Home CryptocurrencyBitcoin “Tracers in the Dark” presents an entertaining crime story – and a lesson in privacy

“Tracers in the Dark” presents an entertaining crime story – and a lesson in privacy

by SuperiorInvest

On its surface is Andy Greenburg’s new book, Tracers in the Dark: The Global Hunt for Crime Lords of Cryptocurrency, is a standard crime story. Fans of true crime podcasts will enjoy the crypto version and get a seat in a FBI van as United States federal agents track criminals through their crypto transactions.

The first story told is that of a crooked drug agency agent who stole funds from the Silk Road online drug market. It also deals with the hunt for the Dread Pirate Roberts, known as Ross Ulbricht – the founder of Silk Road.

Ross’ operational security was pretty good. He used Tor for everything. He used an encrypted laptop that locked itself when closed. He did not disclose personal information. But in private, one mistake is enough. He was eventually corrected by one small blunder on an online forum when he first launched Silk Road.

The AlphaBay takedown was an even more sophisticated operation, told through a combination of standard investigative techniques that also used evolving tools developed by crypto-forensic firms including Chainalysis and Elliptic. I won’t spoil the ending of that wonderful fairy tale in this review.

The more disturbing part reveals the takedown of Welcome to Video, a child pornography site where many users simply sent their bitcoins (BTC) directly from Know that your customer meets the requirements exchanges.

The book is fun to read like a true crime novel. It is also a useful learning tool for operational security on the web, especially for new cryptocurrency users. The growth in cryptocurrency usage in the past two years has been exponential, thanks to new wallets like MetaMask that became available on phones two years ago.

Since you no longer need to be a tech expert to use cryptocurrencies, many new users are less sensitive to information privacy than the hardcore techies who dominated crypto in the early days. This book should serve to awaken them to the need for crypto privacy.

Related: My “I told you so” SEC story on FTX

It is important for privacy advocates to study criminal forensics, not because we want to help the bad guys, but because the tools used by the government against despicable people in this book will eventually be applied to all of us by both governments and snooping neighbors.

As one example, the thousands of people who were stolen cryptocurrency by Sam Bankman-Fried will soon learn of one injustice in the tax code in that the theft is not deductible against capital gains. If victim information is leaked in FTX’s bankruptcy, the Internal Revenue Service will likely use that information to go after the bankrupt victims of the fraud to recover capital gains taxes owed on their paper profits. Chainalysis tracking technology will help them with this.

And with immutable records of transactions existing on the blockchain, your privacy practices compete with yet-to-be-developed crypto-forensic technology.

The book is more sophisticated than the pompous title would suggest. Readers who are crypto-natives will be relieved that the author cares to explore the second, more subtle dimension of cryptographic surveillance technology. It presents views on privacy and Bitcoin advocates such as Matthew Green, one of the founders of Zcash (ZEC) and Bitcoin proponent Alex Gladstein.

After recounting the many victories of Chainalysis, the author concludes by pointing out the dark side of its technology. It recounts an interview with the founder of Chainalysis during which tough questions were asked about working for authoritarian governments. When asked if he is confident that his product will not be used to track ordinary citizens and oppress human rights protesters, the Chainalysis CEO’s answers seem to be shrouded in confusion.

Related: Treasury officials would do more for national security if they left Tornado Cash alone

The book devotes several chapters to the diligent work of privacy researcher Sarah Meiklejohn. Her early work on developing clustering techniques to track bitcoin transactions helped establish the crypto forensics and privacy thread.

That foundation was the work Chainalysis based its early models on, and its work and others in that vein eventually helped power privacy tools in cryptocurrencies like Zcash, Monero (XMR) and Bitcoin CoinJoin wallets like Samourai are evolving. The epilogue notes that when she was offered a position at Chainalysis for her work establishing the tools she uses, she turned it down.

He notes his concern that the impact of Chainalysis will not be in catching bad guys, but instead being used more by financial institutions to “de-risk” a permanent breach of financial privacy. She remarked, “Then it’ll be a lot sketchier, won’t it?”


There is still hope for financial privacy. One agent cited in the book notes that Chainalysis and law enforcement’s claims that they can trace Monero don’t hold up. And nowhere in the book is there any suggestion that anyone has the technology to track Zcash protected transactions.

JW Verret is an associate professor at the Antonin Scalia School of Law at George Mason University. He is a practicing crypto-forensic accountant and also practices securities law at Lawrence Law LLC. He is a member of the Financial Accounting Standards Board’s Advisory Board and a former member of the SEC’s Investor Advisory Committee. He also runs the Crypto Freedom Lab, a think tank that campaigns for policy change to preserve freedom and privacy for cryptocurrency developers and users.

This article is for general informational purposes and is not intended and should not be construed as legal or investment advice. The views, thoughts and opinions expressed herein are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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