According to ciphertrace guys they are able to know origin and destination of a BTC transaction using addresses: exchanges (Binance, Coinbase,..), Darkenet marketplace, Gambling, wallet (Wasabi, Ledger,..).
How can they do this? Does it mean that when I generate a new BTC address on Binance / Wasabi / Ledger wallets, this address is not completely random but belongs to a tagged pool of address pre-attributed to Binance/Ledger/Wasabi etc?
If yes, this is scary! If no, how do they know this information?
Source : "Yesterday, July 16, at 8:39 PM PST, there was a deposit of 2.89 Bitcoin (roughly 22.5% of the scammed funds) into Wasabi wallet", ciphertrace.com
They are able to trace these movements due to each service (Wasabi, Binance, Coinbase, etc) using known addresses and/or techniques that allow services like CipherTrace to "fingerprint" a transaction that may belong to such a service.
For example, most Wasabi transfers may include a specific Coin Join implementation that give their transactions away. Binance may sweep deposited BTC to a known hot or cold wallet, revealing the original deposit was to Binance, etc.
When you create a generic, personal wallet using something such as Electrum, Ledger, etc the addresses are in fact random (other than the address scheme used) and there is no way for services such as CipherTrace to deduce the identity behind these addresses unless they came directly (or indirectly) from another address that was known.
However many of these blockchain analysis tools will allow you to show information N hops deep. For example BTC stored in your Ledger may be only 3 transactions removed from a known gambling site, 2 transactions removed from Binance, etc. While this would not give investigators and/or snoopers definitive proof that you used the gambling site and Binance in our example, it could aid them in their investigation.