Criminal activities often thrive where official oversight is weakest, which explains why cryptocurrency has become the preferred financial tool for criminals worldwide.
"We're seeing an increasing adoption of cryptocurrency. It's massive growth," says Federico Paesano, a financial investigations expert at the Basel Institute on Governance, an international nonprofit focused on strengthening global governance and combating corruption.
For many journalists, cryptocurrency investigations seem intimidating or even impenetrable. Yet, it’s a growing frontier for investigative journalism. At the 13th Global Investigative Journalism Conference (#GIJC23), experts discussed critical insights to help reporters navigate this complex landscape.
Key Questions to Understand Cryptocurrency
What Is Cryptocurrency?
Federico Paesano compares it to the Yapese stone money of Micronesia—a decentralized ledger where ownership is tracked via cryptographic keys rather than physical coins. Transactions are irreversible and recorded on a blockchain, a distributed public ledger.
What Is Blockchain?
A blockchain is the underlying technology for cryptocurrencies, functioning as an immutable record of all transactions. For example, Bitcoin’s blockchain exceeds 500GB in size.
What Are Crypto Wallets?
Wallets store cryptographic keys that authenticate transactions. These keys can be stored digitally (e.g., USB drives, cloud) or physically (e.g., written on paper).
Are All Cryptocurrencies Bitcoin?
No. Bitcoin is just one type, with unique features like decentralization. Others (e.g., Ethereum) serve different purposes.
Why Is Cryptocurrency Attractive?
- Irreversible transactions: No central authority can block payments.
- Decentralization: No single entity controls the asset.
- Pseudonymity: Offers privacy (though not anonymity).
- Inflation hedge: Protects against volatile fiat currencies (though crypto itself is highly volatile).
👉 Learn how to track crypto transactions securely
Investigating Cryptocurrency: Practical Tips
- Identify Cryptographic Keys
Look for passwords stored on devices, USBs, or cloud services. - Trace Crypto Exchanges
Physical exchange shops often convert crypto to cash. Investigate their wallet addresses to map transactions. - Leverage Open-Source Tools
Use blockchain explorers like WalletExplorer to analyze transactions. - Understand Transaction Patterns
Cryptocurrency transactions use "heuristics"—where a single input (e.g., 1 BTC) splits into multiple outputs (e.g., 0.5 BTC sent + 0.5 BTC as change). - Decode Obfuscation Techniques
Criminals may use Zk-SNARKs, CoinJoin, or mixing services to hide trails. - Attend Financial Crime Conferences
Events like the Global Conference on Financial and Cryptocurrency Crime provide networking opportunities. - Collaborate with Watchdogs
Platforms like Elliptic specialize in crypto forensics.
FAQ Section
Q: Can stolen cryptocurrency be recovered?
A: Rarely. Transactions are irreversible, but exchanges may freeze suspicious assets.
Q: How do investigators trace crypto transactions?
A: Through blockchain analysis, clustering addresses, and following "heuristics."
Q: Is cryptocurrency truly anonymous?
A: No—it’s pseudonymous. Advanced tools can de-anonymize transactions.
👉 Explore advanced crypto investigation tools
Final Notes
Cryptocurrency investigations require a steep learning curve, but the payoff is substantial. For deeper insights, refer to the Basel Institute’s guide: Cryptocurrencies and Money Laundering Investigations.