Freestyling on Stablecoins, Privacy, and National Security with Yaya Funusie

Ari Redbord (00:02):

I am Ari Redbord and this is TRM Talks. I'm Global Head of Policy at TRM Labs, we provide blockchain intelligence software to support law enforcement investigations and to help financial institutions and cryptocurrency businesses mitigate financial crime risk within the emerging digital asset economy. Prior to joining TRM spent 15 years in the US federal government, first as a prosecutor at the Department of Justice, and then as a Treasury Department official where I worked to safeguard the financial system against terrorist financiers, weapons of mass destruction proliferators, drug kingpins, and other rogue actors. On TRM Talks, I sit down with business leaders, policymakers, investigators, and friends from across the crypto ecosystem who are working to build a safer financial system. On today's TRM Talks, I sit down with Global Head of Policy, Yaya Fanusie of Aleo.

(00:58):

But first, Inside the Lab, where I share data-driven insights from our blockchain intelligence team. On today's Inside the Lab, we unpack a recent TRM blog post, the imitation game following Garantex's takedown are these high-risk exchanges copying its playbook. After the dismantling of high-risk exchange Garantex, TRM observed a wave of exchanges that appeared to be mirroring its behavior. Platforms like ABCX and AEXBIT have surfaced with nearly identical UIs, overlapping wallet flows, and co-spending activity. Strong signals, they may share infrastructure or operators with the original entity. These mimicry tactics are a defensive playbook, rebrand, spin up clones, reuse code, and try to maintain continuity in user access while evading enforcement. But on- chain analytics exposes the links, while it co-spending, shared transactional patterns and reuse of routing structures leave traceable trails. This case underscores how high risk exchanges adapt fast, but their strategies are rarely unique. The path to resilience is not anonymity, it's visibility, behavioral monitoring, and the ability to detect imitation.

(02:19):

And now, I'm joined by Yaya Fanusie. Today, I am here with my friend and the global head of policy at the Aleo Network, Yaya Fanusie. Yaya, thank you so much for joining TRM Talks.

Yaya Fanusie (02:33):

Ari, thank you for inviting me. It's always a pleasure to team up with you.

Ari Redbord (02:36):

Tell me about your journey. I would love to really dig into your background. Frankly, you have one of the most interesting backgrounds of anyone I know. And now at Aleo, going back, you were a math teacher. Oh, wow. Which I love that. You're a math teacher, but I feel like that's so to me, I just feel like that's part of that really interesting story to technology.

Yaya Fanusie (02:57):

Yeah. Well, let me say, and I still say to this day, my three years teaching in Washington DC, teaching at a public charter high school. I first taught ninth grade and then I taught 11th and 12th, algebra, pre-algebra, algebra two, et cetera. That was the toughest job I have ever had. And that goes ... We could talk about my journey to the CIA, deploying to Afghanistan for three months. Nothing beats how tough that job was of teaching, the job of a teacher.

Ari Redbord (03:29):

And is it just the responsibility that you felt that was on your shoulders? Tell me about why was that so hard?

Yaya Fanusie (03:35):

The thing about teaching, teaching high school especially, but probably any teacher, you are always on. I mean, on in terms of you are in front of the class, even when you're not teaching, in between classes, you're on as a teacher. You're always turned on interacting with students. Now, I love teaching. The flip side is it was probably the most fun I've ever had day-to-day because I was able to be creative. I have a little creative background. So we used to have freestyle Fridays in my homeroom class where I would get the students to freestyle, do rap freestyles about math. So I love the creativity. I love the interacting with students, but the stress of always having to be on dealing with managing discipline. I had discipline issues, especially when I taught ninth graders. So ninth graders, probably the toughest age group. They don't care as much.

Ari Redbord (04:28):

I have one.

Yaya Fanusie (04:29):

Where seniors, it's like they're on autopilot. I mean, they know they need to graduate. And just around the clock. So compare ... You take your work home with you, you're working on the weekends to prepare for the next week. Compare that to the CIA where if you take your work home with you, you go to jail. I mean, you may have a tough day at work, but then you leave and it's like you're totally off. You're not always on like you are when you're a teacher. I would actually say teaching math led me to the CIA.

