Loading ...This is the biggest misconception about cryptocurrencies. Most major cryptocurrencies are not anonymous. They are actually pseudonymous. With Bitcoin anyone in the world can see every transaction ever made, but they see wallet addresses instead of names. When cryptocurrencies were first invented, wallet addresses weren’t linked to names, there were fewer tracking tools and fewer exchanges required identification verification. This created a perception of anonymity, but overtime blockchains and analytics became extremely sophisticated. A common joke among investigators is that criminals who use Bitcoin are often leaving a permanent public ledger of their activities.
The trick is that once investigators connect a wallet to a real person, the entire history of that wallet can become visible. That’s why law enforcement has become surprisingly effective at tracking crypto criminals.
Why criminals get caught
Most people eventually interact with:
Crypto exchanges
Banks
Credit cards
Online accounts
Shipping addresses
IP addresses
If you buy Bitcoin through a regulated exchange such as Coinbase, that exchange knows your identity. If investigators obtain records, they can connect your name to specific wallets.
Companies such as Chainalysis and TRM Labs specialize in analyzing blockchain.
I have no horse in the BTC game, but it sure has been beat down again