Chainalysis Unveils New System to Combat Crypto Crime

Blockchain data analysis firm Chainalysis has developed a new system to help law enforcement trace and seize illicit crypto assets. The integrated solution, which combines Chainalysis' existing blockchain investigation software and a new tool called Wallet Scan, aims to streamline the process of tracking stolen cryptocurrency and recovering assets.

The first component of the system, Chainalysis Reactor, is a preexisting tool designed to help law enforcement officials track crypto across various blockchains and identify on- and off-ramps. The second part, Wallet Scan, automates the discovery of derivation paths, eliminating the need for manual wallet reconstruction and allowing investigators to focus on asset recovery.

Chainalysis' recent acquisition of Alterya, a fraud detection solution powered by artificial intelligence (AI), further enhances the company's capabilities in combating illicit activities in the crypto space. Alterya has worked with top crypto and fintech firms like Coinbase, Binance, and Block, monitoring over $8 billion worth of fiat and crypto transactions monthly. In 2023, Alterya detected more than $10 billion worth of payments sent to scams.

The increasing prevalence of hacks and scams in the digital asset sector underscores the need for such solutions. According to blockchain security firm PeckShield, total value loss in the sector due to hacks and scams in 2023 exceeded $3.01 billion, marking a 15% increase from the previous year.

As cryptocurrency adoption continues to grow, so does the importance of robust security measures and law enforcement tools to combat illicit activities. Chainalysis' new system represents a significant step forward in the fight against crypto-related crimes, providing law enforcement with a powerful tool to trace and seize illicit assets.