Tracking funds on a blockchain has typically required specialized tools, and the process can sometimes be opaque, but crypto analytics firm Chainalysis is taking a swing at solving that problem.
The company rolled out an ontology outlining how investigators can trace funds to wallet clusters and identify which wallets might be under the control of the same entity, in the hopes of creating a standard that law enforcement entities can use in investigations, it said in a blog post published Monday.
Jacob Illum, Chainalysis' chief scientist, told CoinDesk on a call that the ontology is aimed at establishing standards for blockchain analytics to reassure investigators or prosecutors about the usefulness of the data they might use in a case.
"If I was the one who needed this information to actually either convict on or prosecute or investigate, what would I want a tool to do?" Illum said of how he approached the proposal. "… what's supported by the data? That's my job, to tell an investigator as much as possible what you can do with what the data tells us."
Chainalysis used its experience in the U.S. Department of Justice's case against Roman Sterlingov, the co-founder of crypto mixing service Bitcoin Fog, who was convicted on money laundering charges in 2024, to shape its ontology.
During the trial, the judge overseeing the case held what's known as a Daubert hearing to determine whether Chainalysis' Reactor tool was rigorous enough to be used as a prosecutorial tool. Ultimately, Judge Randolph Moss ruled that "substantial evidence supports the government's submission that the software is highly reliable."
The company is leaning on the fact that its software has already been tested in a trial to argue that it has a strong foundation for its methodology.
Illum said multiple times that Chainalysis was publishing its proposal to "start that conversation" with the broader crypto industry about what standards could look like, but hasn't actively solicited much feedback yet, beyond some initial discussions with law enforcement groups.
The ontology itself starts with the idea that current blockchain analytics tools rely on the concept of a "cluster," and this term "does not have a universal meaning across the industry," according to a copy of the document viewed by CoinDesk.
Chainalysis breaks down the concept into different components, starting with wallet segments, which in turn might be used as a deposit address, change address or a number of other functions.
The ontology lays out how Chainalysis views the role of attribution to these clusters, presenting a two-tier structure; the first tier "defines the structural graph," while the second assesses how confident the analysis is in that graph.
"What does it mean that these addresses belong together, right? It's clearly because somebody believes that they are under the control of the same entity, right?" Illum said. "Maybe it's an exchange, or maybe it's a darknet market, or maybe it's a mixer, or whatever. But what are the grounds to establish that these things actually belong together?"
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