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The U.S. government has gone to great lengths to try and track the origins of cryptocurrency transactions. A new report by research firm Diar indicates that the government, through a number of agencies, has spent a total of $5.7 million on contractors to conduct blockchain analysis, including trying to link individuals with crypto wallets.

One of the advantages of cryptocurrency over fiat is that it allows a certain level of anonymity. However, there are a number of tools available—as well as specific digital currencies—that offer tracking capabilities. If a knowledgeable person knows how to use the tools correctly, it is easy to determine a wallet’s origin in many cases.

If a user ever reveals his or her crypto address to another person or an entity, the puzzle pieces begin to be put into place to trace the transactions back to an individual. A reveal can potentially happen when someone deposits or withdraws funds from a crypto exchange where customer verification details re required. Interacting with another crypto user whose address has been revealed could also lead to identification.

The bulk of the money, 38% or $2.2 million, was spent by the Internal Revenue Service (IRS). The IRS has established relationships nine times with crypto forensics providers in order to try and ascertain some individuals’ identities.

Following the IRS is a potentially surprising entity. It isn’t the Federal Bureau of Investigation (FBI) or the Drug Enforcement Agency but, rather, the Immigration and Customs Enforcement (ICE) agency, like the IRS, established nine contracts and spent $1.5 million. The FBI, however, had the most contracts—12 in total—but only spent $1.1 million. The Securities and Exchange Commission (SEC) only spent $185,000 on cryptocurrency forensics.

One company in particular has been the go-to firm for the government. Chainalysis picked up 93% of the total amount, or $5.3 million of the $5.7 million that was spent.

The increase in government spending has brought a whirlwind of money to the blockchain forensics companies, which has also made the firms more attractive to investors. Startups in the industry have taken in $29 million through investments, of which Chainanalysis was the big winner with $17 million.

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