company behind the 2023 AI sensation product ChatGPT, Palantir co-founder Joe Lonsdale, Bedrock venture capital firm founder Geoff Lewis, and Draper Fisher Jurvetson founder Tim Draper, among other industry leaders.

Controversy Sparked by Arkham

User Emails Exposed through Invitation Code Links

Arkham had previously introduced a referral feature, allowing users to invite others to join Arkham by generating an invitation code link. However, after Arkham announced an airdrop on July 10th, some netizens tweeted that the invitation link code could easily be decrypted, revealing the user’s email address, and leading to dissatisfaction within the cryptocurrency community.

These codes were generated by encoding user emails with Base64. By using free online tools for reverse decoding, one could see the referrer’s email address. This means that many individuals who publicly shared their code links on social media platforms inadvertently exposed their email addresses.

Following the incident, Miguel Morel explained on Twitter that the code link system was developed during the beta testing phase. Its purpose was to reward users who helped promote the platform by identifying them through their email addresses. Besides using email addresses for communication and rewards, the company didn’t utilize them for other purposes. Moreover, when a referred user opened the link, they could see the inviter’s email, confirming that the inviter was a genuine Arkham user.

However, Morel admitted that as the user base grew, it became necessary to change how links were generated. They have now updated the mechanism, ensuring that all newly generated links encrypt the user’s email, preventing reverse derivation.

Accused of Profiting from “Human Flesh Search” at the Expense of User Privacy

A significant feature of the crypto community has always been its anonymity. However, Arkham has always advocated for “de-anonymization.” In its white paper, Arkham stated that “raw transaction data, if left untreated and anonymous, is useless,” thus launching the mentioned service. Yet, the Arkham Intel Exchange platform, which allows users to buy and sell information, has drawn criticism from crypto enthusiasts who value privacy, condemning the practice of profiting from “human flesh search.”

AAVE Dao’s founder, Mark Zeller, expressed his disappointment on Twitter, stating, “Human flesh search is not cool. I’m profoundly disappointed in your token that betrays the entire ecosystem’s values. It will bring about a multitude of issues.”

Cryptocurrency blogger Scott Melker, known as ‘The Wolf Of All Streets’ on Twitter, voiced his opposition to the notion that the Arkham project is reasonable and ethical. He believes the crypto community should move towards a more privacy-focused direction, rather than taking steps backward.

However, another viewpoint suggests Arkham’s feature could be instrumental in tackling the prevalent hacking issues in the crypto space. According to a report by Chain Analysis, investors in the crypto community lost up to $3.8 billion in 2022, marking an all-time high.

Suspected Ties with the U.S. Government

One of Arkham’s investors is Joe Lonsdale, the co-founder of the big data company, Palantir. Given that one of Palantir’s major clients is a U.S. government agency and that Palantir aids them in counter-terrorism efforts, there are suspicions that the Arkham project is connected to the Central Intelligence Agency or other government entities, raising concerns about privacy infringement.

In its statement, Arkham denies these allegations, emphasizing that it is not a secret project of the U.S. government and has no affiliations with any government agencies.

Arkham’s Token Model

Arkham is a token minted on the ERC-20 chain, with a total supply of 1 billion tokens, distributed as follows:

• 37.3%: For ecosystem maintenance
• 20%: Reserved for core contributors
• 17.5%: Reserved for investors
• 17.2%: Allocated as foundation funds
• 5%: For use with Binance Launchpad
• 3%: Reserved for advisors

Source: The Arkham Codex https://codex.arkhamintelligence.com/tokenomics

The initial circulating supply of tokens is 15%, with all tokens set to circulate after seven years. Tokens for investors, core contributors, and advisors will be locked within the first year of launch, followed by a gradual unlocking over the next three years. The total unlocking period for ecosystem tokens is five years, while the token unlock duration for foundation funds spans seven years.

Source: The Arkham Codex https://codex.arkhamintelligence.com/tokenomics

Conclusion

Whether in ancient times or the modern era, possessing accurate intelligence brings significantly enhanced results in various domains such as military and investments. Therefore, the value of intelligence is inherently evident, and Arkham has emerged against this backdrop. While Arkham presents itself as a potential platform for facilitating the tracking of hacker information, it’s easy to grasp that this might not be particularly favorable news for prominent figures in the cryptocurrency community. Thus, it can be considered a double-edged sword. Currently, it remains challenging to determine the extent to which Arkham will impact this industry; only time will unveil the answer.

How to Buy ARKM?

To obtain ARKM, you can use the centralized cryptocurrency exchange Gate.io for purchasing. Initially, you’ll need to create an account, complete the verification process, and deposit funds into your account. Subsequently, you can follow the instructions to buy ARKM tokens in the spot or derivative markets.

Take Action

Check out ARKM price today, and start trading your favorite currency pairs.

• ARKM/USDT