Tracing Stolen Crypto Explained

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If your losses exceed £3,000 (in the UK) or $10,000 worldwide The Crypto Adviser can offer advice on recovering your funds. 

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How Does Crypto Tracing Work?

Tracing cryptocurrency stolen in a scam is the first step towards identifying the offenders and working to recover the funds. But how does it work?

Bitcoin and other cryptocurrencies are not completely anonymous despite what many people think.

Each and every transaction is recorded on the blockchain, which is immutable. Think of it like an accountant’s ledger that can never be altered. It means there’s an indelible trail linking transactions and wallet addresses.

> We’ve partnered with Cybertrace to help clients trace and recover their funds. They are a leading global investigations company with experience in both the public and private sectors. We are the UK’s only approved supplier of their services. Get in touch to discuss your case.

Following The Money

Cryptocurrency tracing involves following transactions across the blockchain until they reach an end-point exchange which a scammer or their proxy has signed up to.

Most exchanges have strict KYC (Know Your Customer) rules which means anyone wishing to open an account has to prove their identity by uploading documents such as a passport or driving license.

Often, scam victims will be directed to move funds from their bank account to a crypto exchange, before converting it into cryptocurrency and sending on to a wallet or wallets operated by the scammer.

The crypto may then be bounced across multiple wallets in an attempt to hide the theft. But if the scammer wishes to convert the stolen coins into cash they will need to use an exchange to convert the stolen crypto into cash before moving it to a bank account.

Once stolen crypto is traced to an end-point exchange and/or bank, then action can often be taken to identify the scammer and ultimately recover stolen funds.

The following diagram illustrates how crypto scammers usually operate, from getting victims to transfer funds from their bank account, all the way to the cash-out exchange:

Blockchain Analytics Tools

Crypto tracing investigators use sophisticated tools to follow stolen crypto, monitor wallet interactions and identify patterns in transactions. Cybertrace uses software by market leader Chainalysis as part of their work.

Tracing stolen cryptocurrency can be a complex process which is why you need to ensure you’re working with experienced investigators.

The Cybertrace team have many years of experience tracing stolen (and lost) crypto around the world. They use sophisticated software and other investigatory techniques to track transactions as they move across the blockchain and onto exchanges.

They also work closely with law enforcement agencies across the globe who are able to act on the results of the tracing investigation and approach the exchanges involved.

It’s important to note that crypto recovery can be a lengthy process and there’s no guarantee that it will be successful.

However, Cybertrace has an enviable track record of successful outcomes for many clients.

To discuss your case, contact us today. You can also fill in our fraud and scam questionnaire so that we can assess your situation.