Blockchain Intelligence for Law Enforcement – [Chainalysis report]

While the blockchain is transparent, it’s hard to read. Consider also, that the Bitcoin blockchain alone has processed nearly one billion transactions. When it comes to efficiently and effectively investigating crypto crime, blockchain intelligence provides a game-changing advantage for law enforcement as it offers the ability to analyze extensive on-chain datasets, graphing capabilities to organize that data, and contextualized insight into illicit crypto activity. By contrast, anyone can search for crypto transactions using a block explorer, but those tools don’t aggregate blockchain data in actionable ways.

That data shown above may be public, but it’s not very insightful; it begs more questions than it answers. For example:

● Who are the pseudonymous entities? Are they cryptocurrency exchanges, merchant processors, or darknet markets?
● Why are they transacting? Is it a payment, an investment, or a smart contract?
● How much value are they transacting? Is it hundreds, thousands, or millions of dollars or euros worth of cryptocurrency?

Blockchain intelligence helps organizations answer these questions. Using it, law enforcement agencies identify criminal entities by examining on-chain activity like the movement of stolen or laundered crypto. The teams that support this technology cultivate extensive on-chain datasets and offer graphing capabilities that help law enforcement visually trace the flow of funds over time, and connect crypto transactions to real-world entities. These platforms also provide contextual information that facilitates a greater understanding of illicit on-chain activity.

Blockchain intelligence helps investigators map crypto transactions and present them in an easily digestible format. For example, the graph above shows the transaction relationships between eight drug buyers and vendors, each of which have ties to the same darknet market. Blockchain intelligence helps law enforcement progress investigations, apprehend criminals, present cases for prosecution, and prepare the way for the seizure and recovery of crypto funds to victims when possible.

In the course of an investigation, blockchain intelligence also facilitates faster and more effective collaboration between law enforcement departments as well as government agencies. Using the same dataset contributes to a shared understanding, which drives better investigative outcomes. And while blockchain intelligence is useful for fighting crime, it can also help law enforcement be proactive in

preventing crime, too. It’s possible to detect illicit activity early on by analyzing on-chain transaction patterns and relationships that could be indicative of criminal behavior. Here are some examples:

● Observing an unusual increase in transaction volumes or patterns commonly associated with money laundering or fraud
● Disrupting criminal networks by mapping the financial flows of criminal organizations, which could hinder their operations and prevent future crime
● Targeting darknet marketplaces. Proactive transaction monitoring linked to known darknet markets allows law enforcement to gather intelligence on buyers and sellers, identify emerging threats, and take action before illicit transactions escalate.

Source: Chainalysis.com | View full report: Crypto-investigations-whitepaper