Chainalysis

No Evidence ISIS Is Storing $300 Million in Bitcoin, Says Chainalysis

21/05/2020 by Idelto Editor

Blockchain intelligence firm Chainalysis has dismissed claims ISIS is holding a $300 million bitcoin (BTC) war chest.

In a “fact-checking” report, published on May 20, 2020, the U.S. company accused the media of sensationalizing allegations about BTC and other cryptocurrencies being used to fund terror groups.

Most terrorism financing campaigns have raised less than $10,000 via crypto, indicating limited adoption, said the report.

A few days ago, the director of the Counter Extremism Project claimed that ISIS had up to $300 million stored in bitcoin. Funds of equal value have been missing in a search conducted since 2017.

“This would be an ideal storage mechanism until it is needed. If done right, it would be unfindable and unseizable for most governments,” said Hans-Jakob Schindler, who heads the terrorism-related think tank.

Major news media published Schindler’s speculative allegations, even without hard evidence to back up his claims.

“Schindler’s theory is also highly unlikely,” Chainalysis asserted. The company explained that if the terrorist organization “funneled oil proceeds into bitcoin, trading volume of regional exchanges and money service businesses would have reflected this flow of funds.”

It highlighted that cryptocurrency is not an ideal form of storing illicit money because of the transparency associated with the underlying blockchain technology. Cash and other traditional assets are better suited for this purpose, Chainalysis added.

Chainalysis also spoke about the reports of terrorism fundraising campaign run by Popular Resistance Committees (PRC) through Cash4ps, a Gaza-based money service business, to raise $24 million through crypto, calling it “misinformation.”

Investigations revealed that “if PRC raised any money at all, it was substantially less than $24M.”

Another crypto crime report released earlier this year mentioned the use of BTC payments to facilitate the bombings in Sri Lanka on Easter Sunday, carried out by ISIS. An Israeli blockchain company called Whitsream announced the findings.

However, according to the fact-checking report, “media reports amplified the (Israeli) firm’s findings.”

“The firm…claimed that the balances in Coin Payments’ wallets surged from $500,000 to $4.5 million just one day before the Easter attacks but dropped back to $500,000 right after the attacks took place,” said Chainalysis.

“However, our analysis suggests those findings are likely incorrect and that both the $10,000 transaction and $4 million balance increase were simply internal transactions that are standard practice for a payment processor like Coin Payments,” it added.

Chainalysis observed that “terrorism financing is generally nascent but capabilities are advancing quickly.”

What do you think about bitcoin and terrorism financing? Let us know in the comments section below.

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20 Blockchain Surveillance Firms Monitor Crypto Networks, But Some Apps Show Inaccuracies

16/05/2020 by Idelto Editor

20 Blockchain Surveillance Firms Monitor Cryptos, But Some Apps Show Inaccuracies

During the last few years, blockchain surveillance has increased a great deal and in the early days around 2013-14, there were only a handful of firms. Now there are more than 20 blockchain analysis companies that monitor addresses, transactions, and making sure addresses are AML/CFT compliant as well.

The Rise of Blockchain Analysis Ventures

In the early days before 2013-14, bitcoiners and cryptocurrency users didn’t really hear about blockchain surveillance. Nowadays, there’s a large slew of companies offering services like analytics, monitoring, and identifying blockchain codebase vulnerabilities. A number of firms have worked with law enforcement in the U.S. and also have contracts with groups like Europol as well. At the time of publication, there are more than 20 different blockchain intelligence businesses that work within the cryptocurrency ecosystem. Some of them are well known firms like Cyphertrace, Chainalysis, and Elliptic. Other platforms are offered by Alethio, Bison Trails, Blockpit, Blockmonitor, Bloxy, Postchain, Scoreshain, Sixgill, Tibco, Credits, Crystal Blockchain, Dune analytics, Madana, Bitrank, and Ocyan are lesser-known operations.

A few of these startups have dedicated their business models to blockchain surveillance and monitoring a great number of different networks. In October 2019, Chainalysis detailed it was monitoring 21 different tokens that stem from Ethereum. That same month, the firm Ciphertrace revealed it is tracking 700 cryptocurrencies providing “visibility into 87% of the global trading volume.” Many of these companies put out research reports on the data they discover during exchange hack investigations and other types of crypto scams. Elliptic became well known A slew of blockchain surveillance firms published data after the massive Plus Token scam last year.

