Crypto Forensics Using OXT to track bitcoin transactions
It’s a very common misconception that bitcoin is the perfect tool for criminals because bitcoin is an anonymous currency that they can use to do their nefarious deeds without getting caught. Very few people know that bitcoin is the most open currency in the world. All transactions are written to the blockchain and are stuck in there forever, and anyone can analyze them and make sense out of the money flow.
Hence, in this article I shall debunk the myth and show you how to track criminals on the blockchain using a very potent and easy to use tool called OXT.
Here, I will discuss about a criminal transaction that happened in 7th May, 2019.
So first, go on to https://oxt.me on your browser
In the search bar, paste the transaction id or hash of the transaction. This will list out information about the transaction as follows –
On the left, you’ll see a “Tools” button. On clicking that, it will redirect you to a page that looks like this –
This small circle represents how much bitcoin is sent and which block it is. On double clicking it, this circle will split up, and you will see lot of information.
No need to be intimated by this. This is just the information that we saw in the picture, but in a visual format. The central circle represents the transaction, and the arrows represent money going in or coming out of this transaction. Now, we can click on any of the arrows to see where it is leading, and click on the point following that, hence making a trail.
We can do this for any of the trails shown in the picture and start tracing the point where the money was being distributed.
Here is a peek into how the map looks when we dive in a little deeper into tracing the trails-
Overall, this is the main methodology of tracing the money. The various channels show the outflow of money different amounts of money into different destinations. We can click around and find the other channels as well.
On observing the entire pattern, you’ll see that the hacker is basically trying to split the money into smaller addresses. This isn’t a normal behavior for a regular bitcoin user
So, say that we are an exchange in this transaction as shown above. We will therefore be represented as one small endpoint on the map and will have a trail linking to us with the original transaction. Therefore, using tools such as OXT, we can have a compliance person who can visually tack this back and very easily discover the original transaction.
Therefore, this tool makes the job of IRS and the police much easier and has ever since helped them track down numerous illegal sites relating to child abuse and trafficking, through their bitcoin transactions.
If we, as a just user are in any way linked to the exchange, then we are legally obligated to not accept the money from hacks, and be aware of where the money of your customers is coming from. That being said, some bitcoins are worth more than other bitcoins. If we have any bitcoins from the trace of the hack, then we can’t put it to an exchange for our use because then everyone will know my identity. This is because exchanges need KYCs and if we setup KYC, we will be caught. Therefore, these coins don’t have much value due to the risk of selling them on exchanges.
So what the hackers do is simply sell these bitcoins at a local level at a much lower price. This way they then get immediate buyers, and if the buyers don’t trace the bitcoin trail and try to deposit this money on exchanges, then they might in turn get questioned. Hence, you as an honest buyer might get in trouble. In such cases, we must always have a receipt or an invoice of the service to prove to the law enforcers that you are not connected to the hack.
That being said, I hope this article gives you a good insight into tracking bitcoins and also be a responsible bitcoin user by analyzing your exchanges.
–Eshaan Bhardwaj