In case some of you freaks haven't heard yet, yesterday the market became aware that OFAC, the Office of Foreign Asset Control, had sanctioned two bitcoin addresses belonging to two Iranian men who have launched ransomware attacks for the last 5 years. First off, smh at these two dudes who used the same two addresses for FIVE years as they were extorting people. Learn how to OPSEC, bros. Second, this "sanction" should be an interesting case study in the ability of regulators to actually regulate Bitcoin. I have a feeling their actions will be in vain, and our good friend Laurent explains why in the above thread.
The problem that is going to naturally arise for chain analysis companies and the regulators they obediently serve is that there tracking techniques are completely heuristic based, meaning they will never have 100% certainty that their assumptions are correct. Even if their tracking efforts are successful and they have correctly targeted an address, actually enforcing a sanction is going to be very tricky, especially due to the way in which certain bitcoin transactions can be structured. As Laurent points out in his hypothetical scenario with Alice, Bob and Eve; with P2EP transactions a nefarious actor could send the transaction in such a way that it looks like someone else is interacting with the sanctioned address. On top of this, since Bitcoin is a push system, there is really no way to stop people from sending BTC to these blacklisted addresses.
At the end of the day, these efforts from regulators may ultimately be wild goose chases that lead nowhere as software like Wasabi and Samourai's Stone Wall continue to proliferate, using CoinJoins to completely destroy the heuristics used by regulators and their lapdogs who can be found at companies like Chainalysis. I believe the market will demand these types of mixing services from wallet providers as Wasabi and Samourai grow in popularity and as regulators continue to try to crack down. We'll keep following this story here at the Ƀent as it progresses.
Life don't last that long.