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Can Crypto be Traced?

Tracing Crypto Criminals: Tips and Techniques to Protect Your Business’s Crypto Assets

As cryptocurrency gains more popularity and adoption, it has unfortunately also become a preferred method for criminals to carry out illegal activities. From money laundering to ransomware attacks, crypto criminals are becoming more sophisticated and harder to trace. 

The decentralized nature of cryptocurrency adds a layer of complexity to investigating such crimes. Discover why hiring a cryptocurrency investigator is crucial for protecting your business’s crypto assets. 

Whether you are investing in crypto, accepting crypto payments from clients, or utilizing blockchain for transactions, working with professionals is essential to safeguard against criminal activity. Companies must be aware of their obligations to prevent unintentional involvement in money laundering through foreign vendors or suppliers within complex international supply chains. 

In this article, we will explore how investigators trace crypto criminals and why consulting a professional is essential in navigating this ever-changing landscape successfully.

What is cryptocurrency tracing?

Cryptocurrency tracing, also known as blockchain forensics, is the process of tracking and analyzing financial transactions on a blockchain. 

It involves using specialized tools and techniques to decode the limited information provided by the ledger, revealing a visual trail of illicit funds. This investigative method is crucial in identifying perpetrators and locating their assets. 
As the use of cryptocurrencies for illicit activities increases, the tools and technologies used for cryptocurrency tracing are also evolving. Today, cryptocurrency tracing experts use advanced software tools that are increasingly capable of removing the veil of anonymity associated with cryptocurrency transactions. These innovations are essential to support businesses investing in cryptocurrencies and protect them from potential criminal activity.

Can crypto be traced?

Contrary to popular belief, cryptocurrency is traceable with the right tools and expertise. Each user on a blockchain ledger is identified by a unique address, making it challenging to track down offenders on your own.

Additionally, cryptocurrency can be quickly converted into fiat money through unregulated exchange platforms, adding another layer of complexity to investigations. However, with the help of cyber fraud investigators equipped with expert skills and global resources, criminals hiding behind the veil of anonymity can be exposed.

It must be noted that the success of tracing varies depending on the complexity of the scam and the technical measures used to hide the perpetrator’s identity.

What kind of information can be tracked?

Cryptocurrency forensics and asset tracing involve several methods of analysis to identify perpetrators and locate their funds.

Attribution data is collected and analyzed using blockchain intelligence tools to de-anonymize blockchain addresses and identify known associations with criminal groups or fraud schemes. Transaction mapping converts transactional data into visual maps and flowcharts that show interactions between the subject and known exchanges or other entities. Cluster analysis involves expanding the focus of an investigation from one address to a larger cluster to increase the available evidence for de-anonymization and asset tracing.

Subpoena targets, including commercial cryptocurrency exchanges and decentralized finance firms, can provide valuable information for identifying and de-anonymizing subjects. Other information that can be tracked includes current and historical value, total transactions, risk profiling, and IP addresses.

Furthermore, automated risk-scoring using advanced algorithms allows investigators to trace activity and identify associations with known entities, including sanctioned parties and darknet markets. IP addresses, when available, can provide information on the subject’s geographical location at the time of the transaction.

Why do you need the support of experts to investigate crypto?

Investigating cryptocurrency transactions can be a complex and challenging process, given the decentralized nature of blockchain technology and the anonymity associated with cryptocurrency transactions. As a business, it is crucial to know who you are doing business with, and ignorance is not a defense in the eyes of the law. You have a responsibility to comply with Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations to ensure you don’t do business with criminal entities.

The landscape of crypto crime is continually evolving, and the tools and techniques used for cryptocurrency tracing must keep up with these changes. For this reason, it’s essential to seek the help of experts who have the experience and fully understand how to trace cryptocurrency. Professional cryptocurrency investigators are up-to-date with the latest developments and have access to advanced software tools to help trace illicit funds and identify perpetrators.

The dangers of cybercrime for businesses were illustrated by the recent collapse of the Bahamas-based cryptocurrency exchange FTX in November 2022. The liquidation of FTX, which was once the third-largest cryptocurrency exchange by volume, was caused by a liquidity crisis resulting from the company’s token, FTT. The incident highlights the significant financial risks associated with cryptocurrency and the importance of having the support of experts to help safeguard against such risks.

Key investigation techniques

Professional cryptocurrency investigators use several tools and techniques to trace crypto crimes. They are fundamental to the work of investigators in identifying the perpetrators and locating their funds.

In this section, we will discuss some of the primary tools and techniques used by professional investigators in cryptocurrency tracing.

Address Clustering

A technique that involves identifying and grouping together a set of cryptocurrency addresses controlled by the same person or entity. By doing this, investigators can expand the focus of their investigation from one address to a larger cluster of related addresses, which can provide valuable evidence for de-anonymization and asset tracing.

Graph Analysis

This technique involves converting transactional data into visual maps and flowcharts to show interactions between the subject and known exchanges or other entities. Visual mapping makes it much easier to recognize patterns, such as layering and peel chains, commonly used for money laundering.

Graph analysis can also determine if any linked addresses have a substantial current value or UTXO (unspent transaction output). UTXO means the output of a transaction that has yet to be used as an input in a subsequent transaction. It represents the amount of cryptocurrency associated with a particular address that has not been spent or transferred to another address.

Data Analysis

This refers to collecting and analyzing large amounts of data to identify patterns and trends. Investigators use powerful software tools to automate data collection and analysis, making this approach more efficient and effective than the manual review of ledger entries.


Here, experts use rules-based algorithms to identify suspicious patterns or behaviors. Heuristics are particularly useful in detecting money laundering and other types of financial fraud. Investigators use heuristics to identify patterns that may not be immediately obvious, such as repeated transfers of the same amount of cryptocurrency to multiple addresses.

Open Source Intelligence

In addition to rules-based algorithms and heuristics, open-source intelligence (OSINT) analysis plays a crucial role in identifying and tracking criminals involved in crypto crimes.

OSINT analytics provide law enforcement investigators with valuable insights into the web activity of individuals, financial institutions, businesses, and private sector organizations. OSINT also enables identifying and tagging illicit crypto addresses linked to drug dealers on the darknet or terror-related addresses.

How to identify the best cryptocurrency tracing specialists

To identify the most experienced cryptocurrency tracing specialists, look for those who use multiple powerful tools, provide expert reports, have a global presence with international teams and connections, respect client confidentiality, and have the capability to trace assets worldwide. It’s essential to research and choose a reputable and experienced investigator to ensure the best chance of success in tracing and recovering stolen assets.

Why hiring an expert cryptocurrency investigator is essential

Investigating cryptocurrency transactions can be complex and challenging. However, with the right tools, techniques, and expert support, cryptocurrency transactions can be traced, and criminals can be brought to justice. Professional investigators are at the forefront of the latest developments and have access to advanced software tools to help trace illicit funds and identify perpetrators.

Time is of the essence when it comes to tracing potential criminal crypto activity. That’s why it’s essential to seek the help of expert investigators to protect your business’s crypto assets. At The Owl, we have the skills and expertise to support you in evaluating and investigating potential security breaches or unusual financial activity. Contact us to discuss how we can support any potential crypto criminal investigation to stop criminals in their tracks and ensure compliance.

Eurasian Eagle Owl

The Feisty Rebel

July 7, 2023

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