A company that de-anonymizes cryptocurrency users

Research firm CipherTrace is tracking financial flows on the blockchain, which many cryptocurrency lovers dislike. The company is often accused of strong cooperation with government agencies and undermining the anonymity of transactions.

To dispel these myths and just clarify what is happening, CipherTrace CEO Dave Jevans has been a guest on the next issue of the Decrypt Daily podcast. We have selected the most interesting from his interview.

It is not only CipherTrace employees who analyze transactions on the blockchain. Recall that one of the most active players in the field of deanonymization of cryptocurrency lovers is Chainalysis. The company has been operating for over five years and has offices in major cities around the world. In addition, she cooperates with the governments of many countries and receives a lot of money.

Bitcoin’s anonymity issues

Jevans noted that despite some views, the cryptocurrency industry has grown too big to be circumvented by government regulation. That is, it will not be possible to do without the latter, which means it is easier to take the initiative and find a common language with the authorities. This is what the company is doing, says Jevans. Here is a quote from Decrypt.

That’s the problem. People should have maximum financial freedom. But there are regulatory rules that work, they are real, and we simply cannot do anything with them as individual citizens.

Dave Jevans

In such circumstances, the company can either “help people play by the rules”, trying to preserve confidentiality and influence the policy of regulators as much as possible, or back down and “give it all up”, Jevans said. As a reminder, the firm specializes in solutions to combat money laundering, research and analysis of security threats from anonymous blockchains.

In fact, its experts are developing tools for tracking and potentially de-anonymizing cryptocurrency transactions. Thus, the way CipherTrace works can be perceived as contrary to the basic principles of cryptocurrencies, because the latter imply pseudo-anonymity. This means that until the owner of the cryptocurrency address is associated with a real person, he is anonymous. And it is the anonymity of coin holders that such organizations destroy.

However, this only happens if there are serious reasons for that. For example, after the commission of a crime or any manipulation that became known.

Asked about the risk that CipherTrace could help put the entire crypto industry under the hood, Jevans said his company is primarily focused on finding a compromise between crypto and regulators. He continues.

So we are the guys trying to protect all of this. So we work closely with the regulatory authorities. We put a lot of time and effort into working with them, meeting them, understanding them, learning the rules that no one wants to mess with.

With the growing demand for Bitcoin, billions of dollars in new investment will soon be pouring into the cryptocurrency industry. In such a situation, it is impossible to do without thoughtful regulation.

In part, one of the main problems in establishing a compromise between regulators and the digital asset industry is the desire of bureaucrats to «tighten» the regulation of the banking sector on the crypt. Here’s a quote from Dave.

So the opportunity to show them that there is a better way to maintain confidentiality, but to achieve their desired goals, such as thwarting terrorist attacks, can be done differently.

Speaking of the business itself, Jevans did not deny that his company would make huge profits if its tools could gain popularity among financial institutions.

Of course, I would like to sell CipherTrace products to every bank so that they can serve cryptocurrency companies. Dude, I want every bank to fund cryptocurrency companies, because then I’ll make a lot of money, right?

We believe that there is no point in criticizing representatives of this company and others like it. Still, the blockchains of the main cryptocurrencies are open, that is, the data on transfers in it is available to everyone. It’s just that CipherTrace representatives analyze information more professionally and using special tools. Obviously, if they hadn’t done this, someone else would have been found. And in the end, everything would have ended with exactly what is happening now.

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