SoK: Assumptions Underlying Cryptocurrency Deanonymizations

Abstract

In recent years, cryptocurrencies have increasingly been used in cybercrime and have become the key means of payment in darknet marketplaces, partly due to their alleged anonymity. Furthermore, the research attacking the anonymity of even those cryptocurrencies that claim to offer anonymity by design is growing and is being applied by law enforcement agencies in the fight against cybercrime. Their investigative measures require a certain degree of suspicion and it is unclear whether findings resulting from attacks on cryptocurrencies’ anonymity can indeed establish that required degree of suspicion. The reason for this is that these attacks are partly based upon uncertain assumptions which are often not properly addressed in the corresponding papers. To close this gap, we extract the assumptions in papers that are attacking Bitcoin, Monero and Zcash, major cryptocurrencies used in darknet markets which have also received the most attention from researchers. We develop a taxonomy to capture the different nature of those assumptions in order to help investigators to better assess whether the required degree of suspicion for specific investigative measures could be established. We found that assumptions based on user behaviour are in general the most unreliable and thus any findings of attacks based on them might not allow for intense investigative measures such as pre-trial detention. We hope to raise awareness of the problem so that in the future there will be fewer unlawful investigations based upon uncertain assumptions and thus fewer human rights violations.

Argumentation Schemes for Blockchain Deanonymisation

“…However, it is crucial to note that the legal issues examined in this section are universal and are not limited to the legal systems or jurisdictions of states that ratified the Convention. This universality is illustrated by considering both the US, representing a common-law jurisdiction, and Germany, indicative of a civil-law jurisdiction-following the example of Deuber et al [11]. As both states also ratified the Convention, these examples illustrate that the principles of the Convention apply across different legal systems.…”

“…They suggest specific measures to achieve reliability, such as sharing any information necessary to assess reliability, without discussing how they can be implemented in practice. As a step in that direction, Deuber et al [11] provide a taxonomy for the different assumptions underlying deanonymisation attacks on cryptocurrency users-while only briefly discussing their taxonomy's applicability in legal practice.…”

“…Our contribution is the application of tailored argumentation schemes to assess heuristics employed in investigations based on the use of the Bitcoin blockchain to deanonymise criminal users. The schemes render the taxonomy proposed by Deuber et al [11] broadly accessible and easy to use in practice. By presenting the implicit (as critical questions) and explicit premises of those heuristics, our argumentation schemes enable all parties involved in the legal process to systematically assess evidential value.…”

“…However, supposedly anonymous cryptocurrencies, such as Monero [7] or Zcash [8], have also been the target of deanonymisation attacks [9,10]. All attacks on Bitcoin, Monero, and Zcash are based on partly unreliable assumptions [11]. The reliability of these assumptions determines the quality of the results of an attack.…”

The Satoshi laundromat: a review on the money laundering open door of Bitcoin mixers

“…A successful deanonymizaton attack on a Bitcoin mixer, such as the one illustrated in Figure 4, would be able to identify the input and output addresses of the mixing transaction that belongs to the same user. A deanonymization attack is slightly different from a re-identification attack, which entails identifying addresses to the true identity of an individual or organization (Deuber et al , 2022). While important for AML, re-identification attacks are not in scope of this paper as any successful re-identification attack on a mixed Bitcoin transaction can be extended to the general Bitcoin network as a whole, thus not unique to just the context of Bitcoin mixing.…”