How Accurate Are These Distributed Ledger Monitoring Platforms?

But skeptics often wonder how good these monitoring applications are, and how they deal with coins that have been mixed using the coinjoin process. News.Bitcoin.com recently discovered a platform called Bitrank, a project that allows people to simply copy and paste a BTC or ETH address, in order to check to see if the address follows AML/CFT compliance. Bitrank’s website says it is simple to use and “easy to understand” if people are interested in “Bitcoin address reports for AML/CFT compliance.” The company also says if you run a crypto business you should leverage the platform’s Risk Scoring. However, news.Bitcoin.com tested Bitrank’s platform and found a few discrepancies.

For instance, on May 15 our newsdesk pasted a well known legacy BTC address that is allegedly tethered to the Plus Token scam. On February 11, the Plus Token Ponzi scammers moved 12,000 BTC from one wallet to another. The address and some of the other addresses are flagged on a variety of blockchain explorers as well. That address using the Bitrank application gave a Risk Score of 52 or “acceptable.” Other addresses tied to the same address also came up with the same score and it were deemed “acceptable,” according to Bitrank’s service. After that our newsdesk found another discrepancy, we then pasted an address used by a known mining pool. 1KFHE7w8B… had seen a total of 4,968,400 BTC deposited into the address to-date. This particular address Bitrank flagged as “high risk” with a Risk Score of 18.

As Digital Assets Become Popularized, Platforms That Monitor Crypto Transactions Will Likely Increase

It’s likely considered risky because the address has seen close to 5 million BTC since it was created. According to Bitrank, it explains that the addresses Risk Assessment shows it is involved with an exchange, input over 10K, exchange client, darknet deposit, Binance client withdrawal, Bittrex client withdrawal, seen on Paste Bin, seen on a darknet forum, and seen on a darknet listing. The address associated with the 12,000 BTC used by the Plus Token scammers shows no Risk Assessment data from Bitrank. The creators of the platform may know about the discrepancies, and the website says scoring results will be improved soon.

“In the coming weeks, Blockchain Intelligence Group will be implementing some significant enhancements to Bitrank with a number of refinements to both Bitcoin and Ethereum scoring results,” the website details.

With more than 20 blockchain analysis firms monitoring blockchains and even reporting to law enforcement, it shows the practice is popular. However, if certain businesses are using blockchain analysis tools regularly, they may find some irregular reporting and inaccurate information. Many of these services offer APIs and platforms for paid clients and interested customers might want to research these platforms for any known issues. Blockchain surveillance has become very lucrative for a number of these companies, as governments across the globe have hired these firms for investigations and intelligence reports. It’s likely that as the crypto economy continues to see relentless growth, these distributed ledger investigators will continue to increase.

What do you think about the fact there are over 20 blockchain surveillance firms in 2020? Let us know your thoughts in the comments below.

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3 Reports Look at North Korea’s Lazarus Group, Iran’s Farhad Exchange, and the Crypto Ponzi Futurenet

06/05/2020 by Idelto Editor

3 Reports Look at North Korea's Lazarus Group, Iran's Farhad Exchange, and Crypto Ponzi Futurenet

On May 4, 2020, the blockchain surveillance firm Chainalysis published a three-part series covering a crypto Ponzi scheme, North Korea, and Iran’s use of digital currencies like bitcoin. The company’s research papers discuss the Poland-based crypto Ponzi called Futurenet, a hosting service allegedly tied to North Korea, and how Iran-based exchanges are bypassing OFAC sanctions through the use of digital currencies.

Chainalysis Digs Into North Korea’s Relationship With Crypto

This week Chainalysis published some findings on cryptocurrency usage in Iran, North Korea, and a Ponzi scheme called Futurenet. Mainstream media has been watching North Korea closely, as the country’s supreme leader Kim Jong-un has recently been rumored to have passed away. Other rumors say Jong-un “vanished” because of the coronavirus outbreak. Not too long ago a United Nations report estimated that North Korea (NK) has stockpiled at least $670 million worth of cryptocurrencies like BTC.