(04:59):

I actually went to graduate school for international affairs. So I was in the International Affairs Arena with a concentration on finance. But something happened to me in my young days. I didn't have a lot of work experience. And I think when I graduated, I was a little unsure what I wanted to do. So my first job out of graduate school was I was a budget analyst at the DC public school system. And I supervised the finances or the budgets of 27 schools and different offices. And then I was doing some volunteer work in Harlem where I was tutoring and doing some once a week teaching at this school. And I started to get this teaching bug. And so I was like, "You know what? Why don't I maybe try to get into educational administration?" So I'm working as a budget analyst and then I had a friend who started working at this charter school and I said, "You know what?

(05:44):

I never had formal, formal teaching experience. Why don't I do this teaching?" And I went in, I wanted to teach economics, honestly. And then the principal was like, "Oh, you've taken calculus? You're our new math teacher." I'm like, "I wasn't a math major. I just took math." And so I wound up teaching. So I was teaching and I said, "You know what? This is not what I thought it would be. " And I thought maybe I wanted to become a principal or assistant principal. That's why I went in to teach. I was like, "Oh, maybe that's the path." And then I was like, "This job is just not, it's not for me. The stress, it's not. " So I basically started thinking, why don't I go back to what I was trained in, foreign policy, international affairs. So yes, I was a math teacher and I sent in an application. This is like 2003, I guess it would've been. I applied to the CIA. And I had all of this experience. I had overseas travel. I did research. I'd done all this stuff. And yeah, I applied and it took me a year, but after those three years, I went roughly to the CIA after, like I said, I had a gap job doing something else.

Ari Redbord (06:45):

This is just extraordinary. I mean, to me, you're a high school math teacher and then you move to a counter-terrorism role in really probably the most important time in human history to have counter-terrorism experts in the world.

Yaya Fanusie (06:57):

To clarify. So I was an economics major in undergraduate. So I had an econ background. I had done a lot of travel. I spent some time in Africa. I did this research. I went to Zimbabwe. This is in the '90s before the economy had collapsed. And I did a summer research project that I created myself in Zimbabwe, spent time in rural Zimbabwe, had gone to ... I was a Fulbright scholar after college. I spent time in Ghana. So I was actually hired as an economic analyst focusing on Africa. And I was focusing on energy on issues around energy, corruption, sort of political economy. So I wasn't in the counter-terrorism world, but when I was going through my training, it was 2005 and I showed up at work one day and on the screen was this bombing that had happened in London. This was July 7th, 2005.

(07:46):

And I was talking to ... I had a friend in the Counter-terrorism center, CTC at CIA, and I had a friend who was always saying, "Oh, you should jump to CT work. I know you're doing this economic stuff. Jump to CT." And long story short, I started to think about other ways to navigate my career. And I eventually became a counter-terrorism analyst and joined the National Counter-Terrorism Center, NCTC.

Ari Redbord (08:08):

I would never ask you to dig too deep into that experience, but I would just say you mentioned travel to Afghanistan. Would love to hear more about that if you're able to talk about it.

Yaya Fanusie (08:16):

Yeah. I mean, I can share at a very high level. I mean, a lot of analysts during that time, so this is right, this is in the thick of war in Afghanistan, Iraq, and there were a lot of people going over analysts like myself. I was an analyst. I was in the directorate of intelligence doing analysis to provide analytic support. So yep, I spent three months, a three-month TDY, they call it, providing analytic support to senior US military officials. I was able to brief them on what was going on. And it was an experience that really impacted me because obviously I'd never been in a war zone before and coming back and seeing ... I mean, I think what I would say overall about that experience and my intel experience in general, you see how foreign policy is made. You see how, I think you sort of see how, I don't want to say how the world works, but when I came back, this is a good example.

