5 ms·

I am fascinated by the rise of 'chain analysis' companies - that started as 'aint it fun' and became 'hey we can help the cops track ransomware' quite quickly.

I am fascinated by the rise of 'chain analysis' companies - that started as 'aint it fun' and became 'hey we can help the cops track ransomware' quite quickly. The thing that fascinates me is ... we could do (very similar) analysis on "normal" bank accounts - on a much larger scale but still. I wonder how much criminal activity would be revealed?

tudorizer 5y ago
Well, on "normal" bank accounts you would be hit by international policies and cover-ups, while on public ledgers, the only barrier is the tech.
- tw04 5y ago
  You think someone who is sophisticated enough to hide money in the international banking system isn't sophisticated enough to hide it in bitcoin? Congratulations, you tracked the transaction to a shell company and have no jurisdiction to unwind who the cash withdrawal went to? Ignoring the coin washing services referenced in the story.
  - ozim 5y ago
    Someone who is sophisticated enough to hide money in international banking system won't care about bitcoin. There is enough bad guys that are not sophisticated enough and are thinking that bitcoin will do all hard work of hiding it for them. Obviously they are wrong.
    - tudorizer 5y ago
      Precisely! This is the reason why "crypto is good for money laundering" falls apart, IMHO.
cheeseomlit 5y ago
I'd bet something similar is being done with traditional banking transactions by government agencies, if only to aid in parallel construction
- MikeDelta 5y ago
  And I believe banks seem to cooperate as well to the limits of what is allowed. Detecting Financial Crime (DFC) is (becoming) a big part of operations.
giaour 5y ago
> we could do (very similar) analysis on "normal" bank accounts - on a much larger scale but still. Would this be (more or less) forensic accounting applied proactively to all accounts? I know techniques similar to 'chain analysis' are applied in criminal investigations, but it's usually reactive (due to the labor involved and the need for warrants in many jurisdictions).
NovemberWhiskey 5y ago
>we could do (very similar) analysis on "normal" bank accounts I don't think so really, the fact that the ledger is public is really the thing that makes this is a credible model. In the absolutely general sense of "if all banks around the world opened all their books and banking secrecy laws didn't exist, and if we somehow had the ability to trace through cash transactions" then sure, theoretically (and again not accounting for the absolutely vast difference in scale between the volume of transactions in the real world vs the blockchain), but none of that is even remotely probable.
- chii 5y ago
  > but none of that is even remotely probable. it's not likely, but it's possible. Laws can be used, if the political will is there. It's not like encryption where you can't actually force it! The thing is, this data can contain sensitive information, which existing gov't may want to keep hiding (like CIA slush funds etc).
  - NovemberWhiskey 5y ago
    >it's not likely, but it's possible. OK, sure, in about the same sense that world government is possible: hardly anyone is asking for it and there is a tremendous level of investment in the status quo by all the people with political power.
- Nextgrid 5y ago
  I'd argue that the problem isn't secrecy laws but just general incompetence and unwillingness. Sure, banking secrecy laws could be a problem for large-scale frauds totaling millions, but smaller-scale operations typically stay within the same country where the law most likely already allows this kind of tracing, but it's so unefficient that by the time it's tracked down the money is already gone for good.
xwdv 5y ago
Once chain analysis becomes trivial, a major selling point of cryptocurrencies will be defeated. What then is the point?
- roofwellhams 5y ago
  Monero fixed this problem, right?
- iand 5y ago
  It doesn't defeat the point of cryptocurrencies which is to create a currency free from a single point of control.
  - xwdv 5y ago
    That is only theoretical.
- GuB-42 5y ago
  The major selling point of bitcoin now is that it is a way to store value that is not controlled by a single entity. Anonymity never was a design goal (even though it helped) and transactions are now too slow and expensive to make it a viable payment network. You can still buy drugs in Bitcoin, but it is not why people invest so much into it.
seanhunter 5y ago
Banks are required by law to do this type of tracking on their normal bank accounts and file reports of any suspicious activity they see. The fact that the transactions aren't public means there isn't a third party that can do it and one bank can't follow the chain once a transaction goes to another bank. That work has to be done in the context of a legal investigation.

