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Chainalysis's new plan to assist governments in custody and sale of illicit crypto assets criticized by Weiss Ratings as detrimental to the industry

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Chainalysis

Chainalysis, a blockchain data research firm, not only assists authorities in tracing cryptocurrency assets on the blockchain, but has recently discovered a new business opportunity. Their new service will help governments and bankruptcy trustees to seize and eventually sell off cryptocurrency assets. However, rating agency Weiss Ratings believes that this move will be detrimental to the overall cryptocurrency industry.

Asset Realization Program

Chainalysis launched the Asset Realization Program on the 12th of this month to assist law enforcement agencies and governments in dealing with seized cryptocurrency assets. The announcement emphasizes:

When law enforcement officials investigate illicit cryptocurrency assets, they need to seize and store them until a court ruling allows for legal confiscation. Therefore, a secure way of custody is needed, as well as the eventual sale of the seized assets. As illegal revenue sources become increasingly complex, law enforcement agencies have seen growth in these related needs.

Previously, Chainalysis primarily provided blockchain tracking analysis for government agencies, including playing a role in actions such as the August crackdown on North Korean hackers Lazarus Group and terrorism financing in Syria. With the introduction of the "Asset Realization Program," it may also assist in returning user assets in future Ponzi schemes, pyramid schemes, and other fraudulent activities.

Jason Bonds, Chief Revenue Officer of Chainalysis, stated:

As cryptocurrencies gradually become mainstream, with adoption rates increasing regardless of their purposes, building trust in digital assets is what Chainalysis aims to do. Assisting in investigating illegal activities by providing help with custody and asset realization is a natural progression for us.

US Department of Justice Seizes Over a Billion Dollars in Bitcoin

The "Asset Realization Program" was launched after the US Department of Justice seized a record-breaking 69,370 bitcoins on November 3rd. According to the official press release, an anonymous hacker known as "Individual X" stole the bitcoins from the dark web marketplace "Silk Road" in 2013 and transferred them to this address.

This address held bitcoins as well as forked versions such as Bitcoin Cash (BCH), Bitcoin Gold (BTG), and Bitcoin SV (BSV), valued at over a billion dollars. The transfer occurred on the morning of November 4th, marking the highest-value single bitcoin transaction on the blockchain, with Chainalysis claiming to have assisted in this event.

Weiss Ratings: This Move Leads Bitcoin Towards Anonymity

Weiss Ratings expressed their opinion on Twitter after learning about the "Asset Realization Program," suggesting that it could harm the industry ecosystem. Weiss Ratings pointed out:

If there is anything that could destroy the future of Bitcoin, it is undoubtedly this program launched by Chainalysis. This could lead to bitcoins involved in illegal transactions being sold at a discount and blacklisted, forcing developers to enhance the anonymity of Bitcoin. What is most worrying is that this massive upgrade could increase the likelihood of Bitcoin hard forks, and whether exchanges will accept the anonymous version of Bitcoin remains a big question mark.