Can Crypto Transactions Be Traced Or Tracked?

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If you’ve lost money to a cryptocurrency scam one of the first things you might be wondering is if crypto transactions can be traced or tracked.

Most people hope that by following the money, or in this case the crypto, they’ll be able to track down the scammers and recover their stolen coins.

The short answer is that most crypto transactions can be tracked and ultimately traced by followed the movement of coins across wallets and the blockchain.

> Read more about how crypto tracing works and how to recover stolen coins

Tracking crypto in the blockchain

Despite what many people think, most crypto transactions are not anonymous, rather they’re pseudonymous.

This means that the actual transactions themselves can be tracked, but the identity of the person making them is obscured.

Each time someone pays with crypto or moves coins a transaction hash – a unique string of letters and numbers – is created.

This is an indelible marker that’s stored on the blockchain along with other details about the transaction, such as the wallet addresses it was sent from and to, and the fee attached to it.

Anyone can view this information using free applications widely available online which enable you to examine any crypto transaction on a specific blockchain.

For example, if you want to look up a wallet address or transaction hash for Bitcoin, you can visit a blockchain explorer.

This can be very useful if you’ve been caught up in a crypto scam as it allows you to see where your coins have gone and which wallets they’ve been transferred to.

Tracking crypto using forensic techniques

Scammers, or course, know all this and use various methods to try to minimise the risk of being caught.

They bounce transactions from wallet to wallet and use what are known as bitcoin mixers or tumblers – apps designed to break the link between the sending address and the output address of a crypto transaction.

However, specialist scam recovery companies are using increasingly sophisticated tracing techniques together with proprietary software to trace crypto transactions even if they’ve been partially obscured.

These methods are by no means failsafe, but they’ve certainly improved the chances of locating where your stolen crypto has ended up.

Can a crypto scammer be traced?

The use of digital forensics alongside a range of other techniques to trace the transaction history of stolen crypto and attempt to recover it is an increasingly common tactic being used against the scammers.

While much of the information about crypto transactions is viewable by anyone, the bespoke tools used by forensic investigators can analyse transactions more deeply and uncover hidden information.

The investigators also look the role a scam victim’s bank played in the transaction as well, as often money can be recovered this way if it’s found that the bank failed to adequately protect their customer.

Crypto recovery companies also work with crypto exchanges to freeze the scammer’s wallet or account, together with law enforcement to uncover fraudulent activity and ultimately arrest the perpetrators.

Investigation techniques used by recovery companies

Many crypto recovery companies develop their own software and algorithms in-house as part of their forensic analysis of crypto transactions and their path on the blockchain.

The exact methodology is often kept under wraps to avoid alerting the scammers who would then adjust their modus operandi to try to counteract these detection methods.

However, there are certain things that are known about the techniques involved in blockchain forensics. They include:

• Examining wallet addresses. Scammers often use one wallet to receive crypto from a victim before quickly withdrawing the coins and bouncing them to another wallet, or multiple wallets. This may happen several times.
• Transaction analysis. Every crypto transaction creates a unique entry on the blockchain and a transaction hash/ID, often abbreviated to ‘tx’ or ‘txn’. Analysing the tx hash can reveal a wealth of information about a crypto transaction.
• Address clustering. This is a technique designed to find links between crypto addresses that are under the control of the same scammer/group, including heuristic transaction graphs.
• Network analysis. This involves using advanced tools to identify connections between crypto addresses within the blockchain, discover transaction flows and the nodes that are used as part a specific exchange of crypto.

Using the above techniques, and others, enables crypto recovery companies to trace the movement of coins and create connections between specific transactions and wallets.

By following these trails, crypto tracing experts hope to uncover where the stolen coins have ended up and also if they’ve been converted into fiat money.

This is often a weak spot in any crypto scam as converting crypto to cash usually involves a legitimate crypto exchange and/or a TradFi financial entity with all the regulation and governance this brings.

In order to use these services, the scammer would need to submit Anti-Money Laundering (AML) and Know Your Customer (KYC) details, such as name and address, together with supplying government-issued identification.

Legal pressure can then be used to freeze the funds at the end point and ultimately work with the exchange/bank to secure the recovery of the stolen funds.

Is it possible to recover crypto stolen in a scam?

Yes, there are genuine crypto recovery companies that have had significant successes in recovering stolen crypto using a variety of methods.

However, be careful of scammers in this sector as well. If anyone tells you they can reverse or cancel a crypto transaction on your behalf, do not engage with them as this is impossible to do.

There are a lot of people advertising their services on various social media platforms, claiming to have developed a special software or a way of hacking the blockchain to recover your funds.

None of it is true – they’re simply attempting to prey on people’s lack of understanding about crypto to scam them out of their funds.

Final word

It’s clear that there’s a lot that can be done to trace or track crypto especially if it’s been stolen in a scam or fraud.

There are some great, free resources online but it’s clear if you want a real chance of recovering stolen crypto you’ll need to employ a professional to help you.

If you do sign-up with a crypto recovery company, make sure you do your due diligence first and ensure that you’re working with a reputable business that can genuinely help you get your stolen crypto back.

If you need advice and help navigating the world of crypto and avoiding scams, then check out the services we offer.

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