This Ukrainian startup wants to automate cryptocrime reporting using smart contracts, AI

HAPI Labs has launched a platform for reporting fraud and crime-related addresses, in cooperation with Ukraine’s cyber police.

Scamfari OSINT, currently in beta mode, allows users to report cryptocurrency wallets related to fraud, sanctions violations, terrorist financing and other crimes. The project is supported by Ukraine’s cyber police, which will work to freeze such wallets, the agency announced on Monday.

HAPI, a crypto startup working on cybersecurity tools for decentralized finance (DeFi) platforms, previously ran two-week contests asking people to find and report crypto wallets related to fraud and other crimes, with a particular focus on pro-money Russian volunteer trips to help Russian troops invading Ukraine. Users who report the most wallets receive rewards in HAPI’s own token, but only if the reports are approved by the firm’s team and are truly linked to some form of crime.

This week another week’s competition went live. Even after this “season” is over, the hunt for criminal crypto will not stop, but continue on a new website.

It works like this: A user registers via a Telegram bot, fills out a form and submits a blockchain address and a screenshot proof that the address is being used for criminal purposes.

Then two HAPI staff manually check that the reports contain truthful and relevant data and then either approve or reject them. After a report is approved, the reporter is awarded a reward in HAPI’s own tokens, which now trade around $13 each: $1 for a new address in the database, 10 cents for a previously reported address and $5 for an address related to a sanctioned person or device, HAPI research director Mark Letsyuk told CoinDesk.

Currently, rewards are distributed manually every two weeks, but in the future HAPI wants to automate reward distribution using smart contracts. The community may also soon have a vote on whether to replace the HAPI token with a stablecoin as a reward, Letsyuk said.

“Many people in Ukraine lost their jobs [because of the war] and some made several hundred dollars during the last season,” he said. “In these times, it’s good money. Now people will try to do it on a regular basis.”

He added that since Scamfari OSINT went into beta last week, over 15,000 addresses have been submitted, including wallets that collect money for Russian mercenaries fighting in Ukraine.

In the future, HAPI is considering using AI to automate report approval as well, Letsyuk said: “We are now feeding the reports we get to [latest AI product by OpenAI] GPT-4 – it looks very raw at this point, but promising. I’m not trying to capture any hype here, but we think it could be useful in the near future.”

The Ukrainian cyber police emphasized in its announcement that it will look specifically for wallets linked to the financing of Russian troops invading Ukraine. According to CoinDesk’s own investigation, such accounts have collected at least $1.8 million for ammunition, vehicles and other supplies for the troops since the start of the war. Crypto exchange Binance has said the figure could be as high as $7.2 million.