Chainalysis Aims to Set the Standard for Blockchain Tracing
The analytics firm wants onchain evidence to be easier to explain in criminal cases and oversight. Chainalysis points to the Sterlingov case and the limits of wallet tracing.
Key Takeaways
- Chainalysis has proposed a standard framework for blockchain tracing and wallet clusters.
- The model is designed to clarify what onchain data can and cannot prove, using a two-step review of graph structure and confidence.
- Chainalysis says tracing can track money flows, but it cannot identify who controls a wallet without additional information.
Chainalysis has proposed a standard framework for blockchain tracing. The analytics firm says it wants to give researchers and prosecutors a clearer way to connect crypto addresses with wallet clusters. In Chainalysis’ view, the approach could help define what onchain data can prove and where its limits begin, especially as blockchain forensics becomes more important in criminal cases and oversight of illegal money flows.
Ontology for Wallet Clusters
At the center of the proposal is an ontology that lays out how wallet clusters are identified and which assumptions are made during the process. Chainalysis says the industry’s current language around clusters is not standardized, so different tools and teams may be working from slightly different definitions.
Under Chainalysis’ model, the process begins with wallet segments, such as a deposit address or a change address. From there, the analysis moves through two layers: first the graph structure, then the confidence level attached to that result. Chief scientist Jacob Illum said the main goal is to show what the data actually supports and where the boundaries are.
Lessons From the Sterlingov Case
Chainalysis points in particular to the U.S. case against Roman Sterlingov, the cofounder of the mixing service Bitcoin Fog. In that case, the company’s Reactor tool was challenged for reliability in a Daubert hearing, and Judge Randolph Moss later ruled that there was enough evidence to show the software is highly reliable.
The case is important because blockchain analytics has to stand up in court, not just in technical reviews. Chainalysis says the ontology should make the method easier to explain for anyone trying to use this kind of evidence in a criminal case.
Why This Matters for Europe
For European crypto and compliance teams, the proposal stands out because blockchain forensics is becoming more standardized outside the U.S. as well. In the Dutch and broader European markets, more cases are combining onchain data with information from crypto exchanges, open-source intelligence, and other off-chain sources. A clearer framework could make arguments about reliability and evidence less dependent on which tool is used or how the results are interpreted.
At the same time, Chainalysis is careful to spell out the limits of tracing. The company can follow funds to places like a crypto exchange, but it cannot tell who the end user is without more information, such as a subpoena or customer records. In other words, tracing is only one part of an investigation, not a complete answer to who controls a wallet.
