Chainalysis Refutes Data Breach Allegations while Outlining its User-Information Policy

Chainalysis, a US-based blockchain data analytics firm, in an official statement, clarified that the company does not either collect or sell the personal information of users while providing services to various cryptocurrency exchanges. The statement was published on the company’s blog post dated March 5, 2019. So that you know Chainalysis is one of the most high-profile names in the crypto industry and provides technical support to firms and government agencies to track illicit transactions relating to financing of terrorism and money laundering activities.

According to some recent reports, organizations operating in the blockchain analytics space have been alleged with circulating the users’ information of their client without their consent. These allegations have surfaced in the middle of the controversial acquisition of Neutrino, a blockchain analytics firm, by the Coinbase which got crypto enthusiasts up in arms. The crypto community expressed its displeasure on the deal even as Coinbase tried to douse the fire by stating that their previous technology-support provider was allegedly selling data of Coinbase’s users to third-party.

Chainalysis Explanation

Chainalysis has explicitly clarified in its blog post that to conduct transaction analysis, the company doesn’t require any kind of personal data, and hence, the question of circulating the data does not arise at all. Divulging more details about the process, the company said that exchanges which desire to use the firm’s services need to submit only their transaction data to automate their transaction monitoring process – and not the personal information of users. Any personal link of identifiable information is outside the working scope of Chainalysis, the company added.

This information is in-line with the company’s focus to track down illicit transactions based on select indicators of risky behavior it considers while identifying suspicious elements. This methodology of identifying illicit transactions requires very basic information about the crypto wallet address and not the personal information pertaining to the users. Making it further clear in its blog post, Chainalysis claimed that its scrutiny is limited only to the data related to transaction levels.

Data Privacy Concerns

In a related development, Elliptic, a London-based blockchain analytics organization, dismissed the allegations that it sells users’ data of the clients to the third party in order to reap financial benefits. Of note is the fact that Elliptic provides technology support to Coinbase and has come under severe criticism on the allegations of selling the users’ data making financial gains. Responding to allegations, James Smith, chief executive officer and co-founder of Elliptic said that the organization never violated the financial privacy of users and allegations are a result of a misunderstanding that people have about the role of Elliptic in the industry.  The concern related to data privacy is quite significant, and organizations are putting their best efforts to curb any kind of illegal leak of users’ personal information to third-party. The fact that regulations regarding cryptocurrency and blockchain technology are still in the evolving phase make the things difficult to monitor and control for the enforcement agencies.

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