How the Authorities Track Bitcoin Related Crime

Last updated: Mar 30, 2023
6 Min Read
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One of the many arguments that is used against Bitcoin is that it is the realm of "criminals". There are claims that the relatively anonymous nature of the cryptocurrency makes it a haven for these types of people. Of course, its history for use on darkweb markets has not helped its image.

However, it seems as if this image may soon be shaken by the most unlikely participants. Law enforcement agencies have become increasingly effective at chasing down Bitcoin related crime. This is because they have learned to use the benefits of blockchain technology to help them track down these the perpetrators.

This is indeed not a new phenomenon. Criminals are always willing to adopt new technology in order to evade detection and law enforcement is always happy to adjust their investigative tools to catch them.

Supposed Bitcoin Protections

The reason that Bitcoin has long been considered an effective way to evade detection is because of the fact that Bitcoin addresses have no personally identifiable information. They are essentially just a collection of numbers are digits. Similarly, even though one can spot the IP address of the wallet user, these can easily be hidden through a number of tools like proxies and TOR relays.

Moreover, unlike setting up a bank account, there are no documents that are required in order to create a Bitcoin address. They sometimes try and obfuscate the Bitcoin by sending to multiple addresses. The hope of the criminals is that they agencies won’t be able to spot where the money has gone.

Yet, Bitcoin and blockchain has many things that traditional systems don’t. The completely transparent nature of the public blockchain means that investigators can easily piece together information on the route of the funds.

The Benefits of Blockchain

Blockchain AnalysisWith traditional cyber crimes, data analysis and correlation often helps the investigator locate the perpetrators. This can be difficult when a lot of that data is held by many different companies in different locations around the world. The investigators will have to go to great lengths to actually get their hands on that data.

This is not the case with Bitcoin on the blockchain. Right at the disposal of the investigators is a plethora of data of all the transactions that have ever taken place in time. Below are some of the ways in which Blockchain is making investigators jobs that much easier.

Access to Data

As mentioned, having the data related to the crime will really help the investigator. This is essentially their evidence and as such they have to rely on it in order to seek any sort of prosecution.

Data access can be a really tricky topic especially when you have third party stakeholders like email service providers, internet service providers, hosting companies and the like. In order for an investigator to be able to get access to this information they would have to go through a whole host of procedures to get the data such as subpoenas etc.

There is of course also the possibility of the suspects erasing any data that may lead to them. This would mean that the investigators could lose all data that could possibly implicate these individuals. However, with blockchain, that is completely avoided.

Blockchain stores everything about the transaction and data on the immutable public ledger. No one can change it and it is completely open to anyone who would want to access it.


While Bitcoin addresses are indeed anonymous, transactions can be traced and a clear link can be made to an individual when the Bitcoin is converted into Fiat currency. This is often where many of the cyber criminals can get caught.

Law enforcement is actively monitoring activity that is linked to a suspicious Bitcoin addresses. The moment that the money is placed on the move, it is followed by keen eyes. They can immediately see when a Bitcoin payment hits an address at an exchange for example. It is at this stage that they can make a move and try and spot the individual.

This "trace-ability" of Bitcoin has been the downfall of a number of people in the past. They may try and obfuscate where the funds are going but there are a number of companies such as chainalysis which can help them track where the funds are going. We saw this recently with the Silk Road case where Carl Force, the special agent who stole Bitcoin, tried to hide the funds that he wanted to monetise.

No Jurisdiction Complications

One of the biggest difficulties for law enforcement when it comes to cyber crime is that the activities usually take place in countries other than the country in question. For example, most of the cyber criminals that try to take advantage of US systems are located in countries such as Russia, China, North Korea etc.

As such, getting data from companies that are located in jurisdiction where they do not have authority can be difficult. Therefore, it is hard to get information from offshore bank accounts that were previously used by criminals.

This is not the case with Blockchain. It is entirely borderless and can be accessed by anyone from anywhere in the world. You do not have to rely on any international co-operation from other global agencies in order to get the information you are looking for.

Bad for Criminals, Good for Bitcoin

As Blockchain has become increasingly easier to analyse for Law enforcement agencies, many have realised that Bitcoin is too mainstream for criminals. These nefarious actors have decided that they would rather use other cryptocurrencies such as Monero and ZCash.

This is indeed a positive for Bitcoin. As more of the nefarious use cases are eliminated, Bitcoin will no longer be associated with the underworld. This would be an important step for the mass global adoption of Bitcoin that most cryptocurrency enthusiasts are waiting for.

A safer Bitcoin environment is a desired outcome where people can transact privately but not be comfortable with the prospect of committing crime in the presence of anonymity.

Editorial Team

The Coin Bureau Editorial Team are your dedicated guides through the dynamic world of cryptocurrency. With a passion for educating the masses on blockchain technology and a commitment to unbiased, shill-free content, we unravel the complexities of the industry through in-depth research. We aim to empower the crypto community with the knowledge needed to navigate the crypto landscape successfully and safely, equipping our community with the knowledge and understanding they need to navigate this new digital frontier. 

Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.

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