Security News > 2022 > April > De-anonymizing Bitcoin

Y Greenberg wrote a long article - an excerpt from his new book - on how law enforcement de-anonymized bitcoin transactions to take down a global child porn ring.

Within a few years of Bitcoin's arrival, academic security researchers - and then companies like Chainalysis - began to tear gaping holes in the masks separating Bitcoin users' addresses and their real-world identities.

In some cases, an investigator could learn someone's Bitcoin addresses by transacting with them, the way an undercover narcotics agent might conduct a buy-and-bust.

Chainalysis had combined these techniques for de-anonymizing Bitcoin users with methods that allowed it to "Cluster" addresses, showing that anywhere from dozens to millions of addresses sometimes belonged to a single person or organization.

Thanks to tricks like these, Bitcoin had turned out to be practically the opposite of untraceable: a kind of honeypot for crypto criminals that had, for years, dutifully and unerasably recorded evidence of their dirty deals.

By 2017, agencies like the FBI, the Drug Enforcement Agency, and the IRS's Criminal Investigation division had traced Bitcoin transactions to carry out one investigative coup after another, very often with the help of Chainalysis.

News URL

https://www.schneier.com/blog/archives/2022/04/de-anonymizing-bitcoin.html