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What is the methodology behind determining whether crypto transactions were illicit? I thought the whole point of using crypto was that transactions could not b

What is the methodology behind determining whether crypto transactions were illicit? I thought the whole point of using crypto was that transactions could not be traced. Edit: The report seems to imply that they somehow identified "illicit addresses", but do not say how. Perhaps I'm too scientific but I would really like to see a "Methods" section in this report. The lack of that makes it very difficult to draw reliably conclusions from that piece.

NovemberWhiskey 5y ago
That's not the point at all - every transaction on a distributed ledger can be tracked. It's not necessary to know ownership of an account to know whether a transaction is illicit; for example, a theft from an exchange or a hack on a DeFi contract.
- pydry 5y ago
  It depends on the crime. If I bought drugs on a darknet exchange how would the researcher know to include that in the 0.15%? They don't. Not unless, e.g. that exchange gets busted and leaks all of its data. This title should really be "easily identified illicit transactions constitute 0.15% of trading volume". Which I'd say counts as a lot.
- spicybright 5y ago
  Those kinds of heists are probably 1% of illicit transactions. We're talking more about buying drugs and exchanging crypto between two seemingly clean wallets.
- periheli0n 5y ago
  OK, in that case "illicit" is defined as related to fraud in the crypto exchange itself. It does not refer to activities like e.g. buying banned substances, oligarchs circumventing sanctions, etc. If this is really the message of the article, then it is misleading, perhaps even deliberately so, to make crypto look good.
- gtvwill 5y ago
  That's a very narrow definition of an illicit transaction. I mean you seem to ignore simple facts like how ownership alone can dictate if a transaction is illicit. Bit hard to tell me your not sending money to foreign nation States or supporting terrorism if you can't prove you know the identity of owners of the accounts your transacting with.
mrkramer 5y ago
>What is the methodology behind determining whether crypto transactions were illicit? I thought the whole point of using crypto was that transactions could not be traced. The whole purpose of Bitcoin is to decentralize trust though p2p distributed and decentralized database called blockchain and to solve "double spend" problem. Read Bitcoin whitepaper.
- mrkramer 5y ago
  through*
anonporridge 5y ago
> I thought the whole point of using crypto was that transactions could not be traced. A commonly believed false narrative. Bitcoin transactions are intrinsically more traceable and verifiably incorruptable than anything that exists in the traditional financial world, which is teaming with fraud and criminal behavior, both explicitly illegal and criminal behavior sanctioned by government insiders. The hidden message from Satoshi in the genesis block gives a better foundation for the reason they created it. https://en.bitcoin.it/wiki/Genesis_block https://en.bitcoin.it/wiki/Genesis_block > The Times 03/Jan/2009 Chancellor on brink of second bailout for banks Privacy lovers are mostly using Monero now.
- periheli0n 5y ago
  Yes, of course that's what the blockchain is about, but there is usually no information attached to a transaction that would identify it as illicit, like a note saying "this was for banned substances", "thank you for placing the bomb", or "Enjoy your new superyacht, Sergej". Therefore it is not possible to trace illicit transactions, unless one defines illicit as referring solely to using stolen crypto.
  - anonporridge 5y ago
    Isn't the same true of traditional finance and cash?
    - periheli0n 5y ago
      In principle yes, but at least for wire transfers the autorities can walk up to the bank and ask for transaction details. And cash needs physical transfer which complicates things. Either way, it is difficult to determine which transactions are illicit, also in traditional finance.

NovemberWhiskey 5y ago

That's not the point at all - every transaction on a distributed ledger can be tracked. It's not necessary to know ownership of an account to know whether a transaction is illicit; for example, a theft from an exchange or a hack on a DeFi contract.

pydry 5y ago
It depends on the crime. If I bought drugs on a darknet exchange how would the researcher know to include that in the 0.15%? They don't. Not unless, e.g. that exchange gets busted and leaks all of its data. This title should really be "easily identified illicit transactions constitute 0.15% of trading volume". Which I'd say counts as a lot.
spicybright 5y ago
Those kinds of heists are probably 1% of illicit transactions. We're talking more about buying drugs and exchanging crypto between two seemingly clean wallets.
periheli0n 5y ago
OK, in that case "illicit" is defined as related to fraud in the crypto exchange itself. It does not refer to activities like e.g. buying banned substances, oligarchs circumventing sanctions, etc. If this is really the message of the article, then it is misleading, perhaps even deliberately so, to make crypto look good.
gtvwill 5y ago
That's a very narrow definition of an illicit transaction. I mean you seem to ignore simple facts like how ownership alone can dictate if a transaction is illicit. Bit hard to tell me your not sending money to foreign nation States or supporting terrorism if you can't prove you know the identity of owners of the accounts your transacting with.

mrkramer 5y ago

>What is the methodology behind determining whether crypto transactions were illicit? I thought the whole point of using crypto was that transactions could not be traced. The whole purpose of Bitcoin is to decentralize trust though p2p distributed and decentralized database called blockchain and to solve "double spend" problem. Read Bitcoin whitepaper.

mrkramer 5y ago
through*

anonporridge 5y ago

> I thought the whole point of using crypto was that transactions could not be traced. A commonly believed false narrative. Bitcoin transactions are intrinsically more traceable and verifiably incorruptable than anything that exists in the traditional financial world, which is teaming with fraud and criminal behavior, both explicitly illegal and criminal behavior sanctioned by government insiders. The hidden message from Satoshi in the genesis block gives a better foundation for the reason they created it. https://en.bitcoin.it/wiki/Genesis_block https://en.bitcoin.it/wiki/Genesis_block > The Times 03/Jan/2009 Chancellor on brink of second bailout for banks Privacy lovers are mostly using Monero now.

periheli0n 5y ago
Yes, of course that's what the blockchain is about, but there is usually no information attached to a transaction that would identify it as illicit, like a note saying "this was for banned substances", "thank you for placing the bomb", or "Enjoy your new superyacht, Sergej". Therefore it is not possible to trace illicit transactions, unless one defines illicit as referring solely to using stolen crypto.
- anonporridge 5y ago
  Isn't the same true of traditional finance and cash?
  - periheli0n 5y ago
    In principle yes, but at least for wire transfers the autorities can walk up to the bank and ask for transaction details. And cash needs physical transfer which complicates things. Either way, it is difficult to determine which transactions are illicit, also in traditional finance.