Short answers, pulled from the story.
Blockchain analysis is the process of inspecting, identifying, clustering, modeling, and visually representing data on a cryptographic distributed ledger to discover useful information about actors transacting in cryptocurrency. It relies on common-spend clustering algorithms to map transactions by controlling entity, and on public block explorer sites like Etherscan.io and BitRef.com that let anyone query a blockchain's full transaction record.
Private companies that analyze public blockchains like Bitcoin and Ethereum include Chainalysis, TRM Labs, Elliptic, Arkham Intelligence, Nansen, Blockpliance, Elementus, Dune Analytics, CryptoQuant, and Ormi Labs.
The Bank Secrecy Act requires cryptocurrency businesses in the United States to implement know-your-customer and anti-money laundering programs. It also requires them to register with FinCEN as a money service business.
Singapore, Japan, and the United States have all passed laws requiring cryptocurrency exchanges to track the source of funds for crypto traders.
In 2021, the US Department of Justice used blockchain analysis to trace the ransom paid after the Colonial Pipeline ransomware attack. Investigators recovered most of the funds by following the payment through the blockchain.
In 2022, IRS Criminal Investigations used blockchain analysis to seize over 50,000 bitcoin that had been stolen from the Silk Road dark web marketplace.