The Chainalysis’ NK briefing highlights how an alleged anonymity host provider from Switzerland called Black Host has been accepting digital assets for goods and services. Black Host claims to offer anonymous email services, virtual private networks (VPN), and even SIM cards. Despite the fact that many people think Black Host is not doing anything wrong, Chainalysis believes the Black Host platform is connected with the criminal masterminds called the Lazarus Group. According to a myriad of reports, the Lazarus Group is North Korea’s cyber and crypto crime syndicate.

Lazarus Group has been accused of hacking cryptocurrency exchanges and looting bitcoin from the platforms. The Switzerland-based bullet-proof hosting provider Black Host allegedly shared an address with the syndicate gang, according to the Chainalysis findings. “Blockchain analysis suggests bullet-proof hosting provider Black Host received Bitcoin from an address linked to Lazarus Group exchange hack,” the firm disclosed.

A Comprehensive Look at Iran’s Farhad Crypto Exchange

North Korea is an OFAC sanctioned country, but not the only country accused of leveraging digital currencies to avoid sanctions. The second report published by the blockchain analysis firm, discusses the situation in Iran as far as cryptocurrencies are concerned. “Iran’s Central Bank [is] voicing its intention to pursue cryptocurrency projects aimed at getting around sanctions, many exchanges such as Localbitcoins have stopped offering service to Iranian users to limit their exposure to possible sanction violations,” Chainalysis notes.

The blockchain intelligence company provides a comprehensive overview of the Iranian crypto trading platform called the Farhad Exchange. “While Iran is cut off from many international exchanges, local exchanges continue to operate in the country, drawing scrutiny from U.S. and international regulators. For this reason, it’s crucial to understand how Iranian exchanges interact with the international cryptocurrency ecosystem, and especially their exposure to regulated exchanges,” the study’s introduction explains.

The Crypto Ponzi Futurenet

The final report from Chainalysis discusses the Futurenet Ponzi scheme, a project that was initiated in Poland. Chainalysis calls Futurenet a “cryptocurrency scam with purpose-built payment processors.”

“At first glance, Futurenet appears no different from any other cryptocurrency-based Ponzi scheme. Victims pay into the scam based on promises of large returns, and are told they can make even more money by recruiting their friends as well,” the company’s report reveals. The Chainalysis briefing on Futurenet adds:

Upon further investigation, Futurenet appears to have its own infrastructure of purpose-built shell companies to facilitate cryptocurrency payments to and from victims.

The three briefings give a comprehensive perspective of these subjects and how the operations work. The briefings also contain the company’s Reactor graphs that are tethered to each investigation.

What do you think about the three topics researched by Chainalysis? Let us know in the comments below.

The post 3 Reports Look at North Korea’s Lazarus Group, Iran’s Farhad Exchange, and the Crypto Ponzi Futurenet appeared first on Bitcoin News.

Merchant Services, Gambling, and Darknets: Coronavirus Economy Stunts Cryptocurrency Spending

03/04/2020 by Idelto Editor

A lot has changed since the coronavirus pandemic swept the globe as it has caused a wide range of negative effects on the world’s economy. On March 30, the blockchain surveillance firm Chainalysis published a report that shows how the cryptoconomy is faring from merchant acceptance to gambling, and darknet purchases as well. The researcher’s study highlights that the covid-19 environment has “brought about a significant change” by impacting crypto-based spending habits.

Also read: Tiger King’s Archnemesis Big Cat Rescue Accepts Bitcoin

Covid-19 Effects on the Global Economy Caused a Dip in Bitcoin Spending

On Monday, the blockchain forensics company Chainalysis published a research report that shows the correlation between bitcoin’s price and spending BTC with merchant services, gambling sites, and darknet markets. Statistics from Chainalysis shows that all three spending types “dropped significantly since March 9.” Covid-19 has had an adverse effect on crypto spending and even though the spending habits declined it was in a way that Chainalysis researchers did not expect. The firm says that it is understandable that during an economic crisis, spending usually drops but the company has found that the price of bitcoin is “correlated with daily Bitcoin receiving activity for the services we’re analyzing.”

