Forensic Methods and Solutions for Smart Contracts and Off-Chain Transactions (KRYPTOMONITOR)

Cash flows in the still most relevant cryptocurrency Bitcoin can currently be traced relatively well. However, the need for new forensic methods can already be anticipated due to the advancing technical development: virtual assets, so-called crypto-assets, and financial products are increasingly being implemented as tokens or smart contracts, and established blockchain forensics are also becoming more common due to the increasing spread of off-chain payment channels. Therefore, existing blockchain-forensics will soon reach their technical limits.

The goal of the KRYPTOMONITOR project is to develop generic crypto-asset analysis methods that support the analysis of smart contracts and off-chain transactions in addition to native cryptocurrency transactions. The resulting tools should enable more effective law enforcement through new forensic analysis procedures and provide a fact-based decision-making basis for assessing possible risks and enforcing regulatory measures. Orthogonally, legal and regulatory questions relating to tokens are to be answered, standards for effective data exchange are specified, and qualification standards are to be set through training measures.

The expected project results are:

  • a (data protection) legal assessment of the developed methods and regulatory recommendations with regard to tokens and payment channels,
  • new forensic methods for the analysis of generic crypto-assets which are not used as program libraries and in existing tools (e.g., BlockSci, GraphSense) were integrated,
  • a systematic analysis and risk assessment of tokens,
  • formats for a harmonized data exchange between involved stakeholders,
  • a coordinated cryptocurrency forensic curriculum as a qualification measure for investigators.