“Tracers in the Dark” is a funny crime story that teaches privacy lessons.
Do you want to prevent the government from looking into your transaction history? Learn more about the forensics and privacy of crime on the blockchain. Opinion Ho-ho-ho! Opinion Ho-ho-ho! True crime podcast fans will love the crypto version. They can sit in the Federal Bureau of Investigation van and watch as agents from the United States track down criminals using crypto transactions. The first story is about a corrupt Drug Enforcement Agency agent who stole funds on the Silk Road online drug market. It also discusses the hunt for Dread pirate Roberts, aka Ross Ulbricht, Silk Road’s founder. Ross was quite secure in his operations. He used Tor to do everything. He used an encrypted laptop which locked itself when it was closed. He didn’t share personal details. One mistake can ruin your privacy. One small error on an online forum led to his downfall. This review will not reveal the incredible ending of this amazing story. Chainalysis data shows that Silk Road was responsible for almost 20% of all Bitcoin activity during its peak in 2013. Silk Road conducted over $435M worth of transactions, peaking at $40M in the month of September 2013. pic.twitter.com/veOdmlb3oe– Chainalysis (@chainalysis) November 5, 2020
The more disturbing section is about the downing of Welcome to Video, which was a child pornographic site where users sent their Bitcoin (BTC), directly from Know Your Customer-compliant Exchanges. It is also a valuable teaching tool for operational security online, especially for new crypto users. New wallets like MetaMask, which were made available for smartphones two years ago, have facilitated exponential growth in crypto usage. You don’t have to be a tech expert in order to use crypto. Many new users are more sensitive to information privacy today than the hardcore crypto experts of the early days. This book should awaken them to the importance of crypto privacy. Sam Bankman-Fried stole crypto from thousands of people. This is because theft is not deductable against capital gains. The Internal Revenue Service will likely use victim information leaked in the FTX bankruptcy to pursue bankrupt victims of fraud to recover capital gains taxes owed for their paper gains. Chainalysis’ tracing technology can help them do that. The author also explores a second, more complex aspect of crypto surveillance technology. This will make Crypto-native readers feel relieved. After recounting Chainalysis’ many successes, the author then reveals the dark side to its technology. Chainalysis founder is interviewed about his views on authoritarian governments. When asked whether he is certain its product won’t be used to surveil ordinary citizens and oppress human rights protestors, the Chainalysis CEO’s responses seem to trail off into obfuscation.Related:Treasury officials would have done more for national security by leaving Tornado Cash aloneThe book dedicates multiple chapters to the diligent work of crypto privacy scholar Sarah Meiklejohn. Her early work in developing clustering techniques to track Bitcoin transactions helped establish a thread of privacy and crypto forensic scholarship. Chainalysis’s early models were based on this foundation. Her work and others in the same vein helped to develop crypto privacy tools like Zcash, Monero(XMR), and Bitcoin CoinJoin wallets such as Samourai. In the epilogue, it is noted that she declined an offer to work at Chainalysis because of her founding the tools. She expresses concern about Chainalysis’ potential impact on catching bad guys, but rather how it would be used by financial institutions to “derisk” financial privacy. She said, “Then it gets even more sketchier, right?” There is still hope for financial privacy. One agent in the book points out that Chainalysis and law enforcement claims that they can track Monero are not true. J.W. Verret is an associate professor in the Antonin Scalia Law School, George Mason University. He is a crypto forensic accountant who also practices securities law at Lawrence Law LLC. He is a member the Financial Accounting Standards Board’s Advisory Council, and a former member the SEC Investor Advisory Committee. He is also the leader of the Crypto Freedom Lab, which is a think tank advocating for policy change to protect privacy and freedom for crypto developers and users. These views, thoughts, and opinions are solely those of the author and do not necessarily reflect the views or opinions of Cointelegraph.