• Lambda256 has been selected as a participating company in the "Integrated Narcotics Investigation System Linking Dark Web and Virtual Asset Transaction Tracing" project, led by Korea's Ministry of Science and ICT and the Korean National Police Agency (KNPA).
• In the consortium led by Sungkyunkwan University's Department of Forensic Science, Lambda256 is responsible for virtual asset tracing and will advance cross-chain fund tracing and mixing and tumbling path identification.
• The CLAIR tracing technology applied in the project also supports financial institutions in deciding on withdrawal holds and filing suspicious transaction reports (STRs).

Drug Proceeds Moving Through Virtual Assets

As more drugs are distributed through anonymous channels such as Telegram and the dark web, payments are increasingly made in virtual assets. With sellers and buyers hidden and the money moving onto blockchains, it has become harder for investigators to map distribution networks.

Virtual assets can be split across multiple wallets, swapped into other tokens on decentralized exchanges (DEXs), and moved to other blockchains through bridges within a short time. Because each blockchain records transactions differently, tracing often breaks at the points where funds change form or route.

The three-year project, starting in 2026, aims to build an integrated investigation system that identifies users accessing dark web drug markets, traces the virtual assets used as payment, and connects the two to uncover drug distribution networks. Sungkyunkwan University's Department of Forensic Science leads the project, and the Korean Institute of Criminology and Justice (KICJ) participates to support the field application of investigative techniques and verify the legal reliability of digital evidence. Dark web security company NSHC, blockchain company Lambda256, data analytics company iwaz, and PCN join them to form an industry, academia, and research consortium.

Core Technologies for Virtual Asset Tracing

Lambda256 applies the tracing technology of CLAIR, its onchain AML/FDS intelligence solution, to the project's virtual asset tracing work. CLAIR's core tracing and monitoring capabilities include:

• Cross-chain auto tracing: Set a starting wallet and a direction, and CLAIR automatically expands multi-hop fund flows. It matches bridge deposits with withdrawals on the destination chain, so tracing continues even when the chain changes.
• AI contract analysis: For bridge or DEX contracts it has not seen before, AI generates the interpretation logic, which is applied to tracing after human approval.
• Mixing and tumbling path identification: Identifies paths that mix funds to obscure their origin, enabling accurate tracing.
• Selectable attribution methods: For wallets holding both illicit and other funds, CLAIR applies the method that fits the case, chosen from eight options including FIFO and Pari Passu, to determine how much counts as case-related funds.
• AI-based reporting: Automatically compiles the tracing process, applied methodology, supporting transactions, and analyst notes into a single report.

CLAIR's tracing engine is used by investigative and public agencies in more than 10 countries. When deployed on premises, query records and AI analysis stay within the institution.

What This Means for Financial Institutions' AML

When deciding whether to hold withdrawals or file an STR, financial institutions need to explain, with evidence, the prior onchain flow and which portion of commingled funds is at issue. This is the same kind of evidence investigators use in freeze requests and investigation reports. The tracing technology advanced through this project can support these decisions at financial institutions as well.

Learn more about CLAIR Investigation on the product page.

CLAIR: Ontology-based Blockchain Intelligence Engine (FRAML)

About Lambda256

Lambda256 is a blockchain technology company that provides an onchain finance platform enabling financial institutions to adopt and operate digital asset businesses securely. Originating from Dunamu's blockchain research lab and founded in 2019, Lambda256 drives the commercialization of blockchain technology and the growth of financial data ecosystems through Nodit, an enterprise-grade full-stack blockchain node and data infrastructure platform; CLAIR, an onchain AML/FDS compliance platform; and SCOPE, an onchain finance orchestration platform.