Bloomberg Calls Questioning Of Chainalysis ‘Smear Campaign’, Raises Questions Of Media Integrity

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Jour­nal­ism has been get­ting an ill rep. A sur­vey held by the com­mu­ni­ca­tions firm Edel­mann has found that trust in the media in the UK was at 35% and 37% in 2021 and 2022, while trust in the media in the US was only a few basis points ahead, with 39% and 43%, respectively. 

The prob­lem of erod­ing trust in the media seems to arise increas­ing­ly where cor­po­rate and state inter­ests cross the free press. The media plays a key role in com­bat­ing cor­rup­tion, yet it seems the days of pub­lish­ers suing gov­ern­ments over press free­dom are large­ly over. As report­ing made way for ‘con­tent’ and authors turned into ‘influ­encers’, the stage has been set to fos­ter media cor­rup­tion: Thou shalt not piss on the foot that kicks its scraps towards thy.

A recent exam­ple of the free press rep­re­sent­ing cor­po­rate (and intel­li­gence) inter­ests can be found in Bloomberg’s cov­er­age of the Bit­coin Fog tri­al; and the prob­lem begins as ear­ly as the headline. 

In “Wall Street-Backed Cryp­to Trac­er Faces ‘Junk Sci­ence’ Attack”, we can first­ly find the alle­ga­tion that the def­i­n­i­tion of non-sci­en­tif­i­cal­ly proven soft­ware as ‘Junk Sci­ence’ is some sort of new­ly found con­spir­a­cy – when the US based inno­cence project, which has ded­i­cat­ed itself to crim­i­nal jus­tice reform, fre­quent­ly uses the term to describe flawed foren­sics methods. 

Junk sci­ence describes the use of non-sci­en­tif­ic meth­ods to prove (or dis­prove) a hypoth­e­sis. In legal con­texts, sci­en­tif­ic accu­ra­cy is deter­mined via the Daubert stan­dard, which defines the fol­low­ing method­olo­gies which can­not be met by Chainal­y­sis Inc. as uncov­ered in the Bit­coin Fog case: whether the method has a known error rate, whether the method has been sub­ject­ed to peer review and pub­li­ca­tion, and whether the method applied is gen­er­al­ly accept­ed by the sci­en­tif­ic community.

Expert tes­ti­monies of Chainal­y­sis head of inves­ti­ga­tions Eliz­a­beth Bis­bee and FBI spe­cial agent Luke Scholl attest­ing to the lack of sci­en­tif­ic evi­dence for Chainal­y­sis’ Reac­tor soft­ware, com­mon­ly defined as ‘Junk Sci­ence’

“Chainal­y­sis is look­ing into the poten­tial of try­ing to col­lect and record any poten­tial false pos­i­tives and mar­gin of error, but such a col­lec­tion does not cur­rent­ly exist,” reads an offi­cial Chainal­y­sis state­ment address­ing the case. 

Blockchain Foren­sics expert Jonelle Still of the chain sur­veil­lance firm Cipher­trace has described the use of Chainal­y­sis’ heuris­tics as “reck­less” in an expert report issued in the Ster­lin­gov case, stat­ing that “Law enforce­ment and oth­er cus­tomers of Chainal­y­sis have approached Cipher­Trace on this top­ic and have expressed frus­tra­tion relat­ed to the errors they expe­ri­ence using Chainal­y­sis Reac­tor.” Accord­ing to Still, “Chainal­y­sis attri­bu­tion data should not be used in court for this case nor any oth­er case: it has not been audit­ed, the mod­el has not been val­i­dat­ed, nor has the col­lec­tion trail been identified.”

Instead, how­ev­er, Bloomberg chose to cite a Sep­tem­ber 11th fil­ing, which alleges that “the FBI val­i­dates Chainal­y­sis’ clus­ter­ing every day, and it is ‘gen­er­al­ly reli­able and con­ser­v­a­tive.’” “Pros­e­cu­tors said Chainal­y­sis infor­ma­tion is “fre­quent­ly val­i­dat­ed and found to be reli­able” in sup­port­ing sub­poe­nas and search war­rants,” writes Bloomberg, appar­ent­ly tak­ing the state’s and Chainal­y­sis’ word at face val­ue – no ques­tions asked – because what else would a jour­nal­ist do. 

What Bloomberg con­ve­nient­ly for­got to high­light is that the Depart­ment of Jus­tice, too, has found blockchain foren­sics to be “high­ly imper­fect”, specif­i­cal­ly cit­ing Chainal­y­sis soft­ware in a report pub­lished in the Jour­nal of Fed­er­al Law and Prac­tice – iron­i­cal­ly writ­ten by C. Alden Pelk­er, an expert in com­put­er crime, who cur­rent­ly serves as co-coun­sel to Sterlingov’s prosecution.

The descrip­tion of a soft­ware which fails to meet sci­en­tif­ic stan­dards is hence not an ‘attack’ but rather an accu­rate descrip­tion with­in the mean­ing of the term in light of the facts at hand – all of which have been ignored by Bloomberg – which we can either ascribe to incred­i­bly bad jour­nal­ism, or out­right cor­po­rate propagandaism. 

Cir­cling back to Bloomberg’s head­line, this author would like to note that Chainal­y­sis is not just backed by Wall Street, but also backed by In-Q-Tel, receiv­ing over $1.6 Mil­lion from the Cen­tral Intel­li­gence Agency’s ‘non-prof­it’ ven­ture cap­i­tal fund. How for­tu­nate that this fact, too, appears to have escaped the Bloomberg author’s research capabilities.

TLDR: Cor­po­rate jour­nal­ism has shit the free press’ bed once again, and it’s the peo­ple that con­tin­ue to have to lie in it. Auld Lang Syne.

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