Self-service Business Intelligence Tools For Monitoring Cryptocurrency Deals – Cryptocurrency has seen tremendous growth in the global economy. However, it has paved the way for criminal activity on the blockchain, making it increasingly important to track and verify transactions of different cryptocurrencies. As the tools to conceal criminal cryptocurrency transactions are fortunately constantly evolving, so are the tools to track them.
In this presentation, our experts provide an overview of how criminals disrupt the privacy of cryptocurrencies and list the 7 most useful tools for cryptocurrency investigations.
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Since its launch in 2009 by Satoshi Nakamoto, Bitcoin’s market cap has grown from around 1 billion in 2013 to over 1 trillion in 2021. While this explosive growth took place, many other cryptocurrencies were created. Bitcoin is still the highest valued crypto coin in the market, but Ethereum and some others have succeeded. As a result, today’s cryptocurrency transactions are complex, numerous, and growing in size.
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To study cryptocurrency transactions, you need to understand how they differ from transactions using fiat currencies such as dollars and euros. Given that each cryptocurrency may have its own evolving protocols that define these transactions, keeping up with the technology becomes an important part of the investigator’s job. For example, the Bitcoin “Taproot” update released last November introduced new mechanisms to Bitcoin, some of which improved user privacy.
Some concepts, such as the fact that a smart contract or transaction can have multiple input and output addresses, are not self-evident and require the investigator to dive into the cryptocurrency they wish to investigate before tracking the transaction.
Why is it necessary to monitor cryptocurrency transactions? Well, as the popularity of cryptocurrency grew, so did its use. While there are plenty of legitimate uses for cryptocurrencies, criminals have seen the potential for decentralization and the relative anonymity that some cryptocurrencies offer. For example, according to a 2021 report by Igor Makarov and Antoinette Skoar (London School of Economics and National Bureau of Economic Research), “Illegal transactions, fraud and gambling account for less than 3% of all Bitcoin transactions.” all over the world
Although 3% may seem like a small number, according to Binance, “the Bitcoin network processed $489 billion per quarter in 2021,” which means that the ill-gotten cryptocurrency could be processed every year. year.
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Tracing these ill-gotten funds leads to the identification of the criminals who moved the funds and sometimes to their recovery, as was the case with the FBI’s recovery of $2.3 million worth of bitcoins during the Colony Pipeline hack. . After the Bitcoin seizure, Deputy Attorney General Lisa O. Monaco said, “Tracing money remains one of the simplest yet most powerful tools we have.”
Being able to track assets through cryptocurrency transactions is an important tool used by authorities to prevent and detect money laundering. It’s also what cryptocurrency exchanges—places where you buy and sell cryptocurrencies for fiat currency—do to avoid unknowingly participating in the financing of organized crime and terrorism.
There are several free online tools such as Blockchair, Etherscan, and Ethplorer that allow you to list transactions related to any of the most popular cryptocurrency addresses. These blockchain explorers offer an interface that visualizes the information stored on the blockchain, such as input and output addresses, transaction volumes, and transaction times. However, this information alone may not be enough, as investigators must combine the various bits of data to find their correlation.
Let’s take Bitcoin as an example. Every transaction is available on the blockchain, a public ledger that anyone can consult. Regulated crypto exchanges have KYC (Know Your Customer) obligations, so they must by law know the identity of people withdrawing money using their services. Criminals use a number of methods to obscure their Bitcoin footprint in order to avoid illicit funds. Here are some of these methods.
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A chain of dowry is a popular design used to hide where a large amount of coin is going. It usually starts with a large number of coins centered on a single address. This address will then send the money to both addresses. Almost all coins will be transferred to the first address and the rest to the second address. Then the process repeats until there is no more money left to “scoot”. Spreading small amounts across multiple addresses is less likely to raise red flags for exchanges and other actors looking for money laundering. The money is split between multiple addresses, making it difficult for investigators to follow the money trail.
Tumblers are services that attempt to anonymize your bitcoins by flipping them on the blockchain and mixing them with other bitcoins, using different patterns to make it difficult to connect a spender to a recipient. Although their use is strictly illegal, several Bitcoin Tumbler operators have been arrested for money laundering, among other criminal offenses. Coinjoin is a method used to merge multiple Bitcoin payments into a single transaction. This way, several investors can pool their Bitcoins and distribute them appropriately to the right recipients. This arrangement makes it quite difficult to connect the spender with the recipient.
Chain hopping is the act of transferring your coins from one type of cryptocurrency to another. For example, someone can exchange their Bitcoin for its Monero equivalent and take advantage of its built-in privacy. Chaining can be done using a traditional exchange or a dedicated website.
Although there are legitimate uses for dishes and coins, exchanges are increasingly reluctant to process coins that pass through these services for fear of participating in money laundering. This can ultimately complicate the process of disbursing cash.
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As we can see, tracking cryptocurrency assets through various transactions is essential, and Blockchain Explorers is an online tool that can help you do just that. However, using text to represent transactions can make it difficult to follow the money if multiple confusing methods are used.
The graphical approach is perfect for visualizing complex cryptocurrency transactions. Here are the most useful data integration options for exploring cryptocurrency payments. The list is in alphabetical order and does not indicate any rank or preference.
Download this presentation for a detailed description and evaluation of cryptocurrency data provided by each of the above providers.
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