tudorizer 5y ago

Well, on "normal" bank accounts you would be hit by international policies and cover-ups, while on public ledgers, the only barrier is the tech.

tw04 5y ago
You think someone who is sophisticated enough to hide money in the international banking system isn't sophisticated enough to hide it in bitcoin? Congratulations, you tracked the transaction to a shell company and have no jurisdiction to unwind who the cash withdrawal went to? Ignoring the coin washing services referenced in the story.
- ozim 5y ago
  Someone who is sophisticated enough to hide money in international banking system won't care about bitcoin. There is enough bad guys that are not sophisticated enough and are thinking that bitcoin will do all hard work of hiding it for them. Obviously they are wrong.
  - tudorizer 5y ago
    Precisely! This is the reason why "crypto is good for money laundering" falls apart, IMHO.

cheeseomlit 5y ago

I'd bet something similar is being done with traditional banking transactions by government agencies, if only to aid in parallel construction

MikeDelta 5y ago
And I believe banks seem to cooperate as well to the limits of what is allowed. Detecting Financial Crime (DFC) is (becoming) a big part of operations.

giaour 5y ago

> we could do (very similar) analysis on "normal" bank accounts - on a much larger scale but still. Would this be (more or less) forensic accounting applied proactively to all accounts? I know techniques similar to 'chain analysis' are applied in criminal investigations, but it's usually reactive (due to the labor involved and the need for warrants in many jurisdictions).

NovemberWhiskey 5y ago

>we could do (very similar) analysis on "normal" bank accounts I don't think so really, the fact that the ledger is public is really the thing that makes this is a credible model. In the absolutely general sense of "if all banks around the world opened all their books and banking secrecy laws didn't exist, and if we somehow had the ability to trace through cash transactions" then sure, theoretically (and again not accounting for the absolutely vast difference in scale between the volume of transactions in the real world vs the blockchain), but none of that is even remotely probable.

chii 5y ago
> but none of that is even remotely probable. it's not likely, but it's possible. Laws can be used, if the political will is there. It's not like encryption where you can't actually force it! The thing is, this data can contain sensitive information, which existing gov't may want to keep hiding (like CIA slush funds etc).
- NovemberWhiskey 5y ago
  >it's not likely, but it's possible. OK, sure, in about the same sense that world government is possible: hardly anyone is asking for it and there is a tremendous level of investment in the status quo by all the people with political power.
Nextgrid 5y ago
I'd argue that the problem isn't secrecy laws but just general incompetence and unwillingness. Sure, banking secrecy laws could be a problem for large-scale frauds totaling millions, but smaller-scale operations typically stay within the same country where the law most likely already allows this kind of tracing, but it's so unefficient that by the time it's tracked down the money is already gone for good.

xwdv 5y ago

Once chain analysis becomes trivial, a major selling point of cryptocurrencies will be defeated. What then is the point?

roofwellhams 5y ago
Monero fixed this problem, right?
iand 5y ago
It doesn't defeat the point of cryptocurrencies which is to create a currency free from a single point of control.
- xwdv 5y ago
  That is only theoretical.
GuB-42 5y ago
The major selling point of bitcoin now is that it is a way to store value that is not controlled by a single entity. Anonymity never was a design goal (even though it helped) and transactions are now too slow and expensive to make it a viable payment network. You can still buy drugs in Bitcoin, but it is not why people invest so much into it.

seanhunter 5y ago

Banks are required by law to do this type of tracking on their normal bank accounts and file reports of any suspicious activity they see. The fact that the transactions aren't public means there isn't a third party that can do it and one bank can't follow the chain once a transaction goes to another bank. That work has to be done in the context of a legal investigation.