Discover how to trace chain hopping in crypto laundering and watch our video demonstration showing step-by-step tracking across multiple blockchains.

Cryptocurrency laundering has grown increasingly sophisticated, with chain hopping emerging as a go-to technique for obfuscating illicit funds. For investigators, this method presents a unique challenge: tracing assets that jump between blockchains. In this article, we’ll break down what chain hopping is, why it’s so effective, and the tools and techniques you can use to track these elusive movements.

At the end, we’ll introduce a video demonstration that shows you, step by step, how to track chain-hopping transactions across Ethereum, Avalanche, and Bitcoin networks.

Chain hopping refers to the process of moving cryptocurrency from one blockchain to another to disrupt its traceability. It often involves:

• Bridges: Crypto bridges enable different blockchain networks to connect and transfer assets or data between them. They eliminate the need for centralized exchanges, allowing users to move funds directly across networks.

• Wrapped Tokens: Wrapped crypto tokens are digital assets that represent the value of a cryptocurrency from a different blockchain. They enable assets to move seamlessly between blockchains, improving interoperability and expanding their usability across networks..

• Burn Addresses: A crypto burn address is a special wallet address that permanently removes tokens from circulation. Often called a “burner” or “null” address, it has no private key, meaning tokens sent there are irretrievable and effectively destroyed.

For instance, let’s say an Ethereum-based hacker wants to move funds to Bitcoin. They might:

1. Convert ETH into Wrapped Ethereum** (WETH)**.

2. Use a bridge to transfer WETH to the Avalanche network.

3. Swap WETH for Wrapped Bitcoin** (WBTC)** on Avalanche.

4. Burn the WBTC, prompting the release of native Bitcoin** (BTC)** to an address on the Bitcoin blockchain.

These steps — while seamless for the user — create gaps in the transaction trail, making it far more difficult for investigators to track funds as they cross blockchains.

Chain hopping offers criminals a range of benefits, which is why it has become so prevalent in hacks, ransomware payouts, and fraud:

1. Obfuscating the Trail: Moving funds between incompatible blockchains breaks address continuity. Investigators lose clear connections between wallets.

2. Lower Fees, Faster Speeds: Networks like Avalanche are faster and cheaper than Ethereum, making them attractive for quick laundering.

3. Avoiding Detection: Criminals can bypass KYC/AML checks by using bridges and decentralized services like FixedFloat, which don’t require identity verification.

For example, in the CoinsPaid hack of July 2023, part of the stolen funds moved from Ethereum to Avalanche and eventually to Bitcoin. The hackers leveraged chain hopping to obfuscate their tracks, exploiting the efficiency and low fees of Avalanche before cashing out in BTC.

To follow chain-hopping investigations, you need to understand a few key terms:

• Wrapped Tokens: A mechanism that locks native assets on one chain and issues a digital version on another. For example, WBTC is a wrapped version of Bitcoin that exists on Ethereum or Avalanche.

• Burn Addresses: Addresses where tokens are irreversibly destroyed. For cross-chain transfers, burning tokens on one blockchain triggers their release on another.

• EVM Compatibility: Ethereum Virtual Machine (EVM)-compatible blockchains, like Avalanche, allow users to retain the same wallet address structure. This makes tracking easier within the same ecosystem.

• Time-Value Analysis: Matching transactions across chains using timestamps and amounts. It’s especially useful for non-EVM-compatible transitions, such as Avalanche to Bitcoin.

While chain hopping is complex, investigators have access to several tools that can simplify the process:

1. Arkham Intelligence: A powerful platform for visualizing blockchain activity and filtering transactions by time, value, and entity.

2. Merkle Science** and **Chainalysis: Popular tools for multi-chain blockchain analysis.

3. Blockchain Explorers: Platforms like Etherscan, SnowTrace, and Blockchair help investigators track transactions on individual chains.

However, no tool is perfect. Investigators often need to combine platform insights with manual techniques like time-value analysis to bridge the gaps left by cross-chain movements.

Tracking chain hopping is a battle against obfuscation. Here are some of the toughest challenges investigators encounter:

1. Address Discontinuity: Unlike EVM-compatible hops (e.g., Ethereum → Avalanche), non-compatible transitions (e.g., Avalanche → Bitcoin) require a new address. This breaks the wallet trail.

2. Privacy Services: Platforms like FixedFloat offer no KYC, no registration, and instant swaps — perfect for laundering.

3. Transaction Splitting: Hackers often split funds across dozens of wallets, further complicating analysis.

Despite these challenges, investigators can rely on tools, persistence, and manual correlation methods to pick up the trail.

Now that we’ve explained the concepts and tools, it’s time to see them in action. In this video, we walk you through a real-world example of chain hopping using the CoinsPaid hack as our case study.

Here’s what you’ll learn:

1. How the hackers moved funds from Ethereum → Avalanche → Bitcoin.

2. Why EVM-compatible chains like Avalanche retain the same wallet address, simplifying tracking.

3. How time and value analysis helps investigators identify wallet addresses on non-compatible chains like Bitcoin.

By the end of the video, you’ll see how time-value analysis — can successfully trace funds across blockchains, even when criminals attempt to break the trail.

Tracking Cryptocurrency Hacks: Cross-Chain Tracing from Ethereum to Bitcoin

Chain hopping is one of the most effective obfuscation techniques used by cybercriminals today, but it’s not insurmountable. Investigators armed with the right tools and techniques can still follow the money across blockchains.

Understanding wrapped tokens, burn addresses, and time-value analysis is key to overcoming the gaps left by chain hops. Combined with platforms like Arkham Intelligence and Merkle Science, investigators can shine a light on even the most complex laundering schemes.

To see these concepts in action, don’t miss the video demonstration at the end — where we break down a real-world chain-hopping investigation step by step.

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