(09:10):

It's like there was a big disconnect. And I think maybe a lot of people ... I only went for three months. Imagine folks that in the military that are actually there for a year long tour or more, I came back and it was so clear that there was this disconnect between being in a war zone where you have people fighting, dying. And at one point, Taliban doing rocket attacks, et cetera, and coming back and it's like there was no awareness of, or it seemed like there was no awareness except maybe if you watch the news a little bit. So that's, I think to me, made national security very real in a way that has always stuck with me because it's very easy to get detached for what's happening around the world. It's

Ari Redbord (09:53):

So beautifully said. What was next in terms of that career journey?

Yaya Fanusie (09:56):

Like I said, I jumped to CT work. So even though I started out as an economic analyst, I then went and I was doing CT. None of it was financial related at all for the most part. It was just, "Hey, guys are plotting, let's try to stop them or let's find out who's plotting, et cetera." What was next for me was I started working with a consulting firm that was doing something called financial asset recovery. And what it was is we were doing an investigation to locate kleptocratic assets. So these are assets stolen by corrupt regime, hidden around the world, shell companies, offshore accounts, luxury items, mansions, et cetera, et cetera. And it was a totally non-governmental ... I mean, we weren't in government and it was a financial investigation. And I learned actually through that work after leaving government, I was fresh out of government, I learned a lot about how folks try to hide their money, how they launder funds.

(10:51):

And I was part of a team and we did a, it was a full financial investigation, open source in a sense. I mean, we did have some connection, but it wasn't government, none of it was classified. And that is where I think I got bitten by the counter illicit finance bug. And this was before open source intel was big. This was when it was like, okay, what are the tools that are out there? So you can try to look at property records, look at business registries and understand the typologies around money laundering. That's what got me into the illicit finance realm. And from there, if I can jump ahead to answer your question in terms of how it fits to crypto, that contract ended and I was hired at a think tank to help stand up this new center called the Center on Sanctions and Elicit Finance at the Foundation for Defense of Democracies.

(11:39):

And this was 2015. I think I heard of Bitcoin maybe a little bit, and I'm in this new role and people are sort of saying, "Oh, you know what? This Bitcoin thing, terrorists might use it. " And as an analyst, I'm like, "Okay, let's look at this question. Let's try to analyze this. What's the evidence? How can I see this? Is this something that people are just saying or are they really doing it? " And 2015, that was in my head because I thought any scammer could say that they're ISIS, send me Bitcoin. How do you know that that's really ISIS from a public standpoint? So a year later in 2016, I'll never forget it because it sort of set off where my career has gone. So 2016, the summer, I see this media report and it says that there's a terrorist group that is fundraising Bitcoin.

(12:31):

And so I first saw it and I said, "Okay, this is probably some hype, some journalists making some analytic leaps. I don't know if it's true." So I was about to go to lunch and I spoke to my interns and I said, "You know what? Can you look into this? That's probably nothing, but check it out and talk to me when I come back from lunch." So I come back and my two interns who were younger than the me, Gen Z, they were undergrads, they researched it a little bit and they saw that there was this social media account, which we were pretty confident was, it was an illicit account. Twitter kept trying to ban it and they kept coming back and they showed me the QR code and the QR code led to blockchain.info and it was the wallet that this group was fundraising.

(13:16):

And so they showed it to me. I went right to it and I said, wait a second. So this is like the address that they're raising funds and they're on social media and I can look at it. And then we looked dig deeper and we saw that there were two transactions and it hit me. I was like, wait a second, if this is legit, this is a terrorist funding campaign and we can see the transactions, we can do analysis. This is not like what you would've dealt with with Al-Qaeda terrorist financing five, 10 years ago where it's all through banks and it's hidden through hawalas and how are you going to track it publicly? That was a fundraising campaign that we researched, we wrote a report on. And I still say to this day, that was the first publicly verifiable terrorist use of crypto that the public could verify and look at it.

(13:59):

So it was, I think, a key moment that led to my looking at crypto from an illicit finance perspective, but then getting more into this technology.

Ari Redbord (14:08):

So from there, was that your sort of aha moment where this technology is extraordinary, but it could also be used by bad actors?

