Bitcoin Easy to Track: Payment Processors a Weak Link says Mueller Indictment

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According to a report that appeared in The Intercept, as well as statements from special investigator Robert Mueller, the US government is apparently quite adept at tracking bitcoin and bitcoin transactions. Based on the indictment, the Russian government attempts to manipulate the 2016 presidential election were in some part paid for through bitcoin that the Russian GRU mined. Perhaps the idea was to use bitcoin mined by the group itself as a way to maintain anonymity. However, that seems to have not worked due to a number of oversights and a lack of “compartmentalization”.

Bitcoin Privacy

Big Crypto Brother

It’s a well-known fact that the bitcoin blockchain is completely open and accessible to anyone. All transactions that have ever happened since the genesis block can be reviewed and analyzed. In other words, if an illicit transaction is tracked to a single wallet, then all transactions coming from or going to that wallet can also be tracked using advanced blockchain analysis techniques and software.

The concept of blockchain analysis is essentially that with a full copy of a blockchain, advanced software can build a map of sorts that can reveal connections between a sequence of wallets or accounts. To make things worse for those seeking anonymity, most all payment processors like BitPay record critical information about those interacting with them.

According to the article in The Intercept, payment processing services like Coinbase and BitPay were critical in building a map of financial movements that the GRU made.

Mueller’s The Treasure Hunt

The investigation and eventual indictment led by Robert Mueller discovered that the GRU mined a bitcoin block and then use those proceeds of the block reward to register a website and to pay for a Romanian VPN service. Unfortunately for them, they reused the same email address multiple times and a number of IP addresses were recorded that indicated that the actions which were designed to appear to come from an American hackivist group and a lone Romanian hacker were in fact all the efforts of the same group.

And now that this information is out in the open, this begs a few important questions.

First, why didn’t the group maintain a higher degree of compartmentalization (such as not reusing email addresses), and why didn’t they use a more private payment method, or make more efforts to create a disconnect from the original funding source to its various destinations?

For instance, it would have been arguably more secure if they had simply purchased bitcoin with cash from a person-to-person seller instead of mining the block themselves. Not only that, but they could have purchased bitcoin multiple times from multiple sellers through cash in hand buying operations, and then have kept each purchase or wallet separate in its use case.

Regardless, it seems that they overestimated the anonymity provided by bitcoin. And now we know that not only is the US government and it’s members like Mueller are watching bitcoin, but they are doing a decent job of tracking it as well.

Privacy Implications

Privacy has become something of a buzzword in the last few years since Edward Snowden revealed how closely we are all being watched and tracked.

Privacy Cryptocurrencies

Read: Our Guide to Privacy Coins

Some seeking financial privacy or financial independence may have moved into bitcoin hoping it is a greener pasture. However, this recent investigation reveals that bitcoin may not be the haven of privacy that some wish it to be. Perhaps privacy-focused cryptocurrencies will prove to be the next great escape for those seeking anonymity.


Robert is News Editor at Blockonomi. A true believer in the freedom, privacy, and independence of the future digital economy, he has been involved in the cryptocurrency scene for years. Contact

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