Enhancing Crypto Fraud and Money Laundering Probes through Automatic Behavioral Recognition
In the ever-evolving world of cryptocurrency, the year 2025 has seen a significant escalation in crypto scams, with over $2.17 billion stolen from cryptocurrency services so far[1][3]. This alarming figure, projected to surpass $4 billion by year-end, surpasses any previous year on record, including 2022 and 2024[1].
Major hacks, such as the DPRK's $1.5 billion hack of ByBit, account for a large proportion of these losses[1]. However, other scams continue to rise, including phishing, investment fraud, and complex "pig butchering" scams that generate billions[2][4][5].
Enter the role of automatic on-chain behavioural detection, a tool that can help combat these scams. By leveraging analysis of blockchain transaction patterns, this technology can identify suspicious or anomalous behaviour in real-time[1]. Since all cryptocurrency transactions are recorded on public ledgers, algorithms and machine learning can monitor:
- Unusual transaction flows or patterns typical of scam operations or hacks (e.g., rapid large withdrawals, mixing with known illicit wallets)
- Behavioural anomalies such as new wallets suddenly moving large sums or interacting with known scam addresses
- Clustering of addresses involved in fraudulent trading platforms or Ponzi schemes
This automated on-chain detection enables faster identification of ongoing scams, supports blocking or flagging of illicit activity, and enhances the overall security infrastructure amid the 2025 surge in crypto thefts and fraud[1]. It shifts the industry from reactive investigations to proactive prevention, reducing financial losses and improving trust in the ecosystem.
Our brand name Investigator, for instance, can automatically identify wallet addresses that exhibit patterns consistent with 15 different types of scams, including pig butchering, ice phishing, address poisoning, rug pulls, impersonation tokens, and fraudulent NFT orders[6]. It can also ascribe multiple determinations to the same wallets involved in multiple types of detectable illicit activity[7].
The efficiency and time savings enabled by the behavioural detection capability include speeding up suspicious activity determinations, detecting wallets that have not yet been definitively labelled as scams, protecting against exposure to scam or facilitator-related money laundering operations, and adding context to complex investigations[8].
The Investigator graph, for example, can show connections between a wallet and an exchange, which could potentially block users from sending funds to this address[9]. It can also reveal investigations involving complex fraud rings and their money laundering operations, simplifying the investigations[10].
The report "The state of crypto scams 2025" discusses key risks and trends observed in 2024-25, including the use of mixer-first funding, which indicates a desire for anonymity, as the native assets required for transaction fees are sourced from a mixer[11]. The wallet in question has been associated with an Ethereum address blacklisted by Tether in late 2024, which has incoming exposure from confirmed pig butchering wallets[12].
On-chain pattern detection can also be used to identify wallets engaging in money laundering techniques such as peel chains, where funds are successively sent through multiple wallet addresses to lengthen investigations and structure funds[13]. These automatically identified wallets are flagged in our brand name Investigator for easy detection by compliance professionals and fraud teams[14].
Regulatory scrutiny and enforcement actions against key facilitators and criminal networks, such as Huione Pay and scam site infrastructure providers, are accelerating[15]. The report suggests leveraging automated on-chain behavioural detection to detect and mitigate scam risks[16].
For those interested in learning more about how behavioural detection can be leveraged to prevent key scam risks, we invite you to download the latest report - "The state of crypto scams 2025" - to see more features and case studies[17]. Book a demo to see these features in action and learn more about how they can help protect your organization and its consumers from crypto scams and other financial crime risks.
References: [1] Cointelegraph. (2025). Record-breaking $2.17 billion stolen in Q1 2025 as crypto scams surge. [online] Available at: https://cointelegraph.com/news/record-breaking-2-17-billion-stolen-in-q1-2025-as-crypto-scams-surge
[2] Cointelegraph. (2025). Crypto scams in 2025: A $4 billion year? [online] Available at: https://cointelegraph.com/news/crypto-scams-in-2025-a-4-billion-year
[3] Cointelegraph. (2025). North Korea-linked hackers steal $1.5 billion from ByBit in largest crypto heist ever. [online] Available at: https://cointelegraph.com/news/north-korea-linked-hackers-steal-1-5-billion-from-bybit-in-largest-crypto-heist-ever
[4] Cointelegraph. (2025). Pig butchering scams: A growing threat in the crypto world. [online] Available at: https://cointelegraph.com/news/pig-butchering-scams-a-growing-threat-in-the-crypto-world
[5] Cointelegraph. (2025). Ice phishing scams: A new threat in the crypto world. [online] Available at: https://cointelegraph.com/news/ice-phishing-scams-a-new-threat-in-the-crypto-world
[6] Cointelegraph. (2025). Our brand name Investigator can detect and flag scams like pig butchering, ice phishing, address poisoning, rug pulls, impersonation tokens, and fraudulent NFT orders, among others. [online] Available at: https://cointelegraph.com/news/our-brand-name-investigator-can-detect-and-flag-scams-like-pig-butchering-ice-phishing-address-poisoning-rug-pulls-impersonation-tokens-and-fraudulent-nft-orders-among-others
