Despite a 15% decline from 2022, crypto-related hacks still caused losses of approximately $3.3 billion in 2023. As more financial institutions, governments, and consumers adopt digital assets, the pressure on law enforcement to combat crypto crime continues to grow in 2024 and beyond.

To effectively protect the digital asset ecosystem, law enforcement agencies increasingly rely on blockchain analytics platforms such as Merkle Science’s Tracker. These tools help investigators understand complex crypto transactions, follow illicit fund movements on-chain, collect off-chain intelligence, collaborate with partners, and present evidence in court.

This article explains four key ways blockchain analytics supports modern law enforcement investigations.

1. Building Crypto Investigation Expertise

Law enforcement agencies have decades of experience investigating traditional crimes like fraud, theft, and violent offenses. However, cryptocurrency introduces new technical challenges. According to CoinTelegraph, 74% of law enforcement agencies report feeling under-equipped to investigate crypto-related crimes.

The challenge lies in two main areas: lack of crypto-specific knowledge and limited access to specialized tools. Crypto crimes are not simply traditional crimes conducted online. A hack targeting a crypto exchange, for example, can involve advanced attack methods followed by complex laundering techniques such as chain-hopping, mixing services, and cross-chain bridges.

Blockchain analytics providers help close this gap by offering both education and investigative tools. Merkle Science’s Tracker, for example, is supported by training programs that include certifications, hands-on consulting, and instructor-led courses. These resources help investigators build confidence and competence in handling crypto cases.

2. Intelligence Gathering and Visualization

Every blockchain has a public ledger, often accessed through a block explorer. While these explorers provide raw transaction data, they are not designed to clearly display complex criminal activity or money laundering patterns.

Blockchain analytics platforms transform this raw data into visual graphs that make fund movements easier to understand. Investigators can quickly see how stolen assets move through wallets, mixers, and exchanges.

For instance, during the Bitfinex hack funds incident in October 2024, analytics tools clearly showed how most seized funds were returned to a U.S. government-controlled wallet within a day, while a smaller portion moved to an account linked to Binance. This type of visualization helps investigators quickly grasp what happened and explain it to others.

Beyond on-chain data, blockchain analytics also integrates off-chain intelligence, including information from social media, forums, and dark web marketplaces. Criminals often communicate in these spaces, providing valuable clues about their identities, methods, and networks.

3. Knowledge Sharing and Collaboration

Investigations rarely happen in isolation. Law enforcement officers must often work with regulators, international agencies, and cryptocurrency exchanges. Using native blockchain explorers makes collaboration difficult because findings are hard to reproduce and share.

Without analytics tools, investigators may only be able to share lists of wallet addresses, forcing collaborators to redo the analysis from scratch. This leads to duplicated work and wasted time.

Blockchain analytics platforms simplify collaboration by allowing investigators to share dashboards with a single click. Tools like Tracker also let users add labels and notes directly to transaction graphs. Investigators can clearly mark theft wallets, laundering paths, and exit points, enabling even non-technical stakeholders to understand the case quickly.

4. Attribution and Prosecution

Crypto wallets are pseudonymous. While transactions are publicly visible, they are not automatically linked to real-world identities. This makes prosecution challenging.

Blockchain analytics helps investigators trace illicit funds step by step and clearly document how the funds moved through the blockchain. Transparency is critical: courts must understand how investigators followed the money, and the technology cannot function as a “black box.”

In many cases, illicit funds eventually pass through centralized exchanges that follow Know Your Customer (KYC) requirements. Once funds reach these platforms, law enforcement can work with exchanges to link wallet activity to real individuals. This connection allows prosecutors to bring strong, evidence-backed cases to court.

Conclusion

Blockchain analytics is more than just a technical tool. It empowers law enforcement agencies with the knowledge, visibility, and collaboration capabilities needed to fight crypto crime effectively. By combining education, clear transaction visualization, shared investigative dashboards, and transparent attribution methods, blockchain analytics enables investigators and prosecutors to turn complex blockchain data into actionable evidence—and ultimately bring perpetrators to justice.