Is Chainalysis Prosecuting Innocent People with L0la L33tz - WBD706

L0la L33tz is a privacy advocate and writer. In this interview,
we discuss her recent article about flaws in Chainalysis
blockchain analysis software. They discuss the impact of such
issues in the case against Roman Sterlingoff, who has been held
in jail based on Chainalysis' evidence, the need for regulation
in the blockchain surveillance industry, and Coindesk’s
subsequent hesitance over L0la’s worthy article amid a conflict
of interest.


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Roman Sterlingov has been in jail for 2 years. He has been
accused of running Bitcoin Fog, a Bitcoin mixer, and laundering
$334 million. No evidence has been found on any computer, thumb
drive or server that links Roman to the crimes he’s accused of.
The evidence that does exist has been produced by the blockchain
forensics company Chainanalysis.


The DoJ’s case against Roman is progressing. As part of a court
hearing on the admissibility of expert testimony, Chainalysis’s
head of investigation testified that there was no scientific
evidence for the accuracy of their software. This is obviously a
significant revelation that tests law enforcement's belief that
such analysis can be used to censor transactions and imprison
people.


Chainalysis has thus far failed to provide key validating data
and peer-reviewed studies. There are also significant doubts
about the heuristics used by Chainalysis, such as the co-spend
heuristic, which assumes that all inputs in a transaction belong
to the same person. This heuristic fails when technologies like
coin joins are used, where multiple people contribute inputs to a
transaction.


An underlying problem is the complete lack of regulation in the
blockchain surveillance industry. There should be open-source
transparency as such analysis is being used to deny people their
liberty and seize their assets. But, the companies involved are
driven by profit and they seek to protect their intellectual
property.


This has bled into the reporting on the case. CoinDesk, whose
parent company is an investor in Chainalysis, initially retracted
an article on this case by L0la L33tz without informing her. They
later republished it. But, it calls into question some of the
material conflicts of interest within the industry. To avoid a
powerful nexus of special interests, it is vital that independent
journalists like L0la L33tz are supported in their efforts to
shine a light on such systems.


 


Show notes:
https://www.whatbitcoindid.com/podcast/is-chainalysis-prosecuting-innocent-people


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