Data transparency has been a focal point for the cryptocurrency industry, but the FTX fiasco has shown that centralized exchanges (CEXs) are not transparent enough. So far, crypto analytics firms are apparently not capable of tracking transactions to help prevent collapses like that of FTX. All Bitcoin transactions are available publicly on-chain, which means people can track transactions when sending crypto from one address to another. However, this is not the case when it comes to interacting with a centralized crypto exchange. Cointelegraph spoke with executives at blockchain intelligence firms — including Chainalysis, Nansen and Whale Alert — to gain more insights into the tracking of illicit CEX transactions on-chain. Chainalysis, a major blockchain data platform that cooperates with many governments across the world, said there is currently no on-chain tracking tool that can trace funds through a CEX. “Chainalysis — or any other blockchain analysis tool — can’t trace funds through a centralized service because the way that these services store and manage funds deposited by users inherently makes further tracing inaccurate,” a spokesperson for Chainalysis told Cointelegraph.
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