Sarah Meiklejohn bought a Guy Fawkes mask, alpaca wool socks and a Boston CD with bitcoin in early 20134. Each purchase was a test. She was a PhD student at UC San Diego, and she made 344 Bitcoin transactions over a few weeks1. Her aim was to learn who sat at the other end of each payment.
The Internet Archive's first copy of her team's paper is dated September 2, 20132. Its title was "A Fistful of Bitcoins: Characterizing Payments Among Men with No Names."1 Seven authors signed it, with Stefan Savage as the senior author6. The paper was set to be presented in Barcelona at the Internet Measurement Conference, held October 23 to 25, 20133. Variants of its method are in daily use in government enforcement and private sector compliance, UC San Diego said in 2024.
What 344 payments revealed
Meiklejohn started from a clue in Bitcoin's design. When one payment spends coins from several addresses, one person must hold the keys to all of them4. Satoshi Nakamoto had flagged that risk in the Bitcoin white paper. “The risk is that if the owner of a key is revealed, linking could reveal other transactions that belonged to the same owner,” Satoshi Nakamoto wrote.
Her team grouped addresses with two rules. The first linked every address used as an input to the same payment1. A second rule found change addresses. Each change address holds the coins left over after a payment4. Pay 6 bitcoins from a 10-coin address, and your wallet sends the other 4 to a new address it creates.
Bitcoin's blockchain then held 12,056,684 public keys1. The first rule sorted them into 5,577,481 clusters. With the second rule added, the count fell to 3,383,904 clusters, each one a likely single owner.
Shopping supplied the names. Her 344 transactions tagged 1,070 addresses by hand1. Clustering stretched those tags across 2,197 named clusters holding over 1.8 million addresses. That is 1,600 times more addresses than her own payments touched, the paper says.
Two cases show the scale. From 30 addresses she saw at Mt. Gox, she linked more than 500,000 addresses to the exchange4. Four deposits and seven withdrawals at Silk Road, the dark web drug market, led her to nearly 300,000 of its addresses.
Meiklejohn and her co-authors stated what this meant for anyone with legal power. In the paper they wrote that “an agency with subpoena power would be well placed to identify who is paying money to whom.”1 She described the work again for The Record in 2023. “We used as case studies a number of big thefts that had happened in bitcoin and other potential criminal behavior. And a lot of the times we could really confidently track illicit money right to the doorstep of a big exchange.”5
Both sides, in their own words
Did her paper make crypto safer?
“There was a decision going on in the U.S. government about what should we do here? Should we just shut the whole thing down? Should we have a light touch? And [the paper] provided some comfort to the people who were very concerned to say, well, it's not going to be untraceable”
“This is the only blockchain prosecution that I'm aware of that has no server logs, that has no servers, that has no communications”
What the 2013 coverage missed
MIT Technology Review covered the paper on September 5, 20133. Meiklejohn told reporter Tom Simonite, "The Bitcoin protocol still has huge potential for anonymity," and then, “but the way that people are using it is not achieving anonymity at all.” She had already discussed her research with one U.S. law enforcement agency, at its request.
Ian Miers, a Johns Hopkins graduate student, led work on Zerocoin, a design for fully private payments. He told the magazine the public was behind the developers. “Although the Bitcoin developers themselves and some of the community are highly aware that Bitcoin is at least theoretically not private, it's not clear that the general user population is,” Miers said3.
So the 2013 story framed the paper as a privacy problem for users3. Was that the whole effect? Savage, the senior author, described a second one a decade later5. The team ended up talking to law enforcement, the Treasury and Homeland Security, he told The Record. Meiklejohn expected far less. “I kind of thought of it as a small academic experiment. I thought that scaling it up would be a lot of work,” she said.
How an industry counts what it labels
Chainalysis shows how the method scales. Government agencies in 50 countries are among its 1,200 customers, Bloomberg reported in September 202312. Each January it estimates how much crypto illicit addresses received the year before. Its January 2026 report counted at least $154 billion for 202511.
