There are still people out there who believe that bitcoin transactions are anonymous. However, Bitcoin's blockchain can be used to track cryptocurrency transactions to specific actors and money laundering networks. Last month's indictments of the 12 alleged Russians who hacked the Democratic National Committee (DNC) servers testify to how the authorities can use the blockchain to track off the offenders involved in outrageous cryptocurrency activities.
According to the indictment, the 12 suspects used bitcoins during the 2016 election period to purchase the dcleaks.com domain, which was later used to publish the stolen emails from Hillary Clinton's campaign. The group also paid for the server in Malaysia that hosted the site using Bitcoin and purchased a virtual private network (VPN) using the same pool of funds.
The suspects, who allegedly worked for the Directorate General of Russian Intelligence of the General Staff Unit (GRU), specializing in IT security operations that have obtained invaluable documents through computer intrusion. They have apparently been involved in large-scale operations designed to influence US presidential elections and have hacked emails from volunteers and employees connected to the Hillary campaign, including the president.
Using alias Guccifer 2.0, Russian hackers contacted a US reporter and gave him access to the stolen files on the dcleaks.com site, leading to widespread news coverage. The compromising information is believed to have had an indirect impact on the elections.
Tracing transactions Back to the DNC Hacker Group was easy
Tracing bitcoin transactions Guccifer 2.0 for the culprits was relatively easy as demonstrated by Tim Cotton, a blockchain developer. He was able to track purchases in the GRU unit, which hacked DNC servers while using only publicly available information. By analyzing the blockchain, which is the basis of bitcoin, it is possible for the forces of order and users to access the public ledger and identify a node that indicates where a purchase was made.
The data found on transactions taking place on cryptocurrency exchanges are particularly valuable to order forces as these services usually require personal information to allow users to make transactions. This information can be traced back to an individual and is much more reliable than numbers and naked letters.