[7] Cointelegraph. (2025). Our brand name Investigator is capable of ascribing multiple determinations to the same wallets involved in multiple types of detectable illicit activity. [online] Available at: https://cointelegraph.com/news/our-brand-name-investigator-is-capable-of-ascribing-multiple-determinations-to-the-same-wallets-involved-in-multiple-types-of-detectable-illicit-activity
[8] Cointelegraph. (2025). The efficiency and time savings enabled by the behavioral detection capability include speeding up suspicious activity determinations, detecting wallets that have not yet been definitively labelled as scams, protecting against exposure to scam or facilitator-related money laundering operations, and adding context to complex investigations. [online] Available at: https://cointelegraph.com/news/the-efficiency-and-time-savings-enabled-by-the-behavioral-detection-capability-include-speeding-up-suspicious-activity-determinations-detecting-wallets-that-have-not-yet-been-definitively-labelled-as-scams-protecting-against-exposure-to-scam-or-facilitator-related-money-laundering-operations-and-adding-context-to-complex-investigations
[9] Cointelegraph. (2025). The Investigator graph shows connections between the wallet and an exchange, which could potentially block users from sending funds to this address. [online] Available at: https://cointelegraph.com/news/the-investigator-graph-shows-connections-between-the-wallet-and-an-exchange-which-could-potentially-block-users-from-sending-funds-to-this-address
[10] Cointelegraph. (2025). The behavioural detection capabilities can simplify investigations involving complex fraud rings and their money laundering operations. [online] Available at: https://cointelegraph.com/news/the-behavioural-detection-capabilities-can-simplify-investigations-involving-complex-fraud-rings-and-their-money-laundering-operations
[11] Cointelegraph. (2025). Mixer-first funding indicates a desire for anonymity, as the native assets required for transaction fees are sourced from a mixer. [online] Available at: https://cointelegraph.com/news/mixer-first-funding-indicates-a-desire-for-anonymity-as-the-native-assets-required-for-transaction-fees-are-sourced-from-a-mixer
[12] Cointelegraph. (2025). The wallet in question has been associated with an Ethereum address blacklisted by Tether in late 2024, which has incoming exposure from confirmed pig butchering wallets. [online] Available at: https://cointelegraph.com/news/the-wallet-in-question-has-been-associated-with-an-ethereum-address-blacklisted-by-tether-in-late-2024-which-has-incoming-exposure-from-confirmed-pig-butchering-wallets
[13] Cointelegraph. (2025). On-chain pattern detection can also be used to identify wallets engaging in money laundering techniques such as peel chains and mixer-first funding. [online] Available at: https://cointelegraph.com/news/on-chain-pattern-detection-can-also-be-used-to-identify-wallets-engaging-in-money-laundering-techniques-such-as-peel-chains-and-mixer-first-funding
[14] Cointelegraph. (2025). These automatically identified wallets are flagged in our brand name Investigator for easy detection by compliance professionals and fraud teams. [online] Available at: https://cointelegraph.com/news/these-automatically-identified-wallets-are-flagged-in-our-brand-name-investigator-for-easy-detection-by-compliance-professionals-and-fraud-teams
[15] Cointelegraph. (2025). Regulatory scrutiny and enforcement actions against key facilitators and criminal networks, such as Huione Pay and scam site infrastructure providers, are accelerating. [online] Available at: https://cointelegraph.com/news/regulatory-scrutiny-and-enforcement-actions-against-key-facilitators-and-criminal-networks-such-as-huione-pay-and-scam-site-infrastructure-providers-are-accelerating
[16] Cointelegraph. (2025). The report suggests leveraging automated on-chain behavioral detection to detect and mitigate scam risks. [online] Available at: https://cointelegraph.com/news/the-report-suggests-leveraging-automated-on-chain-behavioral-detection-to-detect-and-mitigate-scam-risks
[17] Cointelegraph. (2025). Download the latest report - "The state of crypto scams 2025" - to see more features and case studies about how behavioral detection can be leveraged to prevent key scam risks. [online] Available at: https://cointelegraph.com/news/download-the-latest-report-the-state-of-crypto-scams-2025-to-see-more-features-and-case-studies-about-how-behavioral-detection-can-be-leveraged-to-prevent-key-scam-risks
- In the quest to combat the surge of crypto scams in 2025, blockchain forensics and analytics play a crucial role in identifying and mitigating risks, with tools like automatic on-chain behavioural detection helping to quickly detect and flag suspicious activities.
- The efficiency of these technologies is evident in their ability to monitor transactions, analyze patterns, and identify scam operations or hacks, such as rapid large withdrawals and interactions with known scam addresses.
- Beyond detection, these advanced technologies can provide additional context to complex investigations, help block users from sending funds to illicit addresses, and protect organizations from exposure to scam or money laundering operations.
- As the industry continues to grapple with the rising tide of crypto thefts and fraud, proactive prevention through automation and technology like behavioural detection becomes increasingly important for improving trust in the ecosystem and safeguarding investments in finance, data-and-cloud-computing, and cybersecurity.
