Crypto-verse deep into monitoring volumes and supporting law enforcers


One of the common misunderstandings that government officials continue to spout is that the blockchain is a safe haven for crooks and that the crypto industry is not doing anything to stop these illicit activities. It always makes for great headlines and “click bait”, whenever these mistruths are uttered in the public sphere, but the reality is that the Crypto-verse has been deep into monitoring transaction volumes and providing superior tools for law enforcement authorities to perform their duties for quite some time.

Occasionally, stories appear in the press that reveal the progress that is being made within the industry to deal with these constant criticisms. The Security and Exchange Commission (SEC) has continually noted that it is uncomfortable with the lack of monitoring services that can detect potential price manipulation situations and the level of fraud that has pervaded the global network of crypto exchanges. Yes, the SEC has admitted that progress has been made, but when it recently rejected another BTC ETF application, it claimed the proposal was not “designed to prevent fraudulent and manipulative acts and practices”, as we recently reported.

Bitwise Asset Management, the applicant in question, may have failed to demonstrate its ability to perform per the SEC’s rules, but the industry is making great strides in these areas, due to the efforts of two leading crypto data research and analytic firms – Chainalysis and Ciphertrace. Each firm has constructed infrastructure that monitors hundreds of coin related blockchains that account for upwards of 90% of trading volumes. Each firm has also assisted government officials and law enforcement authorities by providing state-of-the-art investigative tools to identify the “bad guys”.


Chainalysis initially focused on ERC20 tokens, since the news of various exchange compromises noted that crooks had targeted these programs. It quickly designed and built a monitoring system in a “matter of weeks”, according to cofounder Jonathan Levin. From these early successes, they have been ramping up their development efforts to “appease governments and law enforcement agencies worldwide”.

According to

The firm detailed that over 130 customers in 35 countries use the company’s system to monitor digital currency transactions. The ERC20 support added 21 well-known tokens to the Chainalysis framework. By the end of the year, the company says it will be tracking a total of ‘39 ERC20 tokens in addition to nine other cryptocurrencies — covering 90% of the market by trading volume.’

Chainalysis officials also noted that these ERC20 developments have been integrated with its investigative “toolkit”, known as “Chainalysis Reactor”. A recent blog post revealed that:

[Chainalysis Reactor] is already being used by law enforcement to investigate hacks and other illicit activity across blockchains.


Ciphertrace has also ramped up its activities in this space and touts that it has one of the world’s “most comprehensive cryptocurrency intelligence teams”. Its monitoring software now tracks more than 700 individual cryptocurrencies, including BTC, ETH, LTC, USDT, BCH, and ERC20 tokens.

The company recently announced:

The Ciphertrace platform maintains the industry’s most accurate pool of attribution data. This includes 522 million attribution data points — such as account type, account holders, contract types, contract owners and other metadata — on cryptocurrency addresses. [The infrastructure] provides visibility into 87% of global trading volume with hundreds of millions of attribution data points.

It is common for perception to overrule the reality of a situation, but the truth is that several global government agencies have been using what is being called “blockchain forensics” to detect and help incarcerate criminals and “bad actors”. In the U.S. for example, the IRS, DEA, ICE, FBI, and an assortment of other agencies have hired companies like Chainalysis, Ciphertrace, and Eclliptic to fight crime and eliminate the perception that the anonymity of the blockchain affords crooks a safe place to hide.

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