Research firm Diar quoted public records as saying that US government agencies spent a total of $5.7 million to hire contractors for blockchain analysis, which involved linking personal identities to their cryptocurrency funds.
While there are tools and even personal cryptocurrency transactions that allow users to send money anonymously, most cryptocurrency users leave enough traces, equipped with the right tools, and investigators can determine the specific wallet attribution.
Once the cryptocurrency user exposes his anonymous cryptographic currency address to a service or individual who may identify his or her true identity, the blockchain forensics expert has time to aggregate the data and the user risked exposing the entire wallet.
Typically, these privacy vulnerabilities occur when cryptocurrency transactions that require user authentication are deposited or withdrawn, although this may be the result of posting their cryptographic currency address online, even the result of the transaction, under their real name or identifiable pseudonym. With other people who have been exposed.
Unsurprisingly, the agency that spends the most on the blockchain in US government agencies is the US Internal Revenue Service (IRS) because the IRS is responsible for collecting federal income taxes. The US Internal Revenue Service has signed nine contracts with cryptocurrency forensics providers for a total value of approximately $2.2 million, accounting for 38% of total government spending on these services.
CCN reported last year that the US Internal Revenue Service (IRS) has signed a contract with blockchain tracking companies to help expose investors who have not accurately reported the proceeds of cryptocurrency investments on their tax returns. The agency subsequently increased enforcement of alleged violations related to this asset class and even brought Coinbase to court to force it to surrender customer data.
However, the second largest consumer in US government agencies is even more surprising. One might think that the Federal Bureau of Investigation (FBI), the Drug Enforcement Administration (DEA) or the Securities and Exchange Commission (SEC) will be the second largest institution to track the use of cryptocurrencies, including nem coin
, neo coin
and dash coin
and so on.
It is worth noting that even though the cryptocurrency market has fallen by about 70% from the historical peak, the interest of retail consumers has weakened, but spending in 2018 is still exploding.
Chainalysis is the preferred blockchain analysis contractor for the US government, which received $5.3 million, or 93%, of the $5.7 million paid by US government companies.
These lucrative government contracts have also made blockchain tracking companies increasingly attractive to investors. Startups operating only in the blockchain area alike ripple blockchain
have raised nearly $29 million. The most funded company has raised more than $17 million.