Researchers at the Sandia National Laboratories, two major United States Department of Energy research and development national laboratories managed and operated by the Sandia Corporation (a wholly owned subsidiary of Lockheed Martin), have developed a set of requirements for an analytical tool that can be used to overcome challenges brought by cryptocurrencies, according to an email sent to CoinReport by Sandia.
Leading the work for Sandia, a National Nuclear Security Administration (NNSA) laboratory, is Andrew Cox, who said the law enforcement community had identified the need for new methods and tools to help in an assortment of investigative situations, including intricate money-laundering schemes, cyber thefts and straightforward transactions of illegal goods. Law enforcement’s most contiguous need, says Sandia in its article “Beating Bitcoin bad guys,” was to reduce the time and resources needed to trace illegal trade.
Concentrating on bitcoin, a systems analysis of unlawful ecommerce was carried out by the lab, with the team developing a research environment to investigate other algorithms that can de-anonymize illegal bitcoin users. A combination of new and customary investigative techniques, current financial regulation and innovative policy and process tools were included in the research.
When de-anonymization takes place, law enforcement can connect the bitcoin address to a particular alias and know all of the bitcoin addresses that need to be dealt with.
“When you exchange Bitcoin, you don’t have information such as an e-mail address,” said Cox. “Instead, it’s a completely random set of numbers and an anonymous Bitcoin address. Bitcoin users can use one or many Bitcoin addresses. This allows criminals to evade obvious patterns of transactions.”
The researchers, says the Sandia article, were able to use some published methods to find and fathom that the same users were using the different bitcoin addresses. The Sandia researchers are currently in the process of developing their own methods by typifying transactions of bitcoin users and utilizing machine learning methods to discover patterns of interest.
“It doesn’t mean that we get their actual name because there aren’t any names associated with Bitcoin,” said Cox. “But it will show that some transactions are controlled by the same user.”
Sandia says that it will keep working on the algorithmic research, concentrating on creating a graphical user interface so that law enforcement officers can effortlessly work together and make queries against the lab’s research environment and what bitcoin calls the blockchain.
“Our clients are happy about the requirements we’ve developed and the research we’ve done on what types of tools and capabilities are needed,” Cox added. “The bottom line is, the work is about spending time with law enforcement officers and making sure that we put their needs first.”
Sandia’s work was conducted for the Department of Homeland Security (DHS) Science and Technology (S&T) directorate, but the lab says the work could ultimately be delivered to other federal law enforcement agencies as well. DHS S&T requested Sandia to create a front end or a graphical user interface on the research environment for the agents to be able to test the algorithms Sandia was using in actual investigations.
Image – Via image gallery in the media section of Sandia’s website