What is a Saw Chain?
Saw chain is a complex method used to launder large amounts of cryptocurrency through a series of small, incremental transactions. In this method, a small portion of the cryptocurrency is “pinched off” from the main address in the form of a low-value transaction. These small amounts are often sent to exchanges where they can be converted into fiat currency (such as dollars) or other assets. The remaining cryptocurrency in the original address is moved to the new change address and the process repeats.
The small size of each transaction reduces the likelihood of triggering AML (Anti-Money Laundering) compliance alerts on virtual asset exchanges or mandatory reporting to tax and regulatory authorities.
Use of Saw Chains in Cryptocurrency Fraud
Cryptocurrency scammers and thieves use saw chains, creating long and complex sequences of transactions to hide the trail of their assets. This complexity makes it difficult to track funds to the fiat off-ramp or their final destination.
However, forensic techniques and blockchain intelligence tools significantly increase the ability to track the flow of funds in cryptocurrency fraud investigations. Investigators use these tools to determine the destination and final destination of illegal transfers, which helps create a target map for subpoenas, arrest warrants, and related court orders.
Targets for subpoenas typically include virtual asset exchanges that verify customers and verify their identity in accordance with Know Your Customer (KYC) regulations. In addition to personal data, these exchanges often have information about the bank accounts used to transfer funds to and from the criminal's wallet. Saw chain analysis can reveal transactions directed at multiple exchanges, providing important leads for investigators.
Conclusion
Saw chains are a significant tool in the arsenal of cryptocurrency scammers, allowing them to hide the traces of their illicit gains. However, with the use of advanced forensic techniques and strict compliance with regulatory requirements, investigators can effectively track these transactions and bring criminals to justice.
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