Every year, billions of dollars flow into the crypto wallets of scammers as a result of financial fraud. They use blockchain to launder dirty money and trade on the darknet. At the same time, they try to conceal all traces of a crime by transferring funds to various platforms. As a result, some of the so-called black assets end up at the addresses of common users who have nothing to do with the fraudsters.
For blockchain tracking, there are analytics services that verify transactions and conduct investigations. Thanks to such services, users of these platforms are aware of suspicious addresses and do not make transactions with them. Here we gathered services that track blockchain transactions and gave examples of real-life investigations. At the end of the article we will introduce the service that anyone can use to track their transactions.
Why do we need blockchain-based tracking systems?
Blockchain analysis is used to track cryptocurrency transactions. It is the process of researching, classifying and monitoring addresses and transactions on the blockchain. Blockchain analysis is necessary to prevent fraudulent actions within the network as well as to prevent users from interaction with black assets.
Various analytics platforms track cryptocurrency and NFT transfers, the actions of DeFi platforms, mining servers and business organizations that accept cryptocurrency payments. These systems help identify cases involving stolen money laundering, account hacking, darknet market activity, ransomware, and organizations that finance terrorism and human trafficking.
As of early 2022, data analytics company reports show that illicit addresses contain at least $10 billion worth of cryptocurrency. Most of these assets are found on wallets linked to the theft of cryptocurrencies. Should they find their way to the addresses of other blockchain users, then those will also become accomplices to the crime. And all the funds will be frozen.
Analytical platforms notify exchanges and other institutions about suspicious transactions, so that they do not deal with such wallets. Below are examples of such resources.
Chainalysis — the largest blockchain database platform
Chainalysis, an American company, provides data, software and services to businesses in more than 70 countries. The platform’s team includes scientists and investigators who specialize in analyzing illegitimate organizations.
The system deals with banks, stock exchanges, business enterprises, as well as financial, insurance and governmental institutions. Chainalysis not only tracks funds inside the blockchain, but also monitors open sources of information, such as online communities and darknet forums.
Cryptocurrencies tracked by Chainalysis: the platform covers most major coins, including BTC, ETH, LTC, BAT, BCH, MKR, OMG, PAX, TUSD, USDC and USDT.
Client companies of Chainalysis include UNODC, a drug and crime tracking organization, Gemini, Korbit, Bitstamp and UpBit crypto exchanges, Barclays financial conglomerate, Australia-based Commonwealth Bank, Square payment system, and U.S. Federal Bureau of Investigation.
The following are examples of Chainalysis investigations: on May 7, 2021, an oil giant Colonial Pipeline was attacked by a ransomware, which caused it to temporarily shut down its operations. The other case is about DarkSide, a Russian cybercrime group, who claimed 75 bitcoins, which at the time totaled approximately $4.4 million. Chainalysis tools helped the FBI investigate the incident. Just a month later, the Justice Department returned some of the $2.3 million in stolen bitcoins to Colonial Pipeline.
Chainalysis depicted a pattern of flow of stolen assets that DarkSide conducted. Colonial Pipeline transferred 75 BTC to the address given by the scammers, followed by assets sent to the DarkSide administrator, who then transferred 63.7 BTC to the DarkSide partner.
Similar schemes involve DarkSide administrators working on a “ransomware-as-a-service” model. They control the flow of assets and the performance of the program, for which they receive a share of the fee for each successful attack. Meanwhile, the bulk of the money from the scam goes to its customer.
Crystal Blockchain – a platform for monitoring 98% of transactions
The Netherlands-based Crystal Blockchain platform assists banks, payment systems and state agencies in forecasting possible risks associated with crypto assets. The tool analyzes 98% of blockchain transactions with an accuracy of 100,000 hops. The platform provides real-time blockchain data, supports investigations and audits, and provides research reports.
With Crystal Expert feature, the platform visualizes the flow of crypto assets. It helps identify transaction owners, find out information about the recipient and the source of funds, tracking compliance with the law.
AMLBot – an analytics platform providing access to individuals
Not only does the UK based AMLBot platform serve organizations, but it serves individuals as well. You can use the platform to help customers analyze cryptocurrencies for signs of illegal activity and assess risks. AMLBot platform checks are based on its partner Crystal Blockchain’s international bases, mentioned above.
Platform users can analyze wallets both on the website and by means of AMLBot Telegram bot. You can retrieve information about the checks for specific transactions and share it with other users.
The AMLBot website allows you to investigate a particular address and get a complete tree of all the transactions related to it. It will show you the specific services, amounts of transfers, along with the possible risks.
For example, the image above displays a report where the wallet address was flagged as a high risk. This status was given to him by AMLBot because it received funds from the scammer’s address. Afterwards, the assets were withdrawn from this wallet to the darknet marketplace. Therefore, no transactions can be made through this address, so as not to become an accomplice to crime and avoid freezing of funds.
Conclusion
Our picks highlighted services that monitor the actions inside the blockchain. Using them, analysts check the flow of funds between wallets and identify scams to launder funds.
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