“Meaning, the amount of bitcoin customers send to those service types in a given day — both before and after covid-19 reached North America,” the Chainalysis report adds. “The level of correlation has changed for each of the service types we’re looking at. For darknet markets, revenue has become more correlated with bitcoin’s price, meaning darknet markets have seen unexpectedly steep revenue declines since bitcoin’s price began to drop.”

The Chainalysis report added:

This is especially interesting considering darknet markets’ revenue previously had a small but significant inverse correlation with Bitcoin’s price, meaning we would have expected darknet markets to have slightly higher sales after the price drop. Merchant services and gambling providers, on the other hand, have seen their revenue to Bitcoin price correlation drop, meaning they’ve proven more resilient and seen less of a revenue decrease than expected.

Gambling Downtrend Unrelated to Price While Darknet Markets Reacted to Bitcoin’s Price Like Never Before

The Chainalysis researchers remark that even though merchant services purchasing dropped, the correlation between spending with merchants fell by 50%. Chainalysis also found that the downward trend in gambling activity appears unrelated to the bitcoin price drop.

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“After all, wouldn’t regular users gamble more if they’re shut in their houses all day?” the company’s blog post asks. “That doesn’t appear to be the case thus far though.” The most interesting part of the Chainalysis report is the statistics concerning darknet market (DNM) sales. According to the blockchain surveillance company, DNMs reacted to the price of BTC like “never before.”

“The effects of the covid-19 price drop on darknet markets are especially interesting. Historically, darknet markets’ revenue has had a weak inverse correlation with Bitcoin’s price,” Chainalysis wrote. “Perhaps darknet market customers aren’t buying as many drugs given the public health crisis. It’s also possible that vendors slowed down sales during the price drop, out of fear that the Bitcoin they accept one day could be worthless the next,” the study further said.

Chainalysis concludes by saying that the usage patterns were not normal and it was definitely caused by a black swan event. “The question for cryptocurrency businesses is whether or not they’ll be able to return to their previous transaction levels and if their customers’ usage patterns will return to normal as both bitcoin and the economy itself recover,” the report concedes.

What do you think about how covid-19 has effected crypto spending? Let us know in the comments below.

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Next Step Mobile Surveillance: How You Walk, Your Heartbeat – Why Bitcoin Matters to Combat Government Privacy Invasion

26/02/2020 by Idelto Editor

It may sound like something from a dystopian cyberpunk movie, but payment providers could soon be validating transactions by the way users walk, their heartbeat, veins, and more. Mastercard has recently revealed they “have been testing heartbeat, vein technology, and the way people walk to authenticate people.” The high tech proposal, designed to fight hackers and increase convenience, could be a serious issue for people viewing such measures as unnecessary and invasive, where Bitcoin solves many of the challenges facing online finance already.

Also read: Wikileaks Gathers $37M in BTC Since 2010 – Over $400K Sent After Julian Assange’s Arrest

Mastercard to Map Your Walk

Mega payments provider Mastercard recently revealed to financial news outlet Marketwatch that “We are working with transport organizations where your face or gait will authenticate you.”

While facial recognition software is becoming more and more widely utilized in security, and the field of biometrics continues to evolve rapidly, most everyday people still haven’t considered that something like their gait, or style of walking, could be a means of identification. The tech will ostensibly be able to utilize CCTV, amongst other means, for allowing services such as boarding of public transport.

The president of cyber and intelligence solutions for Mastercard, Ajay Bhalla, told the news outlet:

The way you hold your phone, which ear you use, and how your fingers touch the buttons are all unique to you. We have been testing heartbeat, vein technology, and the way people walk to authenticate people.

For those that think they’ll be able to outsmart this type of tech if it falls into the wrong hands or is abused, they may want to think again. As coronavirus fear grips China and residents are required to wear masks for protection, Chinese AI startup Sensetime has already announced the rollout of new tech which can read 240 facial key points, allowing identification of individuals even if they’ve donned a mask.

Demonizing and Ignoring Bitcoin

The Mastercard exec also told Marketwatch that “The world is changing at a fast pace. Hackers are figuring out how to attack individuals to get their credentials.”

This narrative of payments becoming increasingly electronic and the need for greater online security is not new. In fact, the United States Federal Reserve announced last summer they are developing a new, fast and secure payments system called Fednow. Federal Reserve Board Governor Lael Brainard stated at the time, “Everyone deserves the same ability to make and receive payments immediately and securely, and every bank deserves the same opportunity to offer that service to its community.”

