Overview
Blockchain analysis is the process of inspecting, identifying, clustering, modeling and visually representing data on a cryptographic distributed ledger known as a blockchain. The goal of blockchain analysis is to discover useful information about different actors transacting in cryptocurrency. Analysis of public blockchains such as Bitcoin and Ethereum is typically conducted by private companies.
3 sources for this section
- 1Blockchain analysis — Wikipedia, revision 1370627414
- 2Meiklejohn, Sarah; Pomarole, Marjori; Jordan, Grant; Levchenko, Kirill; McCoy, Damon; Voelker, Geoffrey M.; Savage, Stefan (23 October 2013). "A fistful of bitcoins". Proceedings of the 2013 conference on Internet measurement conference. Imc '13. pp. 127–140. doi:10.1145/2504730.2504747. ISBN 9781450319539. S2CID 2224198.
- 3Kappos, George; Yousaf, Haaroon; Maller, Mary; Meiklejohn, Sarah (2018-05-08). An Empirical Analysis of Anonymity in Zcash. OCLC 1106297947.
Cryptocurrency exchanges
Cryptocurrency exchanges are often required by law to address the source of funds for crypto traders. For example, Singapore, Japan, and the United States have all passed laws that require exchanges to track the source of the crypto funds. In the United States, the Bank Secrecy Act requires cryptocurrency businesses to implement know-your-customer and anti–money laundering programs, including registering with FinCEN as a money service business.
Blockchain analysis enables law enforcement to trace cryptocurrencies back to individuals' wallets on exchanges, which can then be subpoenaed for information on criminal actors.
4 sources for this section
- 1Blockchain analysis — Wikipedia, revision 1370627414
- 4"Cryptocurrency Regulation: How Governments Around the World Regulate Crypto". Chainalysis. 2021-10-26. Retrieved 2023-01-05.
- 5PricewaterhouseCoopers. "Carving up crypto: Regulators begin to find their footing". PwC. Retrieved 2019-05-28.
- 6"Application of FinCEN's Regulations to Persons Administering, Exchanging, or Using Virtual Currencies". www.fincen.gov. Retrieved 2023-01-05.
Method
Because blockchains are typically public, anyone can view the contents of transactions by querying a node or block explorer site. By using common-spend clustering algorithms, it is possible to map the transactions of certain entities on the blockchain. This is how criminals are being caught moving illicit funds using various cryptocurrencies.
3 sources for this section
- 1Blockchain analysis — Wikipedia, revision 1370627414
- 7Spagnuolo, Michele; Maggi, Federico; Zanero, Stefano (2014). "BitIodine: Extracting Intelligence from the Bitcoin Network". Financial Cryptography and Data Security. Lecture Notes in Computer Science. Vol. 8437. pp. 457–468. doi:10.1007/978-3-662-45472-5_29. hdl:11311/881385. ISBN 978-3-662-45471-8. S2CID 4643437.
- 8Yakowicz, Will (2018-01-09). "Startups Helping the FBI Catch Bitcoin Criminals". Inc.com. Retrieved 2019-05-29.
Law enforcement and blockchain surveillance
Blockchain analysis has helped produce evidence in several high-profile cases. In 2018, an analysis of bitcoin transactions uncovered a link between major cryptocurrency exchange BTC-e and Fancy Bear. In 2019, a major website hosting child sexual abuse material was taken down by law enforcement using blockchain analysis techniques.
In 2021, the US Department of Justice used blockchain analysis to recover most of the ransom from the Colonial Pipeline ransomware attack. In 2022, IRS Criminal Investigation used blockchain analysis to seize over 50,000 bitcoin stolen from the Silk Road dark web marketplace.
8 sources for this section
- 1Blockchain analysis — Wikipedia, revision 1370627414
- 9Alden Pelker, C.; B. Brown, Christopher; M. Tucker, Richard (2021). "Using Blockchain Analysis from Investigation to Trial". Department of Justice Journal of Federal Law and Practice. 69 (3): 59–100.
- 10"Bitcoin Suspect Could Shed Light on Russian Mueller Targets". Bloomberg.com. 4 September 2018.
- 11Newman, Lily Hay. "How a Bitcoin Trail Led to a Massive Dark Web Child-Porn Site Takedown". Wired.
- 12Bing, Christopher; Menn, Joseph; Lynch, Sarah N.; Bing, Christopher (2021-06-08). "U.S. seizes $2.3 mln in bitcoin paid to Colonial Pipeline hackers". Reuters. Retrieved 2023-01-05.
- 13"Chainalysis In Action: How FBI Investigators Traced DarkSide's Funds Following the Colonial Pipeline Ransomware Attack". Chainalysis. 2022-02-10. Retrieved 2023-01-05.
The source notesEvidence & further reading15 sources
- Blockchain analysis — Wikipedia, revision 1370627414 Wikipedia contributors · Reference source · accessed 2026-09-22
- Meiklejohn, Sarah; Pomarole, Marjori; Jordan, Grant; Levchenko, Kirill; McCoy, Damon; Voelker, Geoffrey M.; Savage, Stefan (23 October 2013). "A fistful of bitcoins". Proceedings of the 2013 conference on Internet measurement conference. Imc '13. pp. 127–140. doi:10.1145/2504730.2504747. ISBN 9781450319539. S2CID 2224198. dl.acm.org · Reference source · link imported 2026-09-22
- Kappos, George; Yousaf, Haaroon; Maller, Mary; Meiklejohn, Sarah (2018-05-08). An Empirical Analysis of Anonymity in Zcash. OCLC 1106297947. search.worldcat.org · Reference source · link imported 2026-09-22
- "Cryptocurrency Regulation: How Governments Around the World Regulate Crypto". Chainalysis. 2021-10-26. Retrieved 2023-01-05. blog.chainalysis.com · Reference source · link imported 2026-09-22
- PricewaterhouseCoopers. "Carving up crypto: Regulators begin to find their footing". PwC. Retrieved 2019-05-28. pwc.com · Reference source · link imported 2026-09-22
- "Application of FinCEN's Regulations to Persons Administering, Exchanging, or Using Virtual Currencies". www.fincen.gov. Retrieved 2023-01-05. fincen.gov · Reference source · link imported 2026-09-22
- Spagnuolo, Michele; Maggi, Federico; Zanero, Stefano (2014). "BitIodine: Extracting Intelligence from the Bitcoin Network". Financial Cryptography and Data Security. Lecture Notes in Computer Science. Vol. 8437. pp. 457–468. doi:10.1007/978-3-662-45472-5_29. hdl:11311/881385. ISBN 978-3-662-45471-8. S2CID 4643437.