Cryptocurrency transactions, whether fraudulent or genuine, are not completely confidential after trading as they could still be traced or tracked by launching investigations in the form of crypto tracing into the blockchain.
The knowledge of crypto tracing and the way it works is what every owner of any form of digital assets should know, especially owners of cryptocurrency tokens and those that trade with them.
Here, crypto tracing and its intricacies will be explored under the following five significant headings.
• What is crypto tracing?
• When do the crypto tracing services become imminent?
• Common cryptocurrency scam or fraud scheme that may require crypto tracing services.
• Some important tools in crypto tracing.
• Procedures and methods adopted for effective crypto tracing operations.
What is Crypto tracing?
As the name implies, crypto tracing involves all efforts to recover stolen or lost cryptocurrency tokens by monitoring transactions on the blockchain.
Crypto tracing is the best step in the right direction toward recovering any cryptocurrencies that may have been forfeited through fraudulent manners like hacking or theft.
Sometimes, careless cryptocurrency transactions can result in sending cryptocurrencies to the wrong cryptocurrency wallet address. This and many other scenarios that can result in people forfeiting or losing their cryptocurrencies can be duly reversed and resolved with crypto tracing.
In a nutshell, crypto tracing helps uncover the identities of owners of cryptocurrency wallet addresses linked to any form of fraudulent or unlawful cryptocurrency transactions.
When do the crypto tracing services become imminent?
The services of a certified crypto tracing expert become imminent in any of the following scenarios.
1. Events in the form of unauthorized cryptocurrency transactions on a secured cryptocurrency wallet.
2. A failed cryptocurrency transaction whereby cryptocurrency tokens fail to get to the recipient cryptocurrency wallet address.
3. Any form of unauthorized access into a secured cryptocurrency wallet.
4. Mistakenly sending huge amounts of cryptocurrency tokens to the wrong cryptocurrency wallet address.
Common Cryptocurrency Scam or Fraud Schemes that may Require a Crypto Tracing Service
In the crypto space, many scamming schemes are hovering around, which require extra care and prior knowledge to evade them effectively. Some of these cryptocurrency scam schemes and how they operate are listed below.
1. Crypto Scam Mediated through Fake Crypto Mobile Apps: This kind of scam is very common among unsuspecting victims who are always fast to download apps from any available source without verification. These fake crypto mobile apps are designed with the singular intention of stealing cryptocurrencies.
This entails that whenever users of these fake crypto mobile apps are being presented with an address to fund or receive payments, these payments and funds, in reality, end up going into crypto addresses owned by fraudsters that designed the fake app.
2. Phishing Scams: This is a very common scam that involves a scammer impersonating a trusted firm or platform to extract vital information that will be used in scamming their victims in the long run.
3. Vested Interests: This type of scam occurs when you invest in the wrong cryptocurrency tokens by following the words of certain people who are only interested in promoting a particular cryptocurrency token for selfish interests best known to them.
• Pyramid and Ponzi schemes
• Fake or anonymous characters
• Romance scams, etc.
Some important tools in crypto tracing
Tools that will be very effective in crypto tracing are mostly tools that can be used to monitor transactions on the blockchain in the form of software, applications, or utility programs.
Some common tools are:
- Coinpath: This is a tool that uses a set of API endpoints to trace any form of transaction to any source or destination on the blockchain.
- Elliptic: This is a very common tool for blockchain investigations.
- Crystal Blockchain: One of the world’s leading analytics tools used for providing real-time blockchain monitoring.
Procedures and methods adopted for effective crypto tracing operations
To ensure effective crypto tracing operations, the procedures listed below are not to be taken for granted.
1. Cluster Analysis: A cluster is a collection or group of cryptocurrency wallet addresses linked or owned by a single person. Cluster analysis aims to reveal the identities behind these clusters.
2. Attribution Data: This procedure helps strengthen the investigation by analyzing ownership attribution information of numerous hidden accounts to reveal their identity.
In addition to the two procedures mentioned above, other notable procedures include:
~ Tracing total transactions linked to specific cryptocurrency wallets.
~ Tracking IP addresses.
~ Transactions can be mapped out to ease investigation procedures.
Hopefully, this wonderful piece has revealed more details on crypto tracing and what it entails.