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Leaked slides show Chainalysis alerting police to crypto suspects

6 min reading

In its fight to tie real criminals to anonymous bitcoin poisons, Chainalysis has found a "meaningful" advantage - a website for block explorers spying on visitors' Internet Protocol (IP) addresses.

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In its fight to tie real criminals to anonymous bitcoin poisons, Chainalysis has found a "meaningful" advantage - a website for block explorers spying on visitors' Internet Protocol (IP) addresses. The largest blockchain tracking company owns and operates Walletexplorer.com. Like any other block, this service allows anyone to view the history of the public addresses of your cryptocurrency portfolio. Chainalysis points out that attackers will use the website to confirm transactions without fear of leaving a "footprint" on the cryptocurrency.

But where stock exchanges (and perhaps most block explorers) are blind, Chainalysis is heading. This, according to the documentation, "scraped" the IP address of the suspicious user, resulting in the honeymoon of Walletexplorer.com. “With this dataset, we are able to provide important data related to intellectual property to law enforcement,” says the document, translated into Italian. "It is also possible to query for known reverse IP addresses to determine other BTC addresses." Chainalysis works effectively with simple websites without opening links. He has not publicly contacted Walletexplorer.com, despite the fact that the "author" at the bottom of the home page of his website has already joined Chainalysis. This website was created in 2014 under the registration record of a website that does not mention Chainalysis. A spokesman for Chainalysis declined to comment.

From the perpetual presentations of Chainalysis to investigating the dark networks of the Italian police, documents surfaced Monday night on the dark website DarkLeaks, accessible only through an anonymous browser like Tor. CoinDesk has verified the authenticity of the document. The sliding panel shows the various tools that Chainalysis uses to help law enforcement agencies catch illegal travelers. The company is well known for analysing publicly traded data that is not fraudulent. Chainalysis cites a case in June 2020 where Walletexplorer.com spent hours discovering the IP address of a ransomware suspect who deposited funds through the Huobi OTC exchange.

The document also shows that Chainalysis believes it can track transactions on Monero (XMR), which many consider the strongest privacy cryptocurrency. "From the cases where Chainalysis worked with law enforcement agencies, we were able to provide usable data in approximately 65% of causes related to [m]onero," the document said. Justin Ehrenhofer, member of the Monero Space working group, cautioned against reading too much into this statement. A “usable prospect” is “very non-specific and can mean very different things,” he wrote in an email to CoinDesk. “For example, in a best-case scenario, this could lead to the real identity behind the transaction for law enforcement. form of false information, such as fake/stolen identities or Tor addresses. All metadata is useful for research and the extent to which this information varies greatly."

The document also shows that Chainalysis believes it can track transactions on Monero (XMR), which many consider the strongest privacy cryptocurrency. "From the cases where Chainalysis worked with law enforcement agencies, we were able to provide usable data in approximately 65% of cases related to [m]onero," the document said. Justin Ehrenhofer, member of the Monero Space working group, cautioned against reading too much into this statement.

 A “usable prospect” is “very non-specific and can mean very different things,” he wrote in an email to CoinDesk. “For example, in a best-case scenario, this could lead to the real identity behind the transaction for law enforcement. form of false information, such as fake/stolen identities or Tor addresses. All metadata is useful for research and the extent to which this information varies greatly." Similarly, the word "case" is widely used because it uses "all cases of Chainalysis, including Monero, and non-specific Monero transactions," wrote Ehrenhofer. "So, if someone uses Monero but then discloses information outside of the group they are using, that would likely qualify as a 'success' case under the Chainalysis measure. "However, he advises, "Monero users who are concerned about their privacy should always use Monero with their own nodes. While there are several remote Monero nodes available through Tor, it's best to start your own.

Another way Chainalysis collects Bitcoin user data is by starting nodes, reviewing transactions, and confirming documents. In this way, companies can detect data leaks on publicly accessible Internet or Clearnet from portfolios for Simple Consumer Payment Verification (SPV). These services are designed to prioritize simple storage over reliable security (though, frankly, they can be more secure than wallets that rely on transaction verification APIs). “The downside of this design is that when a user's wallet is connected to the network, a lot of information is exposed – the user's IP address, the full set of wallet addresses (used and unused), and the version of the Wallet software”, the slide reads. "Chainalysis runs a number of nodes on the Bitcoin network ... and when a user connects to one of our nodes, we get the above information. "This data can be useful for investigators. Chainalysis cites a "Welcome to Video" statue of child pornography. One of the suspects in this case was identified in part because his Bitcoin node operates on the Clearnet.

In fact, government customers are turning to Chainalysis to help track nodes. The Treasury's Office of Foreign Assets Control (OFAC) is one of those partners: it applied for permission to use Rumker Chainalysis technology to sanction cryptocurrencies in early 2021. On Tuesday, OFAC imposed its first sanctions on crypto exchanges for facilitating ransomware payments. Chainalysis operating its own data collection nodes will not surprise privacy-conscious Bitcoiners; The public has guessed so much for a long time. “We always knew they were running nodes – the only question was what service they were connecting to,” said Colin Harper, content manager at Luxor Tech, a bitcoin company.

However, his story illustrates Chainalysis's game plan to track down illegal crypto for law enforcement partners. Not enough to filter public transaction stories. To be successful, companies need to collect data.

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