MasterCard: your personal stalker

“The way you hold your phone, which ear you use, and how your fingers touch the buttons are all unique to you.We have been testing heartbeat, vein technology,and the way people walk to authenticate people”#PrivacyFirst https://t.co/ZrZzF7vIHh

— Olga Ukolova [LNP/BP] (@OlUkolova) February 14, 2020

The thing is, we’ve already got that. It’s called bitcoin. Not able to be hacked if stored non-custodially, and not subject to centralized censorship at a protocol level, Satoshi’s creation is one of the most secure payment networks there is. Further, transactions can be obfuscated for greater privacy.

The real issue at hand becomes apparent when a critical common thread between narratives from China, the Fed, and companies like Mastercard emerges: the promotion and cultural whitewashing of unmitigated, highly invasive surveillance.

Often, when solutions like bitcoin are presented as viable options to the authoritarian class, the response is the same: users of bitcoin are criminals, because who else would want to use money that isn’t centrally controlled? U.S. Treasury Secretary Steven Mnuchin has even gone as far as making the absurd claim that U.S. dollars are not used for criminal activity, stating:

I don’t think it’s been successfully done with cash. I’ll push back on that. We’re going to make sure that bitcoin doesn’t become the equivalent of Swiss-numbered bank accounts.

Anti-money laundering narratives have become the central focus for global financial regulators, and are putting more and more users of crypto out of business and out of wealth. All this when the latest report from state-connected blockchain forensics group Chainalysis shows that less than 1% of crypto usage centers on darknet market activity.

Contrasted with governments’ nasty track records of money laundering, drugs and human trafficking, debasement of currencies, and outright murder euphemized as ‘collateral damage’ in warfare — all financed mainly by the fiat shitcoin known as USD — bitcoin appears to be about as threatening as a toy poodle. It’s important to remember, though, that it does have teeth.

Regarding crypto’s threat to centralized systems like Fednow, former congressman from Texas, Ron Paul, remarked in August: “This will be bad for consumers and real-time entrepreneurs but good for power-hungry Federal Reserve bureaucrats who will no doubt use Fednow to help ‘protect’ the Federal Reserve’s fiat currency system from competition from crypto currencies.”

Why Bitcoin Matters to Fight Surveillance

Biometrics provides some great opportunities for security and convenience, affording free market actors cutting edge solutions for their businesses and everyday lives. When it comes down to brass tacks, however, less invasive payment solutions such as bitcoin are not favored by lawmakers, as they’ve stated explicitly that the decentralized and immutable nature of crypto threatens the very stability of the global economy itself.

According to a research opportunity posting from the U.S. Office of the Director of National Intelligence: “Many cryptocurrency enthusiasts predict that either a global cryptocurrency or a national digital currency could undermine the U.S. dollar … The U.S. should prepare for scenarios that threaten to undermine the U.S. dollar as the world reserve currency and determine how those scenarios could be overcome, protecting our status in the global economy.”

The real question about all the surveillance coming down the pike is an easy one. Namely, whether these measures will be voluntarily assented to, or whether they will be forced on people. For example, will someone still be able to open a bank account or board a train if they don’t want their vascular tissue analyzed? It’s an uncomfortable reality most don’t want to look at, but ultimately, when it comes to ensuring compliance the state has but one tool, and it ain’t reasoned verbal persuasion.

Bitcoin is very different from any Fednow service, digital Yuan, or Mastercard payment system because the user — and not some third party — controls it. That’s what really seems to get the goat of lawmakers. How far people will go to fight for this financial privacy bitcoin affords them remains to be seen, but let’s hope the shift is more of a philosophical one than is brutal.

What are your thoughts on Mastercard’s proposed verification systems? Let us know in the comments section below.

Op-ed disclaimer: This is an Op-ed article. The opinions expressed in this article are the author’s own. Bitcoin.com is not responsible for or liable for any content, accuracy or quality within the Op-ed article. Readers should do their own due diligence before taking any actions related to the content. Bitcoin.com is not responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any information in this Op-ed article.

Images courtesy of Shutterstock, Reuters, fair use.

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