{"id":10686,"date":"2022-03-15T12:00:00","date_gmt":"2022-03-15T12:00:00","guid":{"rendered":"http:\/\/ci029c2543d008272a"},"modified":"2022-03-15T12:00:00","modified_gmt":"2022-03-15T12:00:00","slug":"watching-chainalysis-bitcoin-surveillance","status":"publish","type":"post","link":"https:\/\/bitcoinmagazine.com\/industry-events\/watching-chainalysis-bitcoin-surveillance","title":{"rendered":"Chainalysis: Watching Those Who Are Watching Us"},"content":{"rendered":"
<\/div>

Blockchain analysis firm Chainalysis recently held the one-day \u201cChainalysis Links<\/a>\u201d conference with a variety of speakers, from former members of MI6, the police force, financial institutions and the United Kingdom\u2019s HM Treasury to internal Chainalysis speakers and moderators.<\/p>\n

The conference did not offer a lot of details on Chainalysis\u2019 products or methods for surveilling activity on blockchains like Bitcoin\u2019s, but it offered a high-level look at the context, uses and potential future of its various services and products, giving Bitcoiners a glimpse into those who are watching them.<\/p>\n

The Chainalysis Business<\/h2>\n

As one aspect of its business, Chainalysis provides market data on some insightful metrics measuring Bitcoin activity. This included information on cryptocurrency-based hacks<\/a>, information on the use of Bitcoin for child pornography<\/a>, Bitcoin adoption metrics<\/a> and its uses in criminal activity<\/a>.<\/p>\n

Another service Chainalysis offers is aiding companies in complying with government recommendations via a service<\/a> that does real-time analysis of blockchains. <\/p>\n

A third area is in transaction tracking and investigation, with a tool called KYT<\/a> and a tool called Reactor, which are both used for investigations on Bitcoin and other blockchains.<\/p>\n

In case you\u2019re wondering what these platforms look like, here are a couple screens from the public website:<\/p>\n

<\/figure>\n
<\/figure>\n

As a sidenote on the Chainalysis business, it recently purchased and put bitcoin<\/a> on its balance sheet. But, as Bitcoin Magazine<\/em>\u2019s Namcios wrote, \u201cthe company doesn\u2019t align very well to the true Bitcoin ethos as its business model is based on surveillance<\/a>, allowing its customers to obtain information on bitcoin transactions for discrimination purposes.\u201d<\/p>\n

Definitions And Client Considerations<\/h2>\n

Given Chainalysis\u2019 business lines and its ability to disrupt the pseudonymity Bitcoin is meant to provide, I went to the conference with questions about three main areas:<\/p>\n

    \n
  1. What is the Chainalysis definition of \u201ccrime\u201d? Within crime, how does it define categories like terrorism, illegal products and subverting democracy?<\/li>\n
  2. What customers does it sell its investigative platform to, and who won\u2019t it sell to or work with?<\/li>\n
  3. How do its products work in detail?<\/li>\n<\/ol>\n

    With regards to the first question, an answer provided to a chat question during the conference stated that Chainalysis\u2019 role is to produce a tool to be used in investigations. The firm is not a law enforcement agency. <\/p>\n

    Secondly, when asked if Chainalysis has criteria for entities it will not sell its products to, it responded that the criterion is \u201cusually\u201d whether or not the country or other client is sanctioned.<\/p>\n

    I reached out to Chainalysis to get a confirmation statement about these conference chat responses, but did not hear back from them.<\/p>\n

    During the conference, various people talked about use cases for the investigative platforms KYT and Reactor. These included:<\/p>\n