December 16, 2025

How Investigators Can Follow the Money in Cryptocurrency Cases

CRYPTO, FINANCE, TECHNOLOGY Blockchain Forensics, blockchain investigators, crypto fraud detection, crypto money laundering, crypto tracing tools, cryptocurrency investigations, follow the money crypto, law enforcement blockchain 0

Demystifying the Myth: Crypto Isn’t Untraceable

Cryptocurrency often gets a bad rap in investigative circles. Headlines scream about untraceable funds fueling ransomware, scams, and dark web deals. But here’s the truth: with the right approach, just like they track bank transfers or cash flows. Blockchain technology, the backbone of crypto, is a public ledger—every transaction is recorded forever, visible to anyone who knows where to look.

This isn’t about becoming a coding wizard or hiring expensive specialists. It’s about building practical skills that turn crypto trails into courtroom evidence. As criminals flock to Bitcoin, Ethereum, and stablecoins to launder proceeds, law enforcement can’t afford to lag behind. Let’s break it down step by step.

Why Criminals Are Flocking to Crypto—and Why You Need to Catch Up

Crime is almost always about money. Studies show 80-90% of offenses have a financial motive, from fraud and drug trafficking to cyber extortion. Traditionally, investigators seize cash, freeze bank accounts, or trace wire transfers. But savvy offenders are ditching these for crypto’s perks:

Borderless and Instant: Move millions across countries in minutes, no banks required.
Pseudonymous: Wallets aren’t directly tied to names, creating a veil of anonymity.
Hard to Seize: Without keys, funds are untouchable—no court order alone unlocks a hardware wallet.

Apps like Cash App, Venmo, and Zelle bridge fiat to crypto, making it accessible even to street-level crooks. If your case stalls because “it went crypto,” you’re not alone. The gap? Training. Criminals learn from YouTube; investigators need structured guidance.

The Fundamentals: Understanding Blockchain for Investigations

Think of blockchain as an unbreakable chain of digital receipts. Every crypto transfer includes:

From Address: Sender’s wallet (publicly visible).
To Address: Receiver’s wallet.
Amount and Timestamp: Exact details, immutable.

No central authority hides data—it’s all on-chain. Bitcoin’s blockchain, for example, has processed trillions in volume since 2009, with explorers like Blockchair or Blockchain.com letting you search any transaction ID (TXID) for free.

Key insight: Most criminals aren’t crypto natives. They deposit via exchanges (Coinbase, Binance) that require KYC—your subpoena goldmine. From there, funds hop wallets, mixers, or DeFi platforms, but patterns emerge.

Essential Tools Every Investigator Needs

You don’t need a PhD. Start with these:

Block Explorers: Free tools like Etherscan (Ethereum), Blockchain.com (Bitcoin). Paste a wallet address—see inflows, outflows, balances.
Attribution Software: Platforms like Chainalysis, Elliptic, or CipherTrace cluster addresses owned by the same entity. They tag exchange deposits, known scams, even darknet markets.
Graph Visualizers: Tools like Maltego or free alternatives map wallet connections, revealing fund flows.
Off-Chain Intel: Subpoena exchanges for user data. Track IP logs from victim reports or seized phones.

Pro Tip: Many agencies get free Chainalysis Reactor access via partnerships. Combine with open-source OSINT like wallet balances on DeBank.

Step-by-Step: in Practice

Here’s a real-world workflow, honed from fraud and ransomware cases:

Step 1: Entry Point Identification

Victims often have the scammer’s wallet address or TXID from phishing sites or emails. Patrol officers: Screenshot it immediately. Use explorers to confirm receipt.

Step 2: Trace the Flow

Follow outflows. Example: $50K hits Wallet A (exchange deposit), splits to Wallets B/C (tumblers?), consolidates in Wallet D (new exchange). Note timestamps—link to suspect alibis.

Step 3: Cluster and Attribute

Tools reveal if Wallet D belongs to a suspect’s phone wallet (e.g., MetaMask seed from device forensics). Cross-reference with FinTech apps showing crypto buys.

Step 4: Legal Takedowns

Subpoena exchanges: “User data for Wallet X, TXID Y.” For non-KYC chains like Monero, pivot to fiat on/off ramps. Seize hardware wallets with warrants—keys often in plain sight.

Step 5: Courtroom Proof

Screenshots, visualizations, expert affidavits tie dots. Immutable blockchain beats shaky witness testimony.

Overcoming Hurdles: Mixers, Privacy Coins, and DeFi

Criminals obfuscate with Tornado Cash (mixer), Monero (privacy coin), or DEXs (no KYC). Solutions:

Mixers: Heuristics detect patterns; sanctions blacklist tainted addresses.
Privacy Coins: Trace fiat bridges. Monero volume is tiny vs. Bitcoin.
DeFi: On-chain analytics track swaps on Uniswap—funds don’t vanish.

Advanced: Timing analysis, dust attacks, or collaborating with firms like TRM Labs.

Training: From Novice to Crypto Detective

Crypto investigations mirror fraud work: leads, subpoenas, evidence chains. No siloing to cyber units—patrol takes initial reports. Effective training covers:

Hands-on tracing exercises.
Subpoena drafting for VASPs (Virtual Asset Service Providers).
Mobile forensics for wallet apps.
Case studies: Colonial Pipeline ransomware recovery.

Scale via online courses, in-house workshops. Confidence skyrockets when you trace your first wallet.

The Future: Closing the Crypto Gap

Crypto adoption surges—$2T+ market cap. Criminals evolve, but so can investigators. By treating crypto as , agencies recover assets, add charges, and deter crime. Victims get justice; suspects face leverage.

Start today: Bookmark a block explorer, run a test trace. The money trail awaits— and win.

Ready to level up? Explore blockchain forensics training and tools tailored for law enforcement.