Each figure is a lower bound, Chainalysis says, built from the illicit addresses identified so far11. A newly labeled address brings its old payments with it. So each year's total grows after it is first published.
The revisions show it. Its January 2022 report counted $14 billion for 20217. A year later Chainalysis raised 2021 to $18 billion, mostly from newly found scams8. For 2022, the first count was $20.1 billion. That figure stood at $39.6 billion in January 2024, a total that includes $8.7 billion in FTX creditor claims9. Chainalysis first put 2023 at $24.2 billion and raised it to $46.1 billion a year later10. Its estimate for 2024 went from $40.9 billion to $57.2 billion11.
Chainalysis raised 2023's illicit crypto total from $24.2 billion to $46.1 billion in 2025
Crypto received by illicit addresses each year, first and revised estimates, in $ billions
- First estimate
- Revised a year later
Read the chart as a table
| Item | First estimate | Revised a year later |
|---|---|---|
| 2021 | $14.0B | $18.0B |
| 2022 | $20.1B | $39.6B |
| 2023 | $24.2B | $46.1B |
| 2024 | $40.9B | $57.2B |
Chainalysis also reports an illicit share. In its January 2026 report, the firm divides illicit receipts by all value sent to known services11. The share of 2020 volume started at 0.34 percent and was raised to 0.62 percent7. For 2021, it moved down, from 0.15 percent to 0.12 percent8. Chainalysis said its divisor grew as it added more blockchains. Its 2022 share rose from 0.24 to 0.42 percent9. In 2023 it climbed from 0.34 to 0.61 percent10.
Illicit share of crypto transaction volume each year, first and revised a year later, in percent
- First estimate
- Revised a year later
Sources: Chainalysis [7]; Chainalysis [8]; Chainalysis [9]; Chainalysis [10].
Read the chart as a table
| Item | First estimate | Revised a year later |
|---|---|---|
| 2020 | 0.34% | 0.62% |
| 2021 | 0.15% | 0.12% |
| 2022 | 0.24% | 0.42% |
| 2023 | 0.34% | 0.61% |
The case for the method
Savage, now a professor at UC San Diego, said the paper reached officials at a decision point. “There was a decision going on in the U.S. government about what should we do here? Should we just shut the whole thing down? Should we have a light touch? And [the paper] provided some comfort to the people who were very concerned to say, well, it's not going to be untraceable,” Savage told The Record5.
Prosecutors make the same case for the tools built since. In a September 11, 2023, filing they said Chainalysis information is "frequently validated and found to be reliable"12. Prosecutors cited the Welcome to Video case, in which more than 300 people were charged. The 2013 paper won a Test-of-Time Award at the ACM's 2024 Internet Measurement Conference in Madrid6.
The case against
Tor Ekeland is a defense lawyer. He represented Roman Sterlingov, whom prosecutors charged with running Bitcoin Fog12. Bitcoin Fog was a mixer, a service that pools coins from many users to break the trail between them13. IRS agents used Chainalysis software to tie funds in Sterlingov's Kraken accounts to Bitcoin Fog.
Ekeland spoke at a September 7, 2023, hearing. "This is junk science that doesn't belong in a federal court," he said12. Bloomberg summed up his claim: the firm is unable to identify its error rate or point to peer-reviewed research to support its accuracy. On a podcast he went further. “This is the only blockchain prosecution that I'm aware of that has no server logs, that has no servers, that has no communications,” Ekeland said.
Chainalysis lawyers answered in writing in August 2023. “They wish to be standard bearers for those in the cryptocurrency community who believe governments should have no ability to trace movements of funds on darknet platforms,” Chainalysis lawyers wrote12. A jury found Sterlingov guilty in March 2024 of money laundering conspiracy, money laundering and two licensing offenses13. On November 8, 2024, he was sentenced to 12 years and six months in prison.
The 2013 paper anticipated part of Ekeland's point. Its authors wrote that their change-address rule "is not fully robust in the face of changing behavior."1 Meiklejohn also named a cost to ordinary users. “This has serious impact on the anonymity not just of potential criminals, but really of anyone,” she told The Record5.
