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In January this year, courts in the Danish city Herning, found the defendant in a narcotics case guilty and sentenced him to eight years of prison due to traced bitcoin transactions. This is the second case in Denmark where bitcoin-tracing evidence has played a major role in the trial.
The article seems to hint that exchanges are complicit in the analysis
First, transactions where bitcoins are used to purchase goods are analyzed by exploiting the possibilities of blockchain technology, which bitcoin is based on. This information is then compared with listings of bitcoin-buyers and bitcoin-sellers.
Now, if a suspect receives drugs by post — which he denies he ordered — the police can go over his bitcoin transaction history and see whether he has sent bitcoins to anyone recently.
However Denmark's head of cybercrime doesn't want to go into specifics.
The comparison is then used to identify the people involved in particular dealings. Aarenstrup didn’t want to go into specifics of how far-reaching this new method is, but one can imagine that it must be substantial since the FBI and Europol are already using the system.