A criminal suspected of conducting illicit trade through cryptocurrency public ledger can now be traced. The identity currently does not remain anonymous for everyone as has been the case in the past. Startups have cropped up that can track the identity of Blockchain users. What at first seemed impossible and a hideout for criminals is now out in the light. The companies are selling their tracking software to law enforcement officials so that they can track down the Blockchain for criminals. The invention of Bitcoin seemed a lucrative hideout for criminals after its ability to preserve anonymity was announced. Within no time, the Blockchain had attracted all kinds of extortion schemes by ransomware criminals and kidnappers. Through the Blockchain, criminals have also been taking part in illegal trade like selling drugs, money laundering, and human trafficking. The proceeds are collected in cryptocurrency and the identities hidden from investigators.
The Idea Behind Blockchain Identity Tracking Systems
Careful analysis of the Blockchain can reveal sufficient information that is useful for investigators to crack down a criminal. The fact that the Blockchain records every Cryptocurrency transaction that takes place, agencies can analyze the publicly accessible records. After a thorough check up on the public records, the analysis is combined with the unique user addresses and the information is used to locate how the crypto funds are moved around. Since it is possible to use this information to map the exchanges used by the Blockchain users, the agencies can finally approach the exchanges for more information about the specific transaction initiated by a criminal.
Blockchain Security Companies
A variety of companies have cropped out that offer cybersecurity solutions towards Blockchain crimes. One such outstanding company is Chainalysis. The company uses the unique alphanumeric strings that are generated by the Blockchain to distinguish each specific wallet. A cluster of wallets is matched to each account strings that have been suspected of criminal activity. The wallets are scrutinized and traced to the exchange where the investigators can easily track the real identity of the wallet owner. Major clients for Chainanalysis include the Federal Bureau of Investigation, Drug Enforcement Administration, The Securities and Exchanges Commission, The Central Intelligence Agency as well as the Immigration and Customs Enforcement.
Blockchain Enforcement And Taxation
Authorities are also using Information from the Blockchain tracking system to track proceeds from merchant trade. The information can then be used to determine whether those taking part in the trade are reporting their revenues to the authority and thus paying the appropriate taxes.
The Mixing Services Challenge
Despite the high intelligence employed to counter Blockchain crimes, Criminals are still getting away through client service called mixing. The service pulls all Bitcoins in circulation into a pool and then mixes them up before sending them out to different wallets at different times. Criminals are also migrating to alternative cryptocurrencies that have been created to conceal address information. Such cryptocurrency includes Monero and Zeash whose Blockchains, crypto crime companies have not been able to by-pass.