What to watch
Chainalysis has published its report in January for five straight years7891011. A January 2027 report would restate the $154 billion counted for 2025. By The CryptoLately.com Desk's arithmetic, each of the last four restatements added between $4 billion and $21.9 billion.
Savage's case holds if those growing totals keep showing up as charges and seizures. Ekeland's case gains if a court demands a published error rate for a tracing rule. Either test starts from the clusters Meiklejohn drew in 2013.
Sources
- Sarah Meiklejohn, Marjori Pomarole, Grant Jordan, Kirill Levchenko, Damon McCoy, Geoffrey M. Voelker and Stefan Savage, "A Fistful of Bitcoins: Characterizing Payments Among Men with No Names," ACM Internet Measurement Conference, Oct. 23, 2013, https://cseweb.ucsd.edu/~smeiklejohn/files/imc13.pdf
- Internet Archive, "A Fistful of Bitcoins (earliest archived copy of the UC San Diego PDF)," captured Sept. 2, 2013, https://web.archive.org/web/20130902232920/http://cseweb.ucsd.edu:80/~smeiklejohn/files/imc13.pdf
- Tom Simonite, "Mapping the Bitcoin Economy Could Reveal Users' Identities," MIT Technology Review, Sept. 5, 2013, https://www.technologyreview.com/2013/09/05/176558/mapping-the-bitcoin-economy-could-reveal-users-identities/
- Andy Greenberg, "How a 27-Year-Old Codebreaker Busted the Myth of Bitcoin's Anonymity," Wired, Jan. 17, 2024, https://www.wired.com/story/27-year-old-codebreaker-busted-myth-bitcoins-anonymity/
- Dina Temple-Raston, "Tracing cryptocurrency: Q&A with the PhD candidate and her adviser who proved it wasn't anonymous," The Record, Apr. 11, 2023, https://therecord.media/tracing-crypto-sarah-meiklejohn-stefan-savage-interview
- Kimberley Clementi, "UC San Diego Computer Scientists Earn IMC Test-of-time Award for Pivotal Bitcoin Crime Fighting Research," UC San Diego Today, Dec. 12, 2024, https://today.ucsd.edu/story/computer-scientists-earn-test-of-time-award-for-pivotal-bitcoin-crime-fighting-research
- Chainalysis Team, "Crypto Crime Trends for 2022: Illicit Transaction Activity Reaches All-Time High in Value, All-Time Low in Share of All Cryptocurrency Activity," Chainalysis, Jan. 6, 2022, https://www.chainalysis.com/blog/2022-crypto-crime-report-introduction/
- Chainalysis Team, "2023 Crypto Crime: Illicit Crypto Volumes Reach All-Time Highs," Chainalysis, Jan. 12, 2023, https://www.chainalysis.com/blog/2023-crypto-crime-report-introduction/
- Chainalysis Team, "2024 Crypto Crime Trends from Chainalysis," Chainalysis, Jan. 18, 2024, https://www.chainalysis.com/blog/2024-crypto-crime-report-introduction/
- Chainalysis Team, "2025 Crypto Crime Trends from Chainalysis," Chainalysis, Jan. 15, 2025, https://www.chainalysis.com/blog/2025-crypto-crime-report-introduction/
- Chainalysis Team, "2026 Crypto Crime Report Introduction," Chainalysis, Jan. 8, 2026, https://www.chainalysis.com/blog/2026-crypto-crime-report-introduction/
- Sabrina Willmer and David Voreacos, "Wall Street-Backed Crypto Tracer Faces 'Junk Science' Attack (2)," Bloomberg Law, Sept. 14, 2023, https://news.bloomberglaw.com/crypto/wall-street-backed-crypto-tracer-under-attack-ahead-of-trial-1
- U.S. Department of Justice, "Bitcoin Fog operator sentenced for money laundering conspiracy," IRS Criminal Investigation, Nov. 8, 2024, https://www.irs.gov/compliance/criminal-investigation/bitcoin-fog-operator-sentenced-for-money-laundering-conspiracy