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Chainalysis: No Scientific Evidence The Surveillance Software Works, According to Head of Investigation


Written by:

Alex Lari

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The head of investigations for Chainalysis Government Solutions appears to lack a comprehensive grasp on the efficacy of their flagship software.

Head of Investigation’s Statements in Court

During a recent court hearing on June 23, Elizabeth Bisbee, the head of investigations, testified that she had no knowledge of any scientific evidence supporting the accuracy of Chainalysis‘ Reactor software, which is utilized by law enforcement. She stated in court:

Chainalysis clustering methodologies have not been peer-reviewed in the sense that an academic paper would get peer-reviewed with data and methodology(ies) reviewed in a separate study by other scientists.

Challenges to Bitcoin Privacy

The continued use of Chainalysis’ blockchain surveillance tools poses a significant threat to the Bitcoin ecosystem and challenges privacy. Adding to the enduring criticism from industry insiders who claim that these tools violate financial privacy, there exists a more compelling argument against the company and similar analysis firms: The possibility that these surveillance systems might not function as effectively as they claim.

Related reading : KYC Is The Illicit Activity
Related reading : How To Use CoinJoin For Bitcoin Privacy

Effectiveness and Consequences of Chainanalysis Investigations

This concern is particularly noteworthy due to the widespread use of Chainalysis’ surveillance tools for compliance purposes within the industry. Law enforcement agencies blindly accept Chainanalysis verdicts.

There have been instances where these tools have resulted in unjustified account restrictions and, more alarmingly, caused innocent individuals to come under the scrutiny of law enforcement agencies without sufficient probable cause. This raises serious implications for the overall integrity of the Bitcoin space.

Demanding Proof of Credibility in Court

Renowned lawyer Tor Ekeland is currently putting forth a compelling argument in defense of an accused early bitcoin adopter, and this is precisely why he was grilling a Chainalysis executive during the trial.

The case involves the U.S. government and Roman Sterlingov, who is accused of being the mastermind behind the once-popular Bitcoin Fog mixer, which was utilized to anonymize bitcoin transactions.

Chainalysis’ Reactor software played a pivotal role in tracing bitcoin payments during Sterlingov’s criminal investigation. However, Sterlingov’s defense team is now raising serious challenges to the reliability and accuracy of Chainalysis’ Reactor software in the context of this case.

During the court proceedings, Bisbee stated her inability to provide statistical error rates for Chainalysis’ Reactor software.

Moreover, she asserted that she had no knowledge of any scientific peer-reviewed papers or publications supporting the accuracy of Chainalysis Reactor. Bisbee added that Chainalysis determines the software’s accuracy primarily through customer feedback, which shows a serious lack of credibility for a tool that is used to convict people of crimes.

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