Yaya Fanusie (14:15):

No, I think it came later. My aha moment was in 2017 when we started to see a different policy issue and a different development in the technology, which was Russia started investing or thinking about using blockchain technology for its banks. We also saw Iran building a blockchain research center at the MIT of Iran. These were things, this is public stuff that I started to see and we started to hear conversations, Russia, Iran, other, even later, Venezuela, which is in the news now, was thinking about crypto as a sanctions evasion tool. And the issue for me there was, okay, so other nation states are thinking about this technology. Now, maybe they don't want to use Bitcoin. I mean, maybe they will, but they're strategically thinking about how can we build a different architecture to use as an alternative to the traditional payment system to SWIFT. Now, were they successful right away?

(15:12):

No, but that opened to me, that was key. That was this technology does unlock something. It unlocks a more advanced or potentially more efficient way to do finance and that maybe this is something I should think about, not just try to stop bad actors from raising funds and laundering, but think about how this technology could be used as the architecture for the future financial system.

Ari Redbord (15:32):

What's amazing and why that is so prescient is if you ask me what was sort of the latter half of 2025 and what's going to be the story in this space in 2026, I would tell you infrastructure by nation state actors. There'll be fewer days of these sort of one-off transactions and more using cryptocurrency infrastructure for sanctions evasion and other illicit activity. It's also just the growth of the ecosystem. Crypto infrastructure, crypto, if blockchains are going to be financial rails, they're going to be overwhelmingly used for good, as you know, but then we're also going to see bad actors take advantage of them.

Yaya Fanusie (16:06):

That's a good segue to where we are now and probably why I'm at Aleo, if I could bring the through line to that, which is my research in a think tank capacity. At one point, I had been looking at China's CBDC, China Central Bank digital currency. I wrote a couple of reports co-authored with a great colleague, Emily Chin, where we looked at this whole CBDC of China, what was it about? And the second report, it's called the Programmable State. I reached a conclusion after doing this research, and I realized that there's going to have to be advancements in privacy preservation in our financial sector, because the technology is getting to a place where the data's going to be more apparent, data's going to be used. So there are going to have to be some ways to protect that data and preserve privacy around that data.

(16:53):

And I started to think that in the US, not probably, there's going to have to be some more attention on digital financial privacy. The more your economy gets digitized, the more you're doing everything digital, the more data is exposed. And just as a corollary to that, if we're going to have a free society protecting liberties, there's going to have to be some way to protect privacy.

Ari Redbord (17:14):

That is incredibly cool through line, and that's a great segue into Aleo. Talk through a little bit more about what you're building there.

Yaya Fanusie (17:20):

Well, I think the best way to describe Aleo and what it is, think of Aleo as being an improvement upon Z cash. So ZCash is a crypto where the breakthrough there was the ability to make the transactions confidential. So they're not on the public blockchain. I mean, of course they could be shielded and unshielded, but that was sort of the breakthrough. But the thing is, ZCash is just, it's kind of like Bitcoin. It's like a private Bitcoin. Ethereum, as everyone knows, brings programmability, but Ethereum like Bitcoin is publicly transparent. So you can build all types of computations, smart contracts, but those smart contracts are public for everyone to see. Aleo is making, is programmable and the transactions are private. So Aleo is a breakthrough in that now you have private programmability and that brings some functionality. Now you can set parameters and the blockchain itself is really its base.

(18:18):

It's built for zero knowledge proofs. So ZKPs, zero knowledge proofs are sort of the element in the blockchain that allows you to have a bunch of computational data and confirm that it happened, but you don't store that computational, you don't store the computation on the chain. So Aleo gives you the ability to not only make transactions private, but now you can also build in parameters, you could build in risk management because you have a ZKP, and all of that could be built on the chain. So it's a layer one ZKP blockchain.

Ari Redbord (18:49):

I get asked all the time about like, isn't what you do counter to privacy? And I say it's actually quite the opposite. I am a privacy maxi. We need to be able to transact privately on blockchains, but at the same time, we can't allow North Korea to use mixers at scale, to use privacy enabled cryptocurrencies or blockchains at scale. How do you think about that push and pull?

