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Bitcoin ransoms seem to be on the rise. Do exchanges or some organization attempt to put comprehensive lists or tracking of bitcoin addresses used for nefarious purposes that are available to the public?

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There are two parts to your question:

  • Blocking: Blocking would entail either nodes refusing to relay transactions paying the crooks, or miners not confirming such transactions. Even if the criminal's address is public and unchanging, which is unlikely due to most wallets generating a new address for each payment, it would require a change to Bitcoin's source code.

    If such a thing were to actually get implemented, miners would not update, as choosing transactions based upon anything else than fee per kB would cause them to lose money. In theory, governments could force more than 51% of hash power to not mine blocks that confirm transactions to known ransomware authors, but if a government can launch such a 51% attack, we have bigger problems.

  • Tracking: Transactions are public, so anyone who downloads the blockchain can map all the transactions in a graph and follow which coins went where.

    Companies like Elliptic and Chainalysis are doing exactly that, and given that ransomware identification sites run by the police, such as No More Ransom, collect the ransom notes including the payment addresses, it is expected that malware authors are being actively tracked through the blockchain.

    These bitcoins are still valid despite the taint, meaning they will be accepted by wallet software, transferrable to anyone, and spendable anywhere they accept bitcoins. Except, of course, for the police attention they attract when spent.

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Yes, it is possible to track addresses used for ransoms, however, it's not quite that simple. Bitcoin is designed to be "censorship resistant", meaning that it is very hard for a third party to block a transaction done willingly between two participants. Exchanges could all agree to not exchange bitcoin from these addresses into fiat, but that's easy enough to get around. All it takes is a single exchange willing to do it, the use of a bitcoin mixer, or even the purchase of online gift cards, and all other efforts are in vain. Most exchanges probably wouldn't even trace the blockchain so much as to detect a ransomer who simply transfers the bitcoin to another address they hold.

The entire concept of coins having "taint" eats away at the fungibility of Bitcoin, so is not in the best interest of Bitcoin stakeholders such as exchanges and miners. I doubt they would voluntarily adopt such policies, and would only do so if forced to by regulators.

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Yes BitcoinWhosWho.com allows bitcoin address tags, tracks website appearances and accepts scam reports from the general public.

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There exist several sites collecting scammers bitcoin addresses. The issue is that everybody can report everything, so you cannot really rely to it.

Tracing is often possible except the scammer is very smart and well organized. There are several heuristics which cluster addresses with likely same ownership. Then one can trace all addresses in the cluster to see when it ends up in one of the millions of known exchange addresses. Then you go to police which might be able in convincing the exchange to hand out all information they know about the person depositing coins. There might be wrong traces but if it brings results at least the police knows to knock at what doors to ask questions.

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