Nadcab – Podcast

The Basics Of Blockchain Forensics

What Exactly Does It Mean? Is It Just Like Digital Forensics, But On-Chain?

Blockchain forensics is the process of analyzing blockchain transactions to trace the movement of digital assets. Unlike traditional digital forensics, which focuses on devices like computers or phones, blockchain forensics follows the transaction history recorded on a public ledger.

Every transaction leaves behind a cryptographic trail tied to wallet addresses, smart contracts, and tokens. Investigators use this data to track how funds move across wallets, exchanges, and even multiple blockchains.

With the help of advanced tools like Chainalysis, Elliptic, and TRM Labs, investigators can cluster addresses, identify suspicious activity, and often connect pseudonymous wallet behavior to real-world identities.

Common Crypto Crimes In India & Globally

What Are The Most Common Types Of Crypto Crimes That Blockchain Forensics Helps Uncover, Especially Here In India?

There’s No Shortage Of Crypto Crimes, Both In India And Globally.

Here In India, Apart From The Big Gainbitcoin Scam, Which Duped People Out Of ₹20,000 Crore, We’ve Seen Other Types Of Fraud:

1. Morris Coin Scam (Kerala)

This Scam Involved A Fake Cryptocurrency Called Morris Coin. The Founder Promised Massive Returns Through A Fake Exchange And Even Hosted Events To Gain Trust. Thousands Of Investors Were Tricked, And Later, Blockchain Forensics Helped Identify Wallet Addresses Where The Funds Were Moved, Many Of Which Were Linked To Offshore Exchanges And Eventually Converted To Cash.

2. Hpz Token Scam

This Scam Used A Fake App Promising High Returns From Investing In “Robotic Mining Of Bitcoin.” Investors Deposited Inr, Which Was Then Routed Through Shell Companies. The Ed Traced These Transactions Using Blockchain Tools And Froze Around ₹370 Crore In Associated Wallets.

3. E-Nuggets Scam (Kolkata)

This Was An App-Based Scam Where Users Were Promised Easy Profits Through Gaming. Once Enough Users Deposited Funds, The App Was Shut Down. Blockchain Analysis Revealed That The Scammer Had Moved The Money To Crypto Wallets And Later Used Tornado Cash (A Mixing Service) To Hide The Transaction Trail.

4. Ronin Bridge Hack (Axie Infinity)

In 2022, Hackers, Later Linked To The North Korean Lazarus Group, Exploited A Vulnerability In The Ronin Blockchain And Stole Over $600 Million Worth Of Crypto. Blockchain Forensic Teams Traced The Flow Of Stolen Eth And Usdc To Multiple Wallets And Exchanges. Some Of It Was Recovered When The Hackers Tried To Cash Out.

5. Ftx Collapse (2022)

Ftx Was One Of The Biggest Crypto Exchanges. But Behind The Scenes, The Founder, Sam Bankman-Fried, Was Allegedly Misusing Customer Funds For Personal And Company Investments. When The Company Collapsed, On-Chain Data Revealed Fund Transfers Between Ftx And Its Sister Company, Alameda Research, Many Of Which Were Unauthorized. Blockchain Forensic Analysts Reconstructed The Timeline And Amounts Through Wallet Behavior And Smart Contract Logs.

And Of Course, Ransomware Attacks Are Another Major Category, But We’ve Already Discussed That Earlier In The Previous Question, Like In The Colonial Pipeline Case, Where Blockchain Forensics Played A Key Role In Tracing And Recovering The Ransom.

What Are The Most Common Types Of Crypto Crimes That Blockchain Forensics Helps Uncover, Especially Here In India?

It Is Dangerous, Especially When People Jump In Without Understanding The Space.

But The Good News Is: You Can Protect Yourself With A Bit Of Awareness And The Right Habits.

You Must Always Verify A Token Or Project Before Investing. Go To Block Explorers Like Etherscan Or Bscscan, Check If The Token Is Verified, How Many Holders It Has, And Whether It’s Been Flagged By The Community.

Secondly, Avoid Clicking On Links From Telegram, Whatsapp, Or X (Twitter) Dms That Promise Free Tokens Or Giveaways. These Are The Number One Source Of Phishing Attacks.

