Crypto Investigators Vs. OSINT Investigators

In the expansive world of cryptocurrency, scammers and dubious practices regretfully abound. In June 2022, the Federal Trade Commission estimated that crypto scams have cost investors at least $1 billion since 2021. A recent Logically crypto investigation also highlighted the scale of loss that can be involved in trading schemes. 

Crypto scams come in many forms. Sometimes, unscrupulous individuals engage in something colloquially known as “rug pulls.” These are exit scams; they entail promoters disappearing during or after an initial coin offering, taking investors' money with them. Other times, scammers create a new token for very little money before hyping it up via online channels. They then encourage susceptible individuals to invest in the new token — thus artificially inflating the price — before quickly selling. This is known as a pump-and-dump scheme. Though pump-and-dumps schemes exist elsewhere, this genre of scam is especially widespread within the crypto world.

There are also straight-up crypto thefts and phishing scams, as well as instances in which fraudsters engage in practices akin to insider trading. Of course, these practices are only akin to insider trading. As a crypto-asset disputes specialist told Wired, “Insider trading has a very specific meaning — using nonpublic information when trading on the stock market. These tokens are not stocks and shares. NFTs aren't regulated, so it is not insider trading.”

In any case, crypto scams leave investors in a fix. Famously, cryptocurrency is mostly unregulated. The world of cryptocurrency is often likened to the Wild West — a metaphor that is especially apt when you find yourself in need of a sheriff.

What is a crypto investigator? 

Crypto investigators are people who take it upon themselves to find out who has committed a moral or legal wrong in the cryptocurrency world. Without regulators or regulations (or indeed sheriffs), crypto fraud detection has fallen to these crypto investigators, who can help victims recoup their losses or at least identify those responsible for the scam. 

There have been a number of success stories. In 2021, a crypto investigator tracked down a group who had conned investors out of $25 million via a rug pull. The crypto investigator (who remained anonymous) found the scammers — who were ordinarily based in Hong Kong — in the Chinatown of Manchester, U.K. In this instance, the crypto investigator gave intelligence to the local police force, who then helped return money to investors.

Another example of a crypto investigator is Stephen Findeisen, who goes by the alias Coffeezilla. Last month, Findesien was responsible for uncovering dubious practices involving SafeMoon, a cryptocurrency created by a QAnon adherent. Once the center of enormous hype on social media, SafeMoon is now the focus of two separate class-action lawsuits, with its former celebrity-endorsers now accusing it of running a pump-and-dump scam. One of the SafeMoon lawsuits claims that “the misleading promotions and celebrity endorsements were able to artificially increase the interest in and inflate the price of the SafeMoon tokens.”

How do crypto investigators work? 

Crypto investigators tend to follow the money to find out who is culpable. They often trace the movements of cryptocurrency through a ledger. A record-keeping system, a ledger “maintains participants’ identities anonymously, their respective cryptocurrency balances, and a record of all the genuine transactions executed between network participants.” 

Crypto investigators make the most of the fact that, in crypto, nothing is really anonymous. All transactions have to be publicly and permanently stored on a ledger. Though nothing in the ledger is tied to an investor or user’s name or other details, the flow of crypto visible on the ledger is essential for crypto investigators and crypto fraud detection.

Of course, it takes further internet sleuthing to find out who is behind whatever token is being used in whatever scam. Crypto investigators often carefully analyze social media profiles, channels, and platforms to aid their investigative work.

What do crypto investigators and OSINT investigators have in common?

OSINT, short for “open-source intelligence,” is a term for techniques that collect and analyze data from publicly available sources. On the surface, OSINT investigators might not seem all that different from crypto investigators. This is because they are not all that different: crypto investigators are simply a type of OSINT investigator.

“The blockchain is publicly available,” Logically OSINT analyst Emmi Conley explains. “So research that hinges on tracking things happening on the ledger is comparable to OSINT, if not just simply OSINT.”

As we have written before, OSINT techniques are open to everyone. However, it’s vital that OSINT investigators go about their work responsibly. This is because, unfortunately, there have been times when internet sleuths have used OSINT techniques to uncover and share personal data — some of these instances have resulted in online harassment and court cases. 

At Logically, our OSINT investigators can help expose potential fraud and identify emerging “hype” about new coins. This is important, as many crypto scams succeed solely on the back of hype drummed up on social media channels. Also importantly, we adhere to a strict ethics policy and pride ourselves on our transparency, accountability, and trust — traits that are essential for ethical crypto fraud detection. In the Wild West of cryptocurrency, Logically OSINT investigators are just the sheriffs you need.