Crypto bounty puts integrity of blockchain analytics at risk

Crypto bounty puts integrity of blockchain analytics at risk

In July, a $600 bounty was placed on information identifying Elon Musk's personal cryptocurrency wallet. The reward is offered in July through the Intel Exchange of Arkham, which critics have nicknamed. The platform encourages users to reveal the identities behind otherwise anonymous blockchain addresses, with crypto in Arkham's native token.

Public forums can be a questionable source of data, and will require multiple verifications, including off-chain methods, while all on-chain information is visible. In reality, wrong conclusions can be drawn, putting the integrity of blockchain analytics and legal systems at risk.

Analytics providers must ensure investigations are carried out carefully and with greater integrity as the blockchain industry matures along with institutional adoption and regulatory clarification. With consumer-focused analytics tools enabling any Twitter sleuth to play detective, the chances are higher for those agents entrusted by public authorities to investigate money laundering, fraud, and criminal activities with real national security implications.

In a twist of irony, forensics firms - the teams tasked with quietly ensuring the integrity of decentralization - have been thrust into the spotlight. In April, a Dutch court granted the developer of the Tornado Cash mixer, Alexey Pertsev, to crossexamine Chainalaysis at trial later this year.

The lawyers for Pertsev haveargued that on-chain Ethereum transactions cited in evidence did not exist, setting up a blockchain analytics company for a grueling back-and-forth in which even one inconsistency could derail the state's case, even if all other facts are ironclad. In addition, a fictional inconsistency can be utilized in future legal defenses to weaken an entire process and industry.

Blockchain analytics firms are held accountable for ensuring their data is trustworthy. All analysis has potential legal outcomes, and the ability to change someone's life in the case of criminal indictments by law enforcement. If blockchain transactions are made public, it doesn't mean it's easy to make real-world connections. acceptance of ownership is not enough: thorough vetting is essential, both on and off-chain.

The blockchain industry is at an inflection point. The growth of intel exchanges and 'crypto bounties' has the potential to bring a surge of digital withhunts and even accelerate L2s and privacy coins. The issues intel exchanges face are human rights concerns, where their service bears a greater semblance to a publisher than a blockchain startup, and leadership will inevitably have to arbitrate what should and should not exist on their platforms.

Forensics firms can correct this course by ensuring audit trails are unquestionable in accuracy and integrity, reminding the public of the trust in legal institutions and cryptocurrency as a tool for social good.