A team of researchers from Friedrich-Alexander-Universität Erlangen-Nürnberg has recently published a paper outlining a set of argumentative schemes aimed at safeguarding the rights of individuals suspected of crypto-related crimes while assisting investigators in their efforts.
The preprint paper titled “Argumentation Schemes for Blockchain Deanonymization” presents a comprehensive blueprint for conducting, verifying, and presenting investigations involving cryptocurrency transactions on the Bitcoin blockchain. Although the paper focuses on the legal systems of Germany and the United States, the researchers believe that the proposed methods can be applied more broadly.
Investigations related to Bitcoin crimes often revolve around deanonymizing suspected individuals, which is complicated by the pseudonymous nature of blockchains. Rather than legal names, users are identified through unique software addresses called wallets when conducting blockchain transactions.
However, blockchains inherently maintain transparency. Whenever data is added to the blockchain ledger, the transaction is recorded and becomes accessible to anyone with blockchain access.
In order to determine the identity behind a specific wallet, investigators rely on information contained within blockchain transactions (blocks), which when combined, create a digital trail of evidence.
According to the research team, the primary challenge in these investigations is no longer technological but rather a legal one. While law enforcement agencies possess the necessary tools for initial blockchain analysis, the early data points they gather only serve as circumstantial evidence.
To validate these assumptions and connect on-chain activity with off-chain activity, such as obtaining identity or bank account information from suspected users involved in criminal activities, there is currently no established standard practice to determine the reliability of these analysis results.
Properly conducted blockchain investigations can, in fact, reveal the culprits behind crimes. The researchers cite the example of the Wall Street Market case, where U.S. Postal Service investigators successfully identified the operator of an illegal dark web marketplace by connecting various data points corroborated through surveillance operations.
However, the researchers acknowledge that such investigations need to balance the rights of suspects with legal requirements. In both Germany and the U.S., prosecutors must demonstrate a certain degree of evidence of guilt before obtaining warrants for invasive investigations such as surveillance or arrests.
In order to assist investigators and prosecutors while ensuring a fair application of the law to suspects, the researchers propose a standardized framework that includes five argumentative schemes. These schemes aim to ensure proper reporting, explanation, and adherence to legal processes throughout the investigation.
The researchers provide two schemes as examples, each employing a set of defined premises to form specific conclusions and offering critical questions to evaluate the strength of the arguments presented.
By utilizing these argumentative schemes, analysts can clearly articulate the employed heuristics, strengths, and potential weaknesses, thus increasing the comprehensibility of analyses and court proceedings for decision-makers. Furthermore, this framework facilitates documentation for later verification by expert witnesses, improving the overall integrity of the process.