Third, Use Non-Custodial Wallets That Have Scam And Phishing Alerts, Like Metamask With Built-In Protections Or Browser Extensions Like Wallet Guard.

Also, Always Double-Check A Wallet Address Before Sending. Once Funds Leave Your Wallet, There’s No “Undo” Button In Crypto.

And Finally, Learn To Read Patterns. If A New Token Suddenly Has Massive Price Spikes Or “Too-Good-To-Be-True” Returns, It’s Often A Rug Pull Waiting To Happen.

Tools, Techniques & Investigations

What Kind Of Tools Or Techniques Are Used In Blockchain Forensics? How Do Investigators Actually Work On These Cases, From Tracing Wallets To Catching The Criminals?

Investigators Use Some Powerful Tools That Can Make Even The Most Complicated On-Chain Movements Easy To Understand Visually.

Investigators Today Rely On An Evolving Toolkit Of Advanced Platforms To Monitor, Trace, And Visualize Crypto Transactions. Some Of The Most Widely Used Global Tools Include:

1. Chainalysis Reactor
   This Is Like A Visual Detective Board For Crypto. It Helps Investigators Trace Transactions Across Multiple Wallets, Build Relationship Maps Between Addresses, And Follow Funds Even If They Move Through Mixers Or Are Converted Into Different Tokens. It’s Widely Used By Law Enforcement Agencies Like The Fbi And Ed To Track Money Laundering, Scams, And Ransomware Payments.
2. Elliptic Navigator
   Elliptic Specializes In Identifying Illicit Crypto Flows, Especially Those Linked To Darknet Markets, Terror Financing, And Sanctioned Entities. It Gives Each Wallet Or Transaction A Risk Score And Alerts Compliance Teams If Any Suspicious Behavior Is Detected. Think Of It Like A Fraud-Detection Radar For Financial Institutions And Exchanges.
3. Trm Labs
   Trm Combines Blockchain Analysis With Real-World Intelligence. It’s Used To Track Cross-Chain Transactions, Identify Wallet Owners, And Even Alert On Potential Insider Threats Or Scam Tokens. It Also Integrates With Regulatory Tools, Helping Governments And Banks Stay Compliant.
4. Ciphertrace
   Ciphertrace Focuses Heavily On Aml (Anti-Money Laundering) In The Crypto Space. It Helps Track Stolen Funds, Trace Defi Hacks, And Unmask Patterns Used By Scammers. It’s Also Widely Used By Crypto Exchanges To Detect Fraud And Prevent Bad Actors From Moving Funds Through Their Platforms.

Alongside These Tools, Techniques Like:

Address Clustering: This Method Groups Wallets That Behave Like They Belong To The Same Person, For Example, Wallets That Always Interact Together Or Move Funds In Sync.

Transaction Graph Analysis: Investigators Build Flowcharts Of How Crypto Moves Between Wallets. If Someone Tries To Hide Stolen Funds By Sending Them Through Dozens Of Wallets, Graph Analysis Reveals The Path Like A Digital Paper Trail.

Dusting Attacks: A Technique Where Small Amounts Of Crypto (Like A Few Satoshis) Are Sent To Multiple Wallets To Monitor Future Activity. It’s Used To See If A Criminal Accidentally Exposes Their Identity By Spending From Those Wallets Later.

Osint (Open Source Intelligence): This Includes Scanning Social Media, Forums, Telegram Chats, Even Github, Any Open-Source Channel Where Criminals Might Brag, Recruit, Or Leave Clues. This Off-Chain Data Can Be Linked To Wallet Behavior.

Legal Gaps & Data Privacy

What Are The Biggest Challenges When It Comes To Using Blockchain Forensics In Indian Investigations And Courts, Especially Around Privacy And Jurisdiction?

While Blockchain Forensics Is Incredibly Effective In Tracing Transactions, Its Use In Indian Legal Systems Is Still Developing. Evidence From Blockchain Can Be Presented In Court, But It Must Follow A Strict Chain Of Custody. Even Then, There’s Often Hesitation, Mainly Because Many Legal Professionals Still View Blockchain As “Technical” Or Even “Unreliable” Due To A Lack Of Understanding.

