This Is How Chainalysis Surveillance Software Sends Crypto Suspects To The Police

This Is How Chainalysis Surveillance Software Sends Crypto Suspects To The Police


This Is How Chainalysis Surveillance Software Sends Crypto Suspects To The Police Photo: Studio shot of gold-plated Bitcoins and dollar bills, Kiev, Ukraine, Sept. 22, 2017

Police are turning to Bitcoin-sleuthing startup Chainalysis and the company’s surveillance software to nab cyber criminals who are attracted to the vastly unregulated world of crypto. Major cases of fraud and money laundering schemes connected to cryptocurrency have been prosecuted recently.

Governments and private sector companies use Chainalysis investigations and compliance software to detect and prevent the use of Bitcoin and other cryptocurrencies in illegal activities, CNBC reported.

Leaked slides show how Chainalysis, which was founded in 2014, secretly flagged crypto suspects through one of its properties, walletexplorer.com. A service that monitors and displays activities in the bitcoin network, walletexplorer.com lets anyone view the history of public cryptocurrency wallet addresses. It can be used as part of a sting operation.

Chainalysis figures that bad actors will use the stealth walletexplorer.com to check transactions without fear of leaving a footprint on crypto exchanges, according to leaked Chainalysis documents obtained by Coindesk.

Chainalysis then gathers the IP addresses of suspicious users on walletexplorer.com, according to the documents. This information can then be passed on to authorities.

“Using this dataset we were able to provide law enforcement with meaningful leads related to the IP data associated with an address,” the documents, translated from Italian, stated. “It is also possible to conduct a reverse lookup on any known IP address to identify other BTC addresses.”

Chainalysis declined to comment on questions from Coindesk.

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CoinDesk tweeted, “@chainalysis has been secretly operating a bitcoin block explorer site, http://walletexplorer.com, and scraping certain visitors’ IP addresses to find leads for law enforcement clients, leaked documents show.”

Vulture’s Pick @VulturesPick tweeted, “Bad news for bad guys”

Satoshimoto @Satoshimoto2 replied that many countries view the whole cryptoverse as sketchy. “You do realize that in the eyes of many governments, simply possessing bitcoin makes you a ‘bad guy’?”

Paperino @PaperinoPoopino broke it down, “The cops trust them, and technically you could call that ‘investigation software.'”

Beyond Chainalysis, authorities have been seeking ways to reign in illicit activity in crypto.

The U.S. Department of Homeland Security recently signed a $1.36 million deal with Coinbase for analytics software. Coinbase will provide the Immigrations and Customs Enforcement (ICE) branch with blockchain analytics software. Coinbase will also provide software to the U.S. Secret Service and Inland Revenue, according to the Federal Procurement Data System.

Coinbase Analytics connects cryptocurrency transactions to real-world entities and can investigate fraudulent blockchain activity. It is not known how ICE will use Coinbase’s blockchain forensic tool, Yahoo reported. 

Listen to GHOGH with Jamarlin Martin | Episode 74: Jamarlin Martin Jamarlin returns for a new season of the GHOGH podcast to discuss Bitcoin, bubbles, and Biden. He talks about the risk factors for Bitcoin as an investment asset including origin risk, speculative market structure, regulatory, and environment. Are broader financial markets in a massive speculative bubble?