Calling all Forensic and Fraud Investigators into the Metaverse
You might be rich in the real world and poor in the metaverse; you might be poor in the real world and rich in the metaverse. The fear amongst the have-nots is that the rich in the real world will have an outsized advantage to enrich themselves in the metaverse, too.
The draw for the downtrodden is the promise of changing the fabric of reality itself and their circumstances within it; for the well-to-do incumbents it’s the appeal of opening up new capital markets.
When the mainstream business media like Barrons, Business Insider, and Fortune are reporting that large investment banks like Citi, Morgan Stanley, and Goldman Sachs are estimating that the metaverse economy is worth anywhere between 8–13 trillion USD, people will pay attention.
One would think, however, that chatter about this fictional reality would diminish in the current environment. Metaverse hype is only increasing during this global market downturn with cryptocurrency prices tanking, inflation running rampant, war in Europe, human rights being taken away, and the climate deteriorating before our very eyes.
People are looking for an escape from reality. Or, if you are of the mind that this situation is only temporary when things almost certainly move in cycles, you look at our current dire reality as a minor setback — you want to move quickly during this reset so that you’re positioned for the boom cycle that’s sure to come. “Buy low, sell high,” according to this school of thought.
The metaverse fulfills both of those things: (1) it’s literally an escape from reality, and (2) it’s the next Boomtown frontier.
When the proposition of the metaverse is dripping with so much anticipation, what is the likelihood that people will break a few rules to get further ahead faster, and at the cost of others?
That might be the definition of pure capitalism at its core, but what if those same incentives lead metaverse participants too far astray — what if real-world laws are broken in virtual reality? Does a legal system even exist where anonymously owned avatars can be hauled into virtual court and be prosecuted?
Although, the law firms of Holland & Knight and Bluestone cleverly airdropped a legal summons via NFT token in June 2022 to the blockchain address of an anonymous crypto wallet. This method was notably approved by the New York Supreme Court.
Even if a legal or regulatory framework isn’t fully in place yet, there are already Web3 investigations being launched around ransomware, cryptocurrency theft, digital money laundering, and NFT scams. Government agencies and consulting companies are successfully recovering funds by the tens of millions.
It’s true that the metaverse is not defined by cryptocurrency alone, but blockchain technology is one of the data sources from which metaverse evidence will be preserved.
A special squadron of metaverse detectives is needed to facilitate justice in the virtual world like we do in the real world, but the skill sets are a little different. Digital forensics examiners can rely on their experience with defensible evidence collections and expert testimony but note that the skills listed below are going to potentially become more important for an individual or, more likely, a group of individuals that operate as a metaverse investigative team.
Skill sets needed are:
- Blockchain extraction — acquiring evidence from the blockchain is not like imaging a hard drive or exporting data from a data warehouse. Cryptocurrencies run on blockchains and will serve as the monetary value of exchange for the metaverse economy.
- Source code examination — programming and scripting skills are going to be required to decode forensic artifacts that aren’t going to be handled by off-the-shelf forensic software. This will also be handy in breaking down smart contracts. If you’re getting in early, you can’t wait for the software development lifecycle to finish first.
- Artificial Intelligence savvy — the behavior of subjects online will need to be examined for whether they were in willful control of their avatars. Did misconduct occur because the avatar was being controlled by the human owner, or was it in automaton mode and did errant AI code cause the avatar to do something illegal it wasn’t designed to do?
- Data analysis — was the avatar controlled by a malicious hacker showing behavior inconsistent with its valid human owner? Can the behavior of the hacked avatar be explained as a statistical anomaly in the absence of direct forensic evidence?
The list of skill sets needed to fulfill the role of metaverse detective will change and grow as the technology takes shape. The direction it will ultimately take will depend on who wins the struggle for the soul of the metaverse: will it be the blockchain anarchists who prefer an anonymous, decentralized, trustless, and permissionless platform with individual creators who primarily benefit from its success, or the well-funded venture companies who want things organized under their centralized commercial control using a mix of private blockchain and proprietary technology?
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Jerry Bui is Managing Director of Digital Forensics within FTI Consulting’s Technology segment focused on forensic technology and risk & compliance issues (all opinions his own). Jerry is a Certified Fraud Examiner and has over 20 years of experience in digital forensics, ediscovery, automated risk assessments, dashboard compliance monitoring, and investigative analytics. Jerry’s team provides evidence acquisition, expert witness, and strategic consulting services to law firms and corporations. Connect with Jerry on LinkedIn, Twitter and TikTok.
The Digital Forensics Future (DFF) podcast is also available on the platforms below.
