Chainalysis Proposes Ontology Framework to Standardize On-Chain Fund Tracing for Investigators

Chainalysis has released a proposed methodology aimed at creating a unified standard framework for law enforcement and investigators to trace on-chain funds, including identifying address clusters and assessing potential control relationships. According to Odaily, the proposal uses an “ontology” approach to define the structure of on-chain analysis and to systematize the industry’s inconsistent concept of address clustering. It breaks clustering into wallet segmentation and functional roles, and describes on-chain relationships through a two-layer structure: the first layer defines transaction graph structures, and the second evaluates inferred confidence. Chainalysis said the framework is intended to improve the explainability of on-chain forensic methods and their applicability in legal settings. The company said it designed and validated the approach based on its practical experience in U.S. Department of Justice-related cases, including its analytical work in the Bitcoin Fog mixing service case. Jacob Illum, Chainalysis’ chief scientist, said the proposal aims to clarify what evidence supports the conclusion that multiple addresses belong to the same entity. He added that on-chain analysis cannot directly identify end-user identities and still requires legal investigative methods involving centralized entities such as exchanges. Chainalysis said it is opening the proposal for industry discussion in an effort to encourage more unified technical standards for on-chain analysis in law enforcement and compliance.