“Bitcoin is only used for money laundering and terrorist financing,” cynics of this nascent industry continually cry, as these wanton critics believe that blockchains, in all their the pseudonymous glory, are solely used for illicit acts. While crypto assets aren’t inherently evil, as its critics like to believe, leading government-affiliated groups have seemingly acknowledged the aforementioned ‘problem’, spending millions in a bid to combat cases of money laundering and terrorist financing that are enabled by cryptocurrencies.

US Governmental Bodies Have Spent Over $5M On Blockchain Analysis Contracts

According to data compiled by Diar, the cryptosphere’s most prominent newsletter, American governmental bodies, have spent over $5.7 million dollars of taxpayer money to purchase the services provided by blockchain analysis companies, which have raised a hefty $28.8 million since Bitcoin’s inception.

For those who aren’t in the loop, blockchain analysis firms, like Chainalysis, Elliptic and CipherTrace, utilize techniques and systems reminiscent of those used by traditional financial institutions to “identify illegal activity and attempt to link identities to pseudo-anonymous bitcoin addresses.” The details of the analysis processes used, which have evidently drawn a lot of flak from die-hard decentralists, are often kept behind closed doors, but from what was made public, these startups trace transactions back to a registered exchange or crypto-related service to garner personal information about a suspect.

And as many would assume, seeing that there is a stigma around Bitcoin and its involvement in supposedly criminal activities, government-backed agencies, like the IRS, FBI, SEC, and CFTC, have issued over 50 contracts to track down Bitcoin-related suspects over the years.

Surprisingly enough, the monetary amount that government agencies have spent on these services have tripled, just in the past six months. This may indicate that although cryptocurrency prices have seen a sharp decline in 2018, governmental employees across the United States are still dead set on tracking down presumed criminals that have utilized cryptocurrencies in some way, shape, or form. Or as the author of Diar’s most recent report explained:

“The pseudo anonymity of cryptocurrencies provides intelligence agencies with a paper trail, which can very often be decrypted by blockchain analysis companies. That information can be used as actionable intelligence with the possibility of leading to criminal prosecution. And the rapid rise in cumulative spending of intelligence agencies indicates that they are paying very close attention.”

DMG Blockchain Solutions CEO Speaks On BlockSeer

At CambridgeHouse’s Extraordinary Future conference on September 19th, Dan Reitzik, the CEO of DMG Blockchain Solutions, discussed this exact topic on-stage in front of a crowd of hundreds of individuals that were invested in what he had to say. Bringing up the topic of Blockseer, an up and coming transaction analysis startup that was just acquired by DMG, Reitzik stated:

“Blockseer essentially tracks Bitcoin and Ethereum as it moves through the blockchains, which basically is used by the CIA, FBI, Homeland Security and the IRS. A Japanese television team came to interview the Blockseer team, which we own, because they figured out a $500 million hack (CoinCheck) by finding the four wallets holding all the coins that were stolen.”

Seeing the value that these services provide to governments across the globe, don’t expect the use of these analysis tools, which directly encroach on the privacy of cryptocurrency users, to wane any time soon, hence why Satis Group recently called for Monero (XMR) to be valued at over $18,000 a piece at some point within the next five years.

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