Yaya Fanusie (19:10):

Yeah, it's very real. Now the question is, all right, so how can we enable the freest movement of funds? How do we do that and then still have safeguards? And I think from my perspective, you think of Aleo as building blocks. When policymakers are thinking about, "Okay, so how do we stop bad actors from exploiting this technology or exploiting privacy, privacy preserving tools?" The answer is not, there's not a one note, one word or one sentence answer for how you stop it. The answer is more in, well, what are we going to build as a financial sector, as a private sector? What are we going to build as a country or a society that preserves privacy and mitigates risk or makes it difficult for illicit actors to exploit? With Aleo, you have an infrastructure where others can build. It's a decentralized blockchain. So the Aleo network is like any other, it's a decentralized network.

(20:08):

There's not a company that can control it. I mean, the Aleo Network Foundation is a foundation that supervises the ecosystem. I mean, we're familiar with that concept, but what we do is we support or encourage people building capacity on the blockchain. So here's a perfect example, Stablecoins. Stablecoins are now obviously with GENIUS passing are the thing and there's going to be a boom in Stablecoins. But what's one of the most overlooked issue with Stablecoins is that they're all transparent, like all public blockchains. They're on public blockchains. So what Aleo allows you to do or allows an issuer to do is to generate a token connected to your stablecoin, which that public stablecoin to have a new token that can have private features. So because if you issue it on the Aleo network, you can have that stablecoin now be private. And the key is that because we're in a zero knowledge proof environment, you can actually build in screening.

(21:06):

You can build in the things that you would have as a stablecoin issuer, but in a private environment because it's programmable. So you can build safeguards, you can build risk mitigation on top of the network.

Ari Redbord (21:17):

That's fantastic. I think I'm literally going to go from the most technical, operational, possible part of this conversation to zoom you out for a moment. Talk me through what do you see as the policy landscape today? Feel free to dive into market structure for a moment.

Yaya Fanusie (21:31):

Even before you get to market structure, GENIUS Act implementation. So now GENIUS is being implemented. All the regulatory bodies are coming up with actual rules. And there's one thing that I don't think that people are thinking about because everyone was happy when GENIUS got passed. Obviously the issuers are happy, right? But here's a conundrum. There are rules that financial regulators are going to be judging issuers by. And one of the rules, if you're under the oversight of the OCC, for example, you have to ensure that your customer's data, their PII, their personal identity information is hidden. And a question arises, and I know this is a real question amongst regulators. When does all of this transaction information or even a little bit of it, when does it become PII? Because if I'm using a stablecoin and then there's attribution around me, or anyone can easily point to my wallet and figure out it's me and it's being handled by a financial institution, how can that financial institution protect it?

(22:34):

I think that when the OCC comes out with rulemaking, I think they're going to put some sort of stipulation that financial institutions or the issuer who are dealing with that stablecoin are going to have to have some sort of privacy option. I think that's actually going to come out in rulemaking. I mean, maybe it'll be a question in rulemaking, how should that be dealt with? I don't think people have even thought about that.

Ari Redbord (22:56):

It's extraordinary. And that's why privacy is going to be part of every conversation. I interviewed Tyler Williams on Friday at an event and I asked him basically two things, tell me about how you're working on GENIUS implementation, at least to the extent that you can share. And he said, obviously working very hard, specifically would not put a date on when they'd have stuff out. But no, I think you nailed it. I think privacy is going to be a huge part of this. And I think anti-money laundering will be a huge part of it. And I think the intersection, it's going to be really, really interesting. This has been an incredible conversation and I knew it would be. I'm so glad you were willing to come on. When you are not working on, to me, really the toughest but most important issues in crypto, that intersection between national security and privacy, what do you do for fun, Yaya?

Yaya Fanusie (23:36):

Two parts. So first I'll do the, there's the physical and then there's the mental and emotional and creative. So physical, I'll share. I usually don't talk about this too much in public, but hey, you ask. I recently started practicing judo. It's funny because judo is less popular in the United States compared to around the world. Here in the United States, everyone knows more BJJ, Brazilian jiu-jitsu. It's very popular. But around the world, judo is much more popular. And I got the opportunity once to go to ... Actually, you were with me to Japan. WWhich you didn't know is that's right when I was getting into judo.

Ari Redbord (24:15):

No. So you've been really at it for a couple years ago.

