Cryptocurrency is gaining popularity worldwide. In some countries, Bitcoin and other crypto is accepted as a legal means of payment. There is, however, another problem – cryptocurrency usage in various money laundering schemes and other illicit activities such as fraud, extortion and so on. Is it possible to verify crypto and know which crypto is safe.
It is important to make sure that the digital assets you are buying are clean, that is, that they haven’t been involved in any illicit transactions.
People used to think that all crypto transactions are confidential – and some still think so. It happens mainly because people do not have a clear understanding of how this technology actually works.
They are under the illusion that crypto is an instrument for suspicious activity used only by criminals and con artists to avoid getting caught.
Blockchains are open networks which make the history of transactions permanently recorded and viewable to anyone. The movement of each coin can be traced from the moment it was mined. Owners of wallets, however, remain anonymous and cannot always be easily identified, which makes crypto increasingly attractive to criminals, who use it for various purposes – for blackmail, extortion, money laundering and so on.
Nevertheless, the age of crypto wallets anonymity is coming to an end as modern technologies are now able to detect what has previously been kept hidden.
How can the movements of crypto be traced?
There are special online services such as Bitfury Crystal that trace the history of cryptocurrency transactions. They will show whether this or that crypto coin has passed through any suspicious wallets. One doubtful activity in the history of transactions is enough to deter any self-respecting seller from dealing with this compromised coin.
If an owner of “grey” crypto assets tries to purchase a product or sell a service, there is high likelihood that they will fail to do so. Sellers will perform KYC [know your customer] verification, identify the client and trace the whole history of their cryptocurrency transactions.
If there are any illicit transactions in the coin’s history, it simply will not be accepted for payment and the customer may attract the attention of law enforcement. Suspicious crypto assets may be frozen.
How can crypto transactions be analyzed?
To assess the risks and track the whole chain of transactions , you can use online platform Bitfury Crystal. Bitfury Crystal conducts transaction analysis for blockchains Bitcoin Cash and Bitcoin and helps identify different grey schemes if any.
The service allows you to trace the exact movement of cryptocurrency to a specific wallet address or after a certain transaction.
To analyze suspicious activities, the team of Crystal apply the following tools:
- The tool groups the addresses on the blockchain belonging to the same owner. The tool uses methods of heuristic analysis. After that, Crystal analysts determine the owner of the cluster by looking at the available information.
- Risk assessment. At this stage, algorithms are used to find out whether this or that wallet can be associated with potentially harmful activities (malware, darkmarket, etc). Unlabelled clusters are considered depending on their interaction with labeled clusters.
- Visualization. This tool can be used to construct a flow chart of all known transactions in a specific cryptocurrency. Moreover, the graph will have a minimum number of intersections of the edges for better visualization.
- This tool helps to find all the transactions between the two clusters and study them in detail. The function also draws graphics that allow you to assess the intensity of the interaction of the owners of addresses in specific time intervals.
- At this stage the platform can help locate stolen money or the organizations through which it was withdrawn. When the movement of cryptocurrency is tracked manually, one usually faces the problem of large branching but Crystal uses algorithms to reveal all the delivery routes and can automatically build a visualization.
What are the possible applications of Crystal platform and its tools?
The tools of Bitfury Crystal blockchain analytics help analyze any illegal or dubious transactions involving Bitcoin at the risk assessment stage. For a more detailed assessment, the platform offers features ‘Interaction’ and ‘Visualization’.
The platform helps locate and track stolen crypto. You can use Crystal to track the flow of digital assets through companies and Bitcoin wallets, including those that were caught making illicit transactions. The data are presented in a visual form.
These data can be useful if you decide to alert law enforcement, asking them to freeze the suspicious crypto and start an investigation against the persons involved in these activities.
Crystal, a platform to analyze crypto currency transactions, is now widely used in Europe, Asia, the CIS countries and the USA as an effective tool to monitor crypto transactions for compliance violations. This platform is used by law enforcement agencies and financial organizations to trace the movement of a certain coin from the moment it was mined to present.
How to make sure that the crypto assets you buy have never been used for any illicit purposes?
Let us suppose that the investor is now unable to order the analysis of crypto assets. In this case, to secure your crypto assets, it would be wise to bear the following in mind:
Don’t buy crypto from dubious sellers.
We also strongly advise you against buying crypto in the following places:
- Anonymous crypto exchanges;
- Various peer-to-peer services;
- Decentralized marketplaces.
Even if you are under impression that things are going to plan and nobody can trace the movement of these assets, this impression may be misleading and there is a risk that one day your assets will be frozen or, even worse, that you will lose all your crypto funds.
The technology of monitoring and tracking crypto currency transactions is constantly developing. Many individuals and national governments are interested in making these transactions as transparent as possible and to ensure their compliance with the legislation. What appears to be anonymous now can become wide open in the future.
What can be done to protect your assets from freezing or blocking?
- If possible, check your crypto wallets right now, for example, with the help of Crystal or similar services.
- Reconsider your views on crypto purchase. Even if you always replenish your crypto wallet or transfer crypto in one and the same way and nothing bad has ever happened, this means absolutely nothing. The situation may change in the blink of an eye.
- Avoid making impulsive decisions. Do not transfer money to anonymous receivers. Make sure that these funds will not be used for shady transactions which may attract the attention of law enforcement agencies. Finding yourself in the company of criminals or terrorists is not something you would want to face.
How are things going in the Russian crypto market?
The Russian crypto currency market may appear to offer more freedom than in Europe and the USA. Yet this freedom could be deceptive as there are cases that prove otherwise. On 5 April 2022 for the first time in the Russian judicial practice, the court ordered to freeze stolen crypto assets. The court issued a freezing order on 24 wallets of a person accused of stealing Ethereum.
It would, therefore, be reasonable to assume that with time there would be more and more of such cases, especially if we take into account the development of technologies for tracking transaction chains and identification of the owner of a certain wallet.
Putting blind trust in the total anonymity of crypto currency is a bad idea. It is high time to reconsider your views on buying, storing and selling Bitcoins and other crypto assets. Avoid buying crypto through p2p services, illegal crypto exchanges and decentralized marketplaces. In the future such reckless behaviour may lead to the total freeze of all your assets.
By using online platform Crystal and suchlike you can trace all the transactions and identify wallet owners to make sure that a certain crypto coin is trustworthy. Since there is a growing individual and public demand for tools to maximize investor security and ensure crypto compliance, this service will undoubtedly continue developing in the future.
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