The $8.6 Billion Startup That Helps Governments Trace Crypto

A look into Chainalysis, a company which has become a favorite of the US and other governments to help Big Brother increase his view across the world of “blockchain analytics”. I am  not a fan

The $8.6 Billion Startup That Helps Governments Trace Crypto

“In May 2021 hackers initiated a cyberattack against Colonial Pipeline Co., the company behind the US’s largest gasoline pipeline. It was the kind of incident American officials had feared for years. Colonial was forced to halt operations for six days, which led to panic buying, shortages, and an increase in the price of gas. The company paid the hackers a ransom of 75 Bitcoin, worth about $4.4 million at the time.

About a month later, the US Department of Justice announced it had reclaimed almost all the Bitcoin. Criminals favor cryptocurrencies in part because they’re supposedly hard to trace, but the FBI had tracked the ransom Colonial paid to an address tied to DarkSide, a Russia-linked cybercrime group associated with the attackers, and swooped in to seize it. It was a breakthrough in the fight against cyberextortion, signaling that US law enforcement could get to assets held by attackers who operate far outside the country. ‘There is no place beyond the reach of the FBI,’ Deputy Director Paul Abbate said in a statement.

The bureau had relied on help from a company called Chainalysis Inc., which has developed software to trace the entities involved in crypto transactions and where the funds end up. The startup has become a key partner for the US and other governments investigating crypto-related crime, the establishment’s private eye in an historically anti-establishment industry. ‘There’s hardly been any case of any significance’ in the world of crypto crime that ‘we haven’t been involved in,’ says Gurvais Grigg, Chainalysis’ global public-sector chief technology officer, who previously worked for the FBI for 23 years.

The company, based in New York, is a leader in a part of the crypto industry known as blockchain analytics, which also includes companies such as SoftBank-backed Elliptic Enterprises and Mastercard’s CipherTrace. Blockchains are, in essence, records of transactions. Although they don’t contain personally identifiable information, it’s possible to reconstruct detailed accounts of how cryptocurrencies move between various wallets. Chainalysis gathers huge amounts of public data from blockchains, then adds information it gathers itself or gets from clients. It uses machine learning, statistical analysis, and other techniques to process the data, cluster wallets together, and understand where the crypto went.”



Master Asked on September 21, 2022 in Cryptocurrency.
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