Blockchain analytics requires professionalisation, collaboration, more data

The burgeoning blockchain analytics industry requires professionalisation, collaboration and more data to improve validity and create legal reliability, the Blockchain Intelligence Forum heard this month at the Digital Innovation Summit in Bucharest.

If law enforcement officials are going to rely on blockchain analytics to identify illicit activities and build cases against individuals who are then prosecuted and potentially imprisoned, the tools should be better understood and explainable, said Patrick Tan, general counsel at ChainArgos, a blockchain intelligence provider in Singapore and co-founder of the Blockchain Intelligence Academy, a joint venture with ICI Bucharest designed in part to professionalise the industry.  

“We seem quite comfortable to deny fundamental rights and liberties of individuals, oftentimes based on this panacea of blockchain intelligence, which in many cases, the very people who are prosecuting these cases, the very members of law enforcement, donʼt fully understand. They exist in black boxes because we want them to. If we say that blockchain has transparency, why should it be that blockchain intelligence is held to a different standard?” Tan said.

There should be three pillars to blockchain intelligence and analytics: data interoperability, transparency and open standards, as well as robust investigative methodologies, he added.

“We firmly believe in building blockchain intelligence on established math and forensic science in service of the truth, moving away from pseudoscience and questionable methods that have not been subject to empirical testing,” Tan said.

“This commitment to open standards will build trust and ensure that our findings are reliable and admissible in court, especially where it has the potential to impact civil liberties. If we are locking up our citizens based on blockchain intelligence, then we owe a higher duty that we act in service of that truth.”

UK programme

The University of Portsmouth will launch the Blockchain Intelligence Centre of Excellence (BICE) to professionalise the blockchain intelligence field, said Dr Paul Gilmour, senior lecturer in economic crime and lead of the economic crime research group at the university. Portsmouth will provide the training, academic and the research capabilities.

“We can deliver training in person and distance learning to financial professionals, but also students and industry experts as well. We have over 500 students who study criminology, and  this is a great opportunity to provide that academic expertise, to ensure the training is delivered in a way that can be used by prosecutors and law enforcement officials,” Gilmour said.

Growing the data set

Established blockchain intelligence providers should find ways to collaborate and share intelligence among themselves and with law enforcement, which includes finding ways to standardise data formats, enabling data to be shared, said blockchain intelligence chief executives.

Criminals are aware of the significant data silos and gaps between forensic tools, government agencies and jurisdictions. These data fragmentation issues allow criminals to take advantage of a lack of coordination and information sharing, said Dhirendra Shukla, chief executive at Grey Wolf Analytics and a professor in technology and entrepreneurship at the University of New Brunswick in Canada.

“Several of the forensic companies are coming together, sharing attribution, and that is giving me a lot of hope and excitement. But there are other players in the industry that just consume the data these people are contributing and never contribute themselves,” Shukla said.

There must be “value for the victims” in blockchain intelligence, said Marina Khaustova, chief operating officer at Crystal Intelligence in the Netherlands. Providers should aim to solve problems for people who are standing alone against groups of trained individuals using advanced technologies such as artificial intelligence (AI).

“Thereʼs no pride on sitting on, for example, child sexual abuse material (CSAM) data, and saying it is your competitive advantage and youʼre selling this data. [It] must go public. And of course, there are considerations that we need to not to turn into search engines for these things. This is our professional challenge, to solve that problem in the right way,” Khaustova said.

Law enforcement data

Governments and law enforcement agencies globally should be sharing more data to tackle criminals operating across borders. Overall, the conference panellists saw data sharing as crucial but complex, with a need for careful, strategic approaches to overcome current barriers.

There are much larger repositories of blockchain data that could be opened up, according to ChainArgos chief executive Jonathan Reiter.

“There are a very small number of government organisations that publish lists of sanctioned addresses, but there are huge repositories of the FBIʼs Internet Crime Complaint Center [that] are not public. Traditionally, law enforcement keeps this stuff non-public, and there are public repositories where weʼve seen major exchange addresses listed as a scam address because somebody sent their money to it,” Reiter said.

“Obviously, thatʼs not right — some filtering is needed. But a lot of law enforcement can think about how they can make commensurately more information public, and that already provides structures for sharing. That makes it easier for people to have a common source. The [Office of Foreign Assets Control] list is the only major international publicly recognised [source] and itʼs very small. There are much larger repositories that could be at least partially opened up.”

Karl Zettl, chief executive at Iknaio in Austria, said because criminals act in international networks, law enforcement and blockchain analytics must do the same. “If we donʼt think in international networks, we are always one step behind them,” he stressed, which is why institutions, organisations and governments need to exchange data with each other.