A Forensic Analysis of Blockchain Surveillance Companies

Blockchain analysis is big business. The U.S. government alone has spent $6 million on transaction mapping tools, while cryptocurrency exchanges routinely partner with compliance companies that promise to and trace the origin of customer funds. Hated by many bitcoiners, blockchain forensics is a controversial field with a plethora of players. The following analysis shines a spotlight on the companies who scrutinize you.

Also read: How to Outwit Blockchain Analysis and Conceal Your Coins

Over $80 Million Invested in Blockchain Forensics Companies

Not content with undertaking basic Know Your Customer (KYC) procedures such as requesting identity documents, many cryptocurrency companies have taken things a step further by partnering with blockchain forensics firms. In the case of Coinbase, they’ve gone one step further still and actually bought their own forensics company in the form of the highly controversial and much-maligned Neutrino. Having raised over $80 million to date, blockchain analysis companies have tapped into a rich source of capital. In turn, these companies have earned millions of dollars for profiling cryptocurrency users. Of the $6 million paid out by U.S. agencies, The Block calculates the IRS to have accounted for 40 percent, ICE almost 25 percent, and the FBI over 19 percent.

A Forensic Analysis of Blockchain Surveillance Companies

Aside from a handful of exchanges that remain defiantly KYC and blockchain forensics-free, the majority of mainstream platforms employ blockchain forensics of some kind. In addition to exchanges such as Coinbase and Binance, crypto-fiat companies such as Wirex are also on the blockchain forensics bandwagon. From a legal perspective, crypto companies are not obliged to utilize the services of blockchain analysts. As Kraken CEO Jesse Powell recently acknowledged, however, any exchange forgoing such tools would be liable to make regulators suspicious.

Get to Know Your Know Your Customer Companies

Ostensibly, blockchain forensics companies monitor customer deposits and withdrawals for signs of “tainted” coins that have been involved in money laundering, terrorism or dealing. In the majority of cases, however, blockchain forensics tools can only make probabilistic connections. As a consequence, innocent cryptocurrency users can have their funds frozen or seized by centralized platforms.

Whatever Satoshi Nakamoto’s vision for Bitcoin may have been, it’s safe to say it wasn’t a world in which individuals have to seek permission to send or receive coins, or where the onus is on the customer to prove their crypto is “clean.” Regardless, it’s the world we now inhabit, and while blockchain forensics can’t be repealed, the companies that push this technology can at least be analyzed, just as they analyze us. The following report profiles the Know Your Customer companies that would like to know everything about you. Through turning the tables and monitoring their every move and appointment, the crypto community can hold these companies to account.

A Forensic Analysis of Blockchain Surveillance Companies


The best known of all blockchain forensics firms, Chainalysis produces a wealth of interesting data on lost coins, hodling patterns and much more. There’s also a more serious side to company, however: its services include “reporting on your customers’ cryptocurrency-related activities” and detecting “suspicious activity and emerging threats from the dark web.” Like all companies of their ilk, Chainalysis are in the pocket of law enforcement, who are their most valuable clients.

Chainalysis’ “Know Your Transaction,” software, while purportedly designed to thwart money laundering, has a wealth of applications, most of which have little to do with stopping serious crime. In libertarian cryptocurrency circles, Chainalysis is a very dirty word.

Senior team: James Smith (CEO), Simone Maini (COO), Lee Wilson (CFO), Adam Joyce (co-founder), Tom Robinson (co-founder).

Clients: FBI, DEA.

A Forensic Analysis of Blockchain Surveillance Companies


Blockeer is of the opinion that “there is a lack of clarity in bitcoin payments and transactions” which seems odd given that Bitcoin is the most transparent payment system the world has ever known. The company “aims to reduce the level of disorder and chaos and increase the level of knowledge and analysis of the publicly accessible blockchain network.” Some would say that disorder and chaos is all part of Bitcoin’s charm, but blockchain surveillance companies are apt to demur, as is their wont. Blockseer has now been acquired by DMG Blockchain Solutions.

Founded: December 2014

Offices: Palo Alto.

Investors: Plug and Play, Charlie Lee, Bobby Lee, Zhenfund, Ceyuan Ventures, Bill Tai.

Senior team: Danny Yang (founder), Patrick De La Garza (lead engineer).


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