FBI Investigates Bitcoin’s Lightning Network

According to the recent findings, the Federal Bureau of investigation is currently engrossed with lurking around the Bitcoin layer-2 solution services provider. The reports reveal that FBI has hired crypto intelligence firm Chainalysis for the task. After the order from the government regulator, the experts at Chainalysis have put the LN under investigation.

The Chainalysis experts have revealed that they are going to implement the KYC or Know-Your-Customer protocol on the LN before the end of the first quarter of 2022. The KYT standard ensures compliance with the legal standards set by the Office of Foreign Currency Control (OFAC). The KYC is already performing the scrutiny for the legal entities on the Ethereum and Bitcoin main networks.

A recent media report revealed that the US intelligence agencies paid around $10 million in funds to the Chainalysis network for conducting their research on the Lightning Network. There are other enterprises like Elliptic and CypherTree that were also paid and hired by the US intelligence departments in the past.

However, Chainalysis has gained a reputation for working for the US departments recently. In 2015, the Federal Bureau of Investigation or FBI paid $9000 to Chainalysis for carrying out a blockchain reconnaissance. The firm has also worked in tandem with state-level organizations like CFTC, DEA, IRS, and SEC among other regulatory agencies.

The HTLC or Hashed Timelock Contracts (HTLCs) is a protocol of the Bitcoin layer-2 solution that provides an additional layer of security when specified conditions are met. The process called the Atomic Swaps converts the LN into a trustless ecosystem with the help of HTLCs.

The initial report by Chainalysis reveals that it can detect as many as 9000 open public lightning transaction channels on the first day of the last month of 2021. The network report also showed that the number of channels has increased since the start of 2021 from just 38K in January.

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