Data transparency has been a focal point for the cryptocurrency industry, but the FTX fiasco has shown that centralized exchanges (CEXs) are not transparent enough. So far, crypto analytics firms are apparently not capable of tracking transactions to help prevent collapses like that of FTX.

All Bitcoin (BTC) transactions are available publicly on-chain, which means people can track transactions when sending crypto from one address to another. However, this is not the case when it comes to interacting with a centralized crypto exchange.

Cointelegraph spoke with executives at blockchain intelligence firms — including Chainalysis, Nansen and Whale Alert — to gain more insights into the tracking of illicit CEX transactions on-chain.

Chainalysis, a major blockchain data platform that cooperates with many governments across the world, said there is currently no on-chain tracking tool that can trace funds through a CEX.

“Chainalysis — or any other blockchain analysis tool — can’t trace funds through a centralized service because the way that these services store and manage funds deposited by users inherently makes further tracing inaccurate,” a spokesperson for Chainalysis told Cointelegraph.

“Even if you could trace through a centralized exchange, on-chain analysis alone cannot reveal fraudulent intent behind transactions,” the representative noted. The spokesperson stressed that Alameda’s leaked off-chain balance sheet was the first thing to reveal that something was wrong.

While blockchain analysis can track deposits on CEXs, there is no way to access their liabilities, according to Nansen analyst Andrew Thurman. “FTX halted withdrawals when they still had in excess of a billion in various digital assets. We now know they had a far greater sum in liabilities,” he said.

Thurman also argued that a proof-of-reserves model — the increasingly popular effort of CEXs to prove transparency — is “only a half measure, but it’s a good one.”

Despite blockchain analysis so far having limited opportunities in tracking illicit CEX transactions, some monitoring services are trying to prove that the industry may be able to one day prevent issues like the FTX crash.

“We are currently doing historical balance checks on our known FTX addresses — deposit and other related addresses — to determine if this could have been spotted sooner,” Whale Alert co-founder and CEO Frank van Weert told Cointelegraph in November.

Whale Alert has since had to abandon the project because it did not have enough resources to properly scan the two years’ worth of data. “It takes quite a bit of computing power, which we did not have available,” the CEO said.

Van Weert also noted that “it is possible to track exchanges” but that platforms like Coinbase and FTX make it a bit more complex to track incoming coins as they don’t use hot wallets in the way exchanges like Binance and Crypto.com use them. He added that exchanges are “extremely reluctant to cooperate,” with many of them declining to comment on Whale Alert’s findings for “security” reasons.

Related: What blockchain analysis can and can't do to find FTX's missing funds: Blockchain.com CEO

The Whale Alert CEO emphasized that the entire crypto industry is responsible for the collapse of FTX, stating:

“So far, the industry’s focus has been on profit rather than proper infrastructure. The only way to recover from the mess is to gain the public’s trust again on the basis of proper transparency, which does not come from Merkle Tree audits.”

However, according to some industry executives, blockchain analysis platforms are not interested in catching illicit players on-chain in the first place.

“First, blockchain analysis doesn’t really do anything, and second, they are not focused on fraud and suspicious transactions at the exchange level. Their customers are the exchanges, and you don’t bite the hand that feeds you,” Bitcoin proponent Samson Mow told Cointelegraph.