Crystal, a blockchain investigating tool, is developed by the Bitfury Group to combat cryptocurrency-related crimes. Bitfury Group saw how the cryptocurrencies such as Bitcoin have the potential to break traditional financial barriers. However, the concerns about digital currencies being used to fund illegal activities are growing.
According to a study, approximately one-half of Bitcoin transactions and one-quarter of Bitcoin users are associated with illicit activity. Over $72 billion of unlawful activity per year involves Bitcoin.
A study conducted in 2018 by a blockchain analysis startup, Elliptic, found a fivefold increase in the number of large-scale illegal operations between 2013 and 2016. According to the analyzes of over 500,000 bitcoins, the organizations identified 102 criminal entities. These criminal entities included dark-web marketplaces, Ponzi schemes, and ransomware/malware attackers.
Tracing Criminal Activity
Many of the digital currencies examined in the study could be linked back to the perpetrators. It was found that 95% of all the laundered coins tracked came from nine dark-web marketplaces, such as Silk Road, Silk Road 2.0, Agora and AlphaBay.
Examining blockchain activity closely can help pinpoint the root cause of cryptocurrency related crimes. Crimes that belong to the same Bitcoin wallet and are controlled by the same entity are even easier to track. This process of tracing back the roots is known as “clustering.”
Crystal is a software solution designed to track activity on the Bitcoin and Bitcoin Cash Blockchains. Crystal collects information about all the transactions recorded to the blockchain to determine which addresses belong to the same entity to identify criminal activities.
Crystal can determine which bitcoin address belongs to certain users Using a unique clustering algorithm. Crystal also names the entities and assign them a risk score by utilizing web crawlers and manual registration.
Crystal is capable of assisting financial institutions and law enforcement in identifying and tracing criminal activities. Every bitcoin address that has ever appeared in the blockchain is assigned a risk score.
The Bitfury Group also conducted a report to trace back the movement of Bitcoin after the hack on the Japanese-based Zaif exchange in September. The hack costed around $60 million in crypto, which is almost 6,000 bitcoins.
According to analysis 46% of the stolen Bitcoin were split into small amounts and sent to various addresses. 30% of the stolen Bitcoins are still located at addresses related to the hacker. Another 24% were sent to Binance for exchange/withdrawal.
Cryptocrime has also been impacting the offline world. Recently a number of crimes occurred in which victims were forced to hand over cryptocurrency account details, or else face violent consequences.
BlockShow, a major flagship event for the blockchain industry, has announced a partnership with Bitfury due to these offline attacks. BlockShow will bring Crystal to its upcoming Singapore event, which is expected to attract over 3,000 attendees.
Addy Creaze, CEO of BlockShow said, “All of our events are centered on a simple premise: we believe in the power of blockchain and cryptocurrencies. But we also believe in transparency and aren’t going to ignore the dangers that come with this promising new technology,” “To some extent, the more promising a technology is, the more people want to sabotage it. We are looking forward to helping attendees understand and address some of the crypto’s risks, as we also explore its undeniable potential.”
Every attendee at BlockShow Asia will be given access to Crystal. The attendees will be able to scan the QR code of their crypto-wallets to obtain user’s risk scores. A risk score represents the extent to which a bitcoin address is connected to questionable activity. This will allow all Blockshow attendees to check whether or not their funds could arouse suspicion from authorities.