A team of researchers from the Friedrich-Alexander-Universität Erlangen-Nürnberg has recently published a paper detailing methods that can be used by researchers and courts to determine the validity of de-anonymized data on the Bitcoin blockchain (BTC).
The teams’ preliminary paper, “Argumentation Schemes for Blockchain Deanonymization,” exposes a plan to conduct, verify, and file investigations into crimes related to cryptocurrency transactions. Although the paper focuses on the German and American legal systems, the authors state that the conclusions should be of general application.
Bitcoin-related crime investigations revolve around deanonymizing suspected criminals, a process made more difficult by the pseudonymous nature of blockchains. Users transacting on the blockchain are identified by wallets (unique software addresses) instead of legal names.
However, blockchains are inherently transparent. Every time data is added to a blockchain ledger, the transaction is recorded and made available to anyone with access to the blockchain.
Researchers trying to determine who is behind a particular wallet use the information contained in the transactions (blocks) of the blockchain as data points that, combined, form a digital paper trail.
According to the research team, the current bottleneck in these investigations is no longer technological, but legal.
Law enforcement agencies have access to the necessary tools to perform preliminary blockchain analysis, but this early data represents circumstantial evidence.
These tests are based on certain assumptions that can only be validated by connecting on-chain activity with off-chain activity, such as forcing an exchange to reveal the identity or bank account information of users suspected of being involved in a scam. crime. According to the document:
“In legal practice, these assumptions are essential for inferring the probative value of an offender’s deanonymization. However, no standard practice has yet been proposed for inferring and discussing the reliability of the results of such analyses.”
If carried out correctly, blockchain investigations can reveal the perpetrator of a crime. The researchers cite the case of the Wall Street market as an example. There, US Postal Service investigators identified the operator of an illegal dark web marketplace by connecting multiple data points that law enforcement officers corroborated through surveillance operations.
However, the investigators claim that these types of investigations risk violating the rights of suspects due to legal requirements. Prosecutors (in Germany and the United States, according to the document) must prove a certain degree of guilt before issuing a warrant to conduct invasive investigations, such as surveillance or arrests.
To help investigators and prosecutors while ensuring that the law is applied fairly to suspects, the researchers propose a standard framework containing five argument schemes designed to ensure adequate information and explanation throughout the legal process.
The image above shows two of the schemes, each of which uses a defined set of premises to frame a specific conclusion, and then provides a set of critical questions to assess the strength of the argument.
The researchers state that “using the schemata, an analyst can clearly articulate the heuristics employed, their individual strengths, and their potential weaknesses. This increases the comprehensibility of such analyzes and judicial procedures for decision makers, and also facilitates the documentation for subsequent verification by an expert”.
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