Bitcoin Forum

Hi everyone,

I've been exploring an idea for tracing transactions through instant exchange platforms, and I'm hoping to get your feedback on its feasibility and potential challenges.

Context:

Instant exchange platforms like FixedFloat and ChangeNOW are often used by hackers and criminals to obscure the trail of their transactions. Unlike mixing services such as Tornado Cash, these platforms perform the swap internally. This means that the originating and destination addresses do not appear on the blockchain, making it difficult to trace the flow of funds.

The Idea:

What if we developed a tool that sends the minimum required amount of cryptocurrency through each available chain on these platforms? By doing this, we could build a record of the contract addresses used for these swaps. Although these addresses might change regularly, the tool could regularly run and log any changes.

Additionally, by using timing analysis, it might be possible to match transactions, especially if the amounts are rounded or specific to certain blockchains (e.g., a specific amount of TRX received on Tron that equals 1 ETH). Unlike Tornado Cash, there's no possibility of delaying transactions with these platforms, which could make timing analysis more effective.

Questions:

What are the potential flaws or challenges in this approach? It might be a little expensive, but well within the ability of most successful digital forensics firms.

Why haven't commercial tracing platforms, such as Chainalysis, implemented a similar method to trace funds after they pass through these instant exchange platforms?

I appreciate any insights or feedback you can provide on this topic.

Thanks!

Cash is more often used by scammers to obscure the trail of transactions, should we start working on a system to track every note spent? Crypto transactions accounts for an insignificant amount of illegal txs but gets almost all of the scrutiny, making it more difficult for those who simply wants privacy to get that.

Maybe cause they'll need to invest a huge amount of money for it to be done naturally and successfully. If it's successful you only get one bust and everyone avoids that platform, so it will not be worth the reward in the end.

 How do you know what happens in the most successful digital forensics firms?
Without insight its just guesswork.

If I understood everything correctly, that's basically a tool to perform crypto dusting attacks ^{[something that's been around for a very long time]}.

False positive results ^{[even with the timing analysis approach]}!

Regardless of their claims, I'm pretty sure some of them do it from time to time.
^{- Take everything they say with a grain of salt!}

I don't think hackers and criminals use these exchanges. Both exchanges can freeze funds at any time and require KYC as well as the origin of the coins. Why would anyone take the risk, especially those who are aware that their coins did not come in a legal way?
We are talking about hackers who know what they are doing, not random beginners. Right?



To me, this sounds like one of the competent authorities is trying to do an investigation, so now you are stuck and asking for help. (I have reason to doubt that you are targeting Fixedfloat and Changenow here)

What you are proposing will not confirm with great certainty the connection of certain transactions. It's an algorithm that will base its conclusions on assumptions.


Another platform that will charge for marking coins as "tainted". Super.