Yaya Fanusie (24:20):

Yes, two plus two and a half or almost three years almost. But I was only into it for a month or two. And my sense, our instructor, he was like, "Oh, you should go to the KodoCon, which is the birthplace of judo in Japan in Tokyo." And so I went and it was so funny because I had no idea. I was like, "Okay, yeah. Okay. I guess I'll go. " And it's so respected around the world. Most judokas, people who practice judo have never been to the Kodoka and I was able to go and actually watch a live competition. And now I'm like, I can't believe now that I've been here a lot, I'm like, "I can't believe I went to the Kodo Con."

Ari Redbord (24:59):

Is it a center or a stadium, I'm picturing a Jedi temple.

Yaya Fanusie (25:07):

Yeah, it's a building. At least it's a few floors in a building, but the center is like the Dojo, which is the area. It's a huge area where people have competition and then there are seatings. But it's very famous. As you get into judo, you recognize the Kodo-Con where you see it in videos. So I love judo. And the other thing is I alluded to this. I've always been creative. I used to do photography in high school, used to rap poetry in college, and that later evolved into my work doing podcasting myself. But my true, if you really were to say, what's my real hobby right now is I produced a podcast a couple of years ago called the Jabari Lincoln Files. And the Jabari Lincoln Files is a spy thriller podcast where the protagonist is a CIA financial analyst, Intel analyst. And it's a spy thriller, audio drama in the form of a podcast. So that is, and I thought it went pretty well and I'm working on season two right now.

Ari Redbord (26:11):

It's really extraordinary. And I would just tell everyone there, this is an absolute must listen. Oh. When I first started listening, the thing that struck me the most is I'm picturing you obviously. It is really extraordinary and congratulations on it. You've now mentioned freestyling once and rap. Is there any way that I could get you to a couple bars for the TRM Talks audience? Just for the audience, this is unrehearsed. Never done before. TRM talks first, but we thought this would be a little fun. And since we're talking about building a new financial system, thought a little instrumental for my shot from Hamilton might be something that'd get us in the mood.

Yaya Fanusie (26:45):

Freestyling...

Ari Redbord (28:06):

Awesome. That was unbelievable. You are so talented.

Yaya Fanusie (28:13):

Thank God. I've always loved ... I've loved creativity.

Ari Redbord (28:18):

Literal mic drop from Yaya Fanuise. Yaya, like you are the man, and that was so cool. That was absolutely awesome. I think everyone knows I've loved a hundred or a hundred plus now TRM Talks, but this may have been truly my favorite. And it was deeply personal and it was so much fun. And I think what's really extraordinary is that you think about Yaya's background and we got into him being a math teacher at a charter school in DC, going right to a counter-terrorism role at CIA. Spent time in Afghanistan, trade associations in the crypto industry, and now at Aleo really working on those incredibly important connections between privacy and security, but it was the freestyling, right? I mean, I was so blown away and he's so humble. And I said this to him afterwards and I think he just kind of nodded. But the reality is to be able to have your head moving that fast and your mind moving that fast and yet have the creativity to drop those bars and really sort of make it happen.

(29:17):

And I think it speaks to him as a person, creative, talented, incredibly smart, and really just extraordinary. So really blown away by the entire episode. You can hear it in my voice probably now because I was just so excited. It's podcast magic when something like that happens, what happened just now in terms of the freestyling. So hopefully we could have more guests freestyle or maybe I can learn to rap better. Anyway, really extraordinary and honored to have YaYa on the show and really to drop the mic today.

(29:48):

On the next TRM Talks, I sit down with the head of legal and compliance for DBS Bank, Chee Kin Lamb. If you love the show, you Leave a review wherever you're listening to it. Follow us on LinkedIn to subscribe to our newsletter, the weekly Roundup, to get the latest news on crypto regulation, compliance, and investigations.

TRM Labs (30:12):

TRM Talks is brought to you by TRM Labs, the leading provider of blockchain intelligence and anti-money laundering software. This episode was produced in partnership with Voltage Productions. The music for this show was provided by iKOLIKS.

Ari Redbord (30:28):

Now, let's get back to building.

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