Let Me Give You An Example That Hasn’t Been Talked About Enough: The Coindcx Scam Wallet Tracing Case In 2021. A Group Of Scammers Duped Investors Into A Fake Token Scheme And Used Coindcx Wallets To Move Funds. The Issue Wasn’t Tracing; Forensic Tools Tracked The Movement. The Problem Was Proving Ownership. Since Some Wallets Were Non-Kyc, Prosecutors Struggled To Tie Them To Real Individuals In Court, Leading To A Delay In Further Action.

Then There Was The Ethereum Mining Fraud Case In Gujarat, Where Investors Were Lured Into Putting Money Into A Fake Mining Setup. When Funds Were Moved Into Multiple Wallets And Cashed Out Via P2p Platforms, Local Police Couldn’t Proceed Easily. Why? Because Some Funds Went To Wallets Based In Other Countries, And No Formal Process Existed For Cross-Border Crypto Evidence Exchange.

Another Legal Issue Arose During The Bitconnect India Leg Of The Global Ponzi Scheme. Even Though Blockchain Trails Were Available, Local Authorities Lacked Standard Forensic Protocols, So The Evidence Was Viewed As “Inconclusive.” This Shows How The Absence Of A National Guideline Can Weaken Even Strong Digital Trails.

And Let’s Not Forget Privacy. Tools Like Chainalysis Can Map Wallet Clusters, But If Law Enforcement Links A Wallet To A Person Without Proper Legal Approval, It Raises Serious Ethical Issues. Just Because Blockchain Is Public Doesn’t Mean Identifying Someone Without A Warrant Is Okay. That Balance Is Missing In Our Current Regulations.

So To Sum It Up: India Needs Specialized Courts, Blockchain-Aware Legal Teams, And Formal Collaboration Frameworks, Both Locally And Internationally, To Make Blockchain Forensics Work Effectively And Fairly.

Awareness, Prevention & Future Outlook

What Can Regular Users Do To Protect Themselves From Becoming Victims Of Crypto Crimes?

Great Point. The First Step Is Awareness. Always Verify Token Contracts Before Buying. Don’t Fall For Telegram Giveaways Or Whatsapp Schemes. Use Only Trusted Exchanges With Strong Compliance Teams.

Also, Install Browser Wallets With Scam Detection, And Learn To Read Blockchain Explorers, Sites Like Etherscan Show You If A Token Has Suspicious Activity Or Verified Contracts.

I’d Also Recommend Users Follow Trusted Blockchain Educators And Watch Wallet Addresses Before Interacting. The More Transparent Your Tools Are, The Safer You Are.

What Needs To Happen Next For India To Really Step Up Its Game In Fighting Crypto Crimes More Effectively?

We Need Three Big Things To Really Level Up Our Crypto Crime-Fighting Game In India.

First, Proper Training For Law Enforcement. And I Don’t Mean Just A Couple Of Weekend Webinars. I’m Talking About Solid, Deep-Dive Certification Programs That Actually Teach Officers How To Trace Blockchain Activity And Handle Digital Evidence.

Second, We Need Dedicated Blockchain Forensic Labs, Especially In Metro Cities. Right Now, We’re Relying On Limited Resources, And Crypto Crime Moves Fast; We Need Tech That Can Keep Up.

And Third, And Probably Most Important, Collaboration. Exchanges, Developers, Regulators, Tech Experts, Everyone Needs To Sit At The Same Table. Crypto Moves Too Fast For Us To Work In Silos.`

See, Blockchain Isn’t The Wild West Anymore. If We Work Together And Use The Tech Right, It Could Become The Most Secure Financial System The World Has Ever Seen.

Closing Remarks

Today’s discussion revealed how blockchain forensics is reshaping the fight against crypto crimes. Do you have any final thoughts for our listeners?

bsolutely. Scams may look clever, but the blockchain never forgets — good projects will stand strong, while frauds eventually get exposed.

Exactly! It’s not just “survival of the fittest,” it’s “survival of the most transparent.”

By turning every crypto transaction into a digital fingerprint, blockchain forensics brings accountability, security, and trust back to the ecosystem.

It’s the perfect mix of tech, law, and finance — but as always, awareness and caution are our best shields.

Absolutely! To our listeners — whether you’re a curious learner, an investor, or a future blockchain detective — this space is worth following closely.