Elliptic, a blockchain analysis company targeting terrorist cryptocurrency financing that counts Binance, Circle, and banks as clients has now gotten $23 million USD from Japan’s SBI Holdings, which is a financial business service spin off from Softbank, which has 31 trillion yen (~289 billion USD) in total assets and a market cap of 90 billion USD.
Elliptic made headlines for being able to track Bitcoin donations made to Hamas, which Israel, the United States, and European Union designate a terrorist organization, via various online wallets. Recently, they were able to learn of more cryptocurrency donations to Al-Qassam Brigades, the military wing of Hamas, through a donation website that was using a dynamic donation wallet in an attempt to obscure donation destination by giving each donor a different Bitcoin address. Co-founder and CEO, James Smith, told CNBC about how their information enables their customers to take the appropriate actions:
“Because we are always on top of what’s about to happen, we can see when those funds start to move to exchanges. We were able to let our customers know that these funds were heading towards them, and they were able to stop them.”
In addition to tracking cryptocurrency financing for terrorist organizations, Elliptic is also able to track people that trade child pornography, trade drugs, and recent hacks that resulted in stolen funds.
Cryptocurrencies may be easier to track than previously thought
Cryptocurrency has been called out multiple times for being used to finance terrorists, drug dealers, and other illicit actives for its anonymity, however due to its pseudonymous nature with every transaction being published on the public blockchain, this has given rise of various blockchain analysis companies that are able to track money going between various cryptographic addresses. In many cases, these tools are able to link a cryptographic address to an online or real-world identity, or to known movements of funds such as a major theft. Even in cases where transactions are mixed, as in with Dash PrivateSend or Bitcoin mixers, large movements and suspicious activity can sometimes be identified through extensive blockchain analysis and process of elimination.
An attempt to counter these tracking tools has been attempted with various encryption-based privacy coins such as Zcash or Monero, which obscure the blockchain and its transactions from public analysis. However, at present these coins still suffer from a lack of liquidity and adoption, which creates limited velocity of money. This facilitates various tools finding outliers and red flags, particularly at bottlenecks that require AML/KYC information such as exchanges, with major fiat currency and transparent cryptocurrency movements able to be correlated to purchases of less-liquid more-private coins.
Dash offers privacy without sacrificing radical transparency
As previously detailed by Dash Core CEO Ryan Taylor, Dash’s PrivateSend, its method of mixing transactions, is not fundamentally different than mixing Bitcoin transactions through services like Wasabi Wallet, simply offering significantly improved speed and efficiency, as well as reduced third-party trust. Therefore, Dash’s PrivateSend should not be treated any differently in terms of regulation than how Bitcoin is treated. The ability to still score rank the risk of various Dash transactions, just as other cryptocurrency transactions, is seen in the recent partnership with blockchain analysis company BlockchainIntel, which will help companies that require strict regulatory compliance to adopt Dash without dedicating their own extra bandwidth.
Dash carries with it “radical transparency” according to independent journalist Ben Swann, due to anyone’s ability to see how organizations are funded via the DAO or the public blockchain, and the network itself can be publicly audited for total supply, transaction costs, and other valuable metrics. PrivateSend obscures the ability to trace individual transactions, as well as benefiting multiple users by allowing the mixed transaction details to flow downstream to future users and enables better fungibility aspects than encryption coins that simply attempt to hide details of a single transaction, without compromising the greater transparency of the network as a whole.