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The Classroom

PATHWAY I) Blockchain Sleuthing: Become a Crypto Detective

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What is a Blockchain Sleuth?

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— Blockchain sleuths are web3’s detectives; responsible for solving crypto crimes and holding scammers to account.

— Crypto detectives use a variety of skills and tools to track down criminals and get justice for victims. It’s not just about on-chain analysis, but also their understanding of digital identity in web2 formats too.

— To become a blockchain sleuth, education is a must; so, start learning to read transactions and up your knowledge to get started.

Everyone loves a good detective story,  and every field has both its criminals and its famous investigators. Finance, politics, healthcare, and more, rely on these kind-hearted individuals. Blockchain is no different. 

Today, crypto scams are growing almost as fast as blockchain use cases. Even if it’s not an outright rug pull, crypto founders are organizing token drops with pump-and-dump mechanics. Even worse, scammers can steal your assets using social engineering and phishing.

Today, the most common reasons for loss of value on the blockchain are these types of scams. Although hardware wallets can protect you from threats like seed phrase compromises and computer malware, they won’t protect you from falling for scams. So, how can we better protect ourselves?

Well, the first pillar is education: it’s important to understand every part of each transaction to know where and when you are putting your assets at risk. By understanding what should happen, you can aim to avoid scams in the first place. But for exploits already in progress, there are good Samaritans who seek justice through investigation: Blockchain Sleuths.

These unsung crypto natives spend time, effort, and often money to keep the wider crypto community safe. How do these heroes catch crypto blockchain criminals?

Well, to understand what they do, let’s start at the beginning. In fact, what is blockchain sleuthing all about?

Blockchain Sleuthing: How Transparency Changes Everything

Well, if you didn’t already know, the blockchain is entirely transparent. This means that there is a history of every single transaction ever executed on each network. Block explorers such as Etherscan, for the Ethereum network, make blockchain data easily accessible.

All of this means that on-chain crimes are easily traceable; everyone can see exactly which wallet stole which assets, where any profits were moved, and even how many other victims there were. This is a game changer for those investigating cybercrime, as there’s a single source of truth proving that specific wallets committed specific crimes.

However, there is one problem: tying ownership of that crypto wallet to a person in the real world. This is where blockchain sleuthing comes in. Plus, since anyone can learn how to read blockchain transactions and the blockchain is fully transparent, anyone can become a sleuth with a little bit of practice. 

But not everyone who reads transactions is a real-life detective. So what makes a blockchain sleuth exactly?

What is a Blockchain Sleuth?

A blockchain sleuth is a crypto detective, someone who investigates crimes committed on blockchain networks. In short, they investigate, analyze, and corroborate information to tie crypto accounts to real people. They often help law enforcement catch up with crypto criminals too.

That explains what sleuths are, but how do they operate?

What Does a Blockchain Sleuth Do?

A crypto detective has choices for how to bring their target to justice; each sleuth has a different method. However, crypto detectives have some main ways to catch criminals:

On-chain analysis

Blockchain detectives are most famous for their on-chain analysis. It may sound obvious, but the first step for any detective is understanding how to read every part of blockchain transactions. Block explorers allow them to see the details of any blockchain transaction in a network’s history. This is just one tool in the blockchain sleuth’s arsenal. However, they often use multiple tools to read transactions and visualize the movement of assets between accounts.

 As you can imagine, on-chain transparency comes in handy when trying to see where money moves—they can track the amount of assets sent in addition to who they were sent to and when. They can even track individual wallets, essentially watching money move in and out of criminals’ accounts. 

Off-Chain Analysis

Offchain analysis is how sleuths tie real-world identities to criminal actions on blockchain. Thus it’s just as important as using block explorers.

To explain, investigating social media accounts, domain registrations, and other web2 sources of information is integral to linking crypto criminals to their real-life identities. Even if sleuths have the intricate details of a complex crypto scam, it’s difficult to impossible to get justice without knowing who is the owner of the incriminating wallet(s). 

So, blockchain sleuths also employ successful investigation methods from their web2 counterparts. These investigations help detectives connect digital scammers with their real-life identities. Next, sleuths need to report information to the relevant authorities.


One of the most important tasks blockchain sleuths have is reporting. How can they bring criminals to justice without telling others about it? Well, once a sleuth has enough evidence to link a criminal wallet to a real-life identity, the only job left is to report the crime! 

This can differ from detective to detective though. Some blockchain sleuths will only report the crime to the crypto community, relying on a loss of reputation to serve justice. 

However other blockchain sleuths prefer a more orthodox option: reporting criminals to the relevant national authorities. In some cases, these reports have led to extremely long prison sentences, and some lucky victims have even received their funds back.

In some jurisdictions, this can pose some difficulties. Not all countries regulate crypto scams in the same way as other digital scams, and as a result, some crypto criminals walk free. 

Reporting can also pose a danger to doxxed detectives. Some crypto criminals are willing to turn to violence or coercion because of the amount of money at stake. 

Why Do We Need Blockchain Sleuths?

Blockchain sleuths have unique skills to understand blockchain’s features and use them to catch criminals. Transparency on blockchain and immutability have an impact on investigations but regulatory bodies rarely understand these mechanics. They typically don’t analyze the transactions themselves and the lack of understanding emboldens scammers. They arise with new potential attacks each day. 

So, although it would be great if you could just task the local police force with finding the perp of crypto theft, they might not understand the evidence you provide them with. Blockchain sleuths play a crucial role for victims. Not only do they research scams, they also report the evidence, and show law enforcement how they came to their conclusions. 

The expertise and evidence they provide allow police forces to take appropriate actions to move forward and serve justice for the victims of blockchain scams.

Transparency Helps To Catch Criminals Many Years Later

But even if the evidence a blockchain sleuth finds is not enough now, that doesn’t mean a crypto crook is off the hook. 

While some crimes might not have any solid links to real people today, that doesn’t mean they won’t in the future. The beauty of the blockchain is that every transaction is recorded forever. That means if a criminal slips up and leaves a link to their real-life identity, even ten years later, a blockchain sleuth can make the connection. With blockchain sleuths, no crypto criminal can rest easy: now, or far into the future.

Ready for the next step? Check out our next post in the module exploring some of the most famous crypto detectives so far!

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