This compelling story from Ars Technica gives us the deepest look yet into the corruption scandal that brought down two federal agents. The duo attempted to steal and extort hundreds of thousands of dollars from the Silk Road dark net market but were thwarted by a mix of investigative work and simple analysis of the publicly available Bitcoin blockchain.
This new site, like no other before it, could accurately trace the history of bitcoin payments and wallets. Moreover, it was able to map wallets into known "clusters"—that is, mapping addresses to known entities like Silk Road, Coinbase, and other large Bitcoin players. (Wallet Explorer, and its commercial successor, Chainalysis, made use of academic research that first debuted in October 2013.)
There was more to this discovery. After becoming more comfortable with his blockchain analysis, Gambaryan strongly suspected there was another bad actor. The dozens of hours he'd spent tracing the movements of bitcoins through the blockchain showed some currency being moved in small groups, while others were bouncing around as large chunks. Force had made simplistic transfers of money using his own name. But Gambaryan saw another, more complicated set of transfers as well.
The whole thing is worth reading.
Our advisory board member Jason Weinstein, a former federal prosecutor and director of the Blockchain Alliance, previously looked at how law enforcement leverages the blockchain in investigations. Tools and savvy have only become more available since then. We will likely hear many more stories of criminal enterprises foiled by the blockchain in the future.