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Author: Admin | 2025-04-28
Discover how blockchain forensics helps combat crypto-related crimes and whether the authorities can find out who owns a crypto address.Criminal activities involving cryptocurrencies are common and include a wide range of illegal actions like ransomware attacks and breaches that target cryptocurrency exchanges.Most times, the stolen digital assets are never recovered due to the various techniques criminals use to complicate crypto tracking. However, blockchain forensics has somewhat made it possible for authorities to track illegal crypto transactions and potentially recover the associated assets. In this guide, you will learn how they do it.What is blockchain forensics? Blockchain forensics uses scientific techniques to track and interpret the flow of crypto assets on the blockchain. While transactions on public blockchain networks are visible to everyone, blockchain forensic experts use specialized tools and methods to decipher, examine, and interpret blockchain data. Personal identities aren’t associated with wallet addresses, making it difficult for organizations to pin real people to crypto-related financial crimes. However, blockchain forensic techniques have improved over the years, and organizations have been able to recover some illegally acquired digital assets.To illustrate the effectiveness of blockchain forensics, let’s take the case of the Colonial Pipeline, a prominent U.S. oil pipeline company that fell victim to a ransomware attack orchestrated by a group known as DarkSide in 2021. The perpetrators demanded a ransom payment of 75 bitcoins (BTC). The company paid the ransom hoping the hackers would end the attack, which had crippled operations and led to an emergency declaration by President Joe Biden. However, in a remarkable display of investigative prowess, a blockchain security firm, Mandiant, in collaboration with the FBI, employed blockchain forensics and undisclosed methodologies to trace the ransom payments. They managed to recover a substantial portion of the funds, reclaiming 64 out of the 75 BTC that had been extorted. Crypto is money – let`s use it! You can use CryptoWallet to buy, sell, and trade crypto. Sign up today Sign up today How does blockchain forensics work?While blockchain forensic specialists don’t all work in the same way, there are specific steps that they generally follow:Data collection: The first crucial step in blockchain forensics involves collecting relevant data. Investigators can gather transaction data from various sources, such as blockchain explorers, crypto exchanges, and digital wallets associated with a case. This data can include transaction hashes, addresses, timestamps, and transaction amounts.Data analysis: Once the data is collected, the next step is to analyze it for potential patterns and clues. Blockchain forensics experts utilize specialized software tools to examine transactional data and identify suspicious or noteworthy activities. They look for irregularities, such as large transactions, frequent transfers, or connections to known illicit entities.Address clustering: This is a crucial technique used in blockchain forensics to group related addresses and transactions. Investigators identify addresses controlled by the same entity by analyzing patterns, such as shared inputs or outputs. By clustering addresses, they can gain insights into the flow of funds and trace the movement of illicit transactions across the blockchain.Linking identities: Blockchain forensics aims
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