Module 8: Cryptocurrency Crime Investigation

Question 1

Exchanges + monitoring

Answer 1

Machine learning algorithms are already used by exchanges to identify and track users to find similarities between illicit transactions. Transactions are automatically ranked with history of BTC —> risk score and seize money that way

Question 2

Two examples of Bitcoin heuristics

Answer 2

• Multi-input
• Change address

Question 3

Explain multi-input

Answer 3

Group inputs and assign them to a single user

Question 4

Explain change address

Answer 4

output of transaction which is smallest belongs to 
original sender. But: Is this change? Or another person receiving?

Question 5

How is an investigation performed?

Answer 5

1. Blockchain analytics
2. Seizure
3. Subpoena

Question 6

Elaborate on seizing crypto with subpoena

Answer 6

Exchange is the custodian —> they ‘own’ the cryptocurrency and have full control of it until you take 
it out of their platform. Flag it there. Crypto can be seized and returned to victims through the courts.
You can contact exchanges with subpoenas and official court documents as law enforcement officers 
through exchange portals (excluding high risk exchanges, like Russian ones)

Question 7

Examples of extensive research in academia and industry

Answer 7

• Chainalysis
• CipherTrace
• Elliptic, TRM, Crystal Lite

The best has the biggest dataset