Detecting the Invisible: The Power of TRM Labs' Signatures™ in Blockchain Investigations

Blockchain technology, celebrated for its security and decentralization, also complicates the mapping of fund flows when investigating on-chain activities.

As an investigator, uncovering illicit activities hidden within blockchain's vast sea of data is akin to trying to identify a pattern without having the entire picture. Often, you're only seeing one tile of a mosaic at a time, not realizing it's part of a larger piece. For example, when tracing funds to a wallet, it might not be immediately apparent that this particular address is part of a larger peel chain.

In short, navigating through the enormity of the blockchain’s “haystack”—finding hidden patterns and understanding complex, cross-chain transactions that may facilitate money laundering, tax evasion, or other suspicious activities—can be daunting.

Unlocking the power of pattern recognition with Signatures

TRM Labs' pioneering technology, Signatures, leverages advanced machine learning to enhance investigators' ability to detect often overlooked suspicious patterns. This technology automates the detection of complex behaviors across multiple transactions, revealing hidden relationships and activities. Signatures empower investigators to rapidly uncover and map sophisticated money laundering techniques and other criminal typologies on-chain.

A blend of technology and expertise

At the core of the TRM Intelligence Graph is raw blockchain data, covering 30 industry-leading blockchains and over 70 million digital assets. This robust foundation supports the largest and fastest-growing database of illicit crypto. TRM also enables comprehensive cross-chain analytics and automatic tracing across over 25 million cross-chain swaps.

From this extensive dataset, Signatures are created with machine learning to pinpoint and label distinct behavioral patterns across the blockchain.

Examples of Signatures in action

A cross-chain swap detects exchanges of one cryptocurrency for another across different blockchains. With each cross-chain swap, threat actors are breaking the direct transaction trail. With this Signature, investigators can continue to follow the money across blockchains without losing the trail.

A peel chain identifies when someone splits large amounts of cryptocurrency into smaller amounts, which are then distributed to various addresses. Threat actors do this in an attempt to complicate tracing or evade compliance checks by breaking a large transaction into smaller ones. TRM identifies and labels addresses that are part of a peel chain pattern, which investigators can then plot with a single click.

A webflow tracks the flow of cryptocurrencies through complex, web-like transaction patterns. By dispersing funds across a wide array of addresses in a non-linear and intricate pattern, threat actors hope to increase their anonymity. Similar to the peel chain, addresses found to be a part of a webflow are labeled and can be quickly plotted.

Practical applications of Signatures

Signatures are invaluable across various sectors:

• For law enforcement: Detect and trace complex transactions, even through mixers and across chains, significantly speeding up investigations
• For compliance teams: Enhance due diligence and ensure regulatory compliance by identifying obfuscation patterns and mapping criminal networks exploiting your institution
• For tax authorities: Uncover unreported wealth and elaborate tax evasion schemes, and conduct comprehensive wealth analysis

A new era

Launched in 2020, Signatures form a crucial component of behavioral intelligence, representing the third generation of blockchain intelligence. This approach focuses on understanding the nature of transactions, offering a more complete and clear view of blockchain activities.

To learn more about Signatures and how to conduct blockchain investigations, request a demo.