The end of Bitcoin privacy? Danish police claim to have developed Bitcoin transaction tracking software

Danish police claim to have developed software that can track Bitcoin transactions involving drugs, according to local media reports.

According to Berlingszeitgeist, one of Denmark’s oldest newspapers, the new toolkit could help Danish law enforcement agencies advance cases involving Bitcoin. The Danish National Police Cyber ​​Crime Center (NC3) is said to be the department responsible for developing the tracking software.

According to reports, NC3's new breakthrough has attracted the attention of the Federal Bureau of Investigation (FBI) and Interpol.

The cases involved individuals in Denmark purchasing large quantities of methamphetamine, ketamine, and cocaine through dark web markets and shipping the drugs through the mail. Law enforcement agencies intercepted the drugs before the defendants received them. The mailing addresses were then used to track Bitcoin transactions.

NC3 director Kim Aarenstrup told Berling Times:

"Our country is currently unique in this regard, as law enforcement agencies in other countries have not been able to successfully use these traces as evidence. In this area, everyone looks to Denmark. We are now in close dialogue with many other countries, so we may be able to further develop the method and teach them how to do tracking."

Criminals’ use of Bitcoin has been on the radar of Danish police since 2015, with the country’s police viewing it as a strategic threat, according to public records.

In its assessment of Bitcoin that year, Danish police expressed concerns about Bitcoin, believing that the technology could allow money launderers to obscure the source of funds and conduct money laundering outside of the strict criminal hierarchy.

Experts have been trying to show that Bitcoin is pseudonymous, meaning that an identity on the Bitcoin network is an address, not a name or some kind of personal information. Other privacy-centric currencies, such as Monero (XMR) on darknet markets, have attracted attention due to concerns about transaction tracking.