In the world of digital finance, a quiet revolution is underway — one where blockchain technology is turning ordinary individuals into frontline investigators. While traditional crime detection remains confined behind closed doors under the principle of "investigation confidentiality," blockchain’s transparent nature allows financial flows to be traced openly, creating a new era of public-private collaboration in fighting financial crime.
At the heart of this transformation is Miffy Chen, Chief Blockchain Financial Crime Investigator at XREX Group. Speaking at the 2024 Meet Da-Nanfang “WEB3+ Block Party Special Edition,” she revealed how blockchain analysis has evolved from niche expertise into a powerful tool accessible to anyone with internet access and determination.
The Rise of the Citizen Chain Detective
Historically, criminal investigations have relied heavily on centralized institutions — law enforcement agencies, banks, or regulated exchanges — to retrieve transaction records. These processes are often slow, constrained by jurisdictional boundaries, and bound by strict confidentiality rules.
But blockchain changes everything.
As a decentralized, immutable, and publicly accessible ledger, blockchain enables anyone to inspect transactions in real time. This means that illicit activities — whether scams, money laundering, or exploitation networks — leave permanent footprints that can be followed by both professionals and concerned citizens alike.
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Miffy emphasizes: “Technology exists to solve problems.” In this case, blockchain isn't just enabling new forms of finance — it's democratizing investigative power. You no longer need to work for a government agency or financial institution to make an impact. With the right tools and mindset, anyone can become a “chain detective.”
One of the most high-profile examples was the investigation into the “Creative Workshop” (Chuangyi Sifang) case — a child sexual abuse network where members, including public figures like Huang Zijiao, used cryptocurrency to purchase illegal content. XREX analyzed four wallets linked to the platform, traced fund flows, identified potential beneficiaries, and compiled a detailed report titled “XREX Analysis of Taiwan's N-Room Case: Who Profited from Child Exploitation?” This report was shared with law enforcement and published publicly as part of their commitment to transparency and accountability.
This case marked a milestone: not only did it demonstrate how blockchain analysis could support criminal investigations, but it also highlighted the growing role of private-sector cooperation in upholding justice.
Two-Stage Framework for Effective Crypto Flow Tracking
Tracing cryptocurrency isn't magic — it's methodology. According to Miffy, effective blockchain investigation follows a two-phase approach rooted in understanding criminal behavior and enabling actionable intelligence.
Phase 1: Understand the Crime’s Purpose and Reconstruct the Scenario
Before diving into transaction graphs or clustering algorithms, investigators must first understand why certain transactions occurred. What was the application scenario? Was it a membership fee? A ransom payment? A money laundering funnel?
In the “Creative Workshop” case, Miffy’s team began by reverse-engineering how the forum operated — its membership tiers, access controls, and monetization model. Once they understood that specific wallet addresses were used for collecting subscription fees, every incoming transfer became a potential lead.
Knowing the purpose behind each transaction allows analysts to interpret raw data meaningfully. For instance:
- Repeated small payments may indicate user subscriptions.
- Large lump-sum transfers might point to bulk data purchases or profit withdrawals.
- Rapid movement across multiple addresses could signal obfuscation tactics.
This contextual awareness transforms abstract blockchain data into real-world insights — exactly what law enforcement needs to build prosecutable cases.
Phase 2: Enable Public-Private Collaboration Without Breaching Confidentiality
One major hurdle in traditional investigations is the tension between transparency and privacy. Law enforcement must protect ongoing probes, yet often lacks specialized knowledge about blockchain systems.
Blockchain solves this paradox through address-based communication. Instead of exchanging personal information or sensitive case details, public and private entities can collaborate using only wallet addresses and transaction hashes — data already visible on-chain.
For example, when a victim reports being scammed on a fake investment platform, they can share the transaction ID showing where their funds were sent. Analysts like Miffy can then:
- Map out the flow of stolen assets.
- Identify mixing services or cross-chain bridges used.
- Flag high-risk destinations such as darknet markets or privacy coins.
All of this can be done without accessing any personally identifiable information (PII), preserving investigative integrity while accelerating response times.
This collaborative model has already proven effective. XREX now conducts regular training sessions with Taiwan’s Investigation Bureau, prosecutors’ offices, and local police departments, helping equip frontline officers with practical skills in crypto tracing.
Tools That Empower Investigators
To further streamline cooperation, XREX developed XRAY, a free blockchain wallet lookup tool designed specifically for law enforcement use.
Traditionally, when authorities encounter a suspicious wallet address, they send inquiry letters (known as “submission orders”) to all registered exchanges to check if the address belongs to their users. However, Miffy notes that over 90% of such requests sent to XREX do not involve their platform — a massive waste of time and resources.
With XRAY, investigators simply paste a wallet address and instantly receive key information:
- Associated exchange (if known)
- Asset types and balances
- Risk indicators (e.g., links to illicit services)
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This dramatically reduces response time and helps prioritize genuine leads — especially critical in fast-moving crypto crimes where funds can vanish within minutes.
Victims as Teachers: Learning from Real Cases
Miffy’s journey into blockchain forensics began not in tech, but in human rights. With a decade-long background at the Judicial Reform Foundation and experience aiding victims of human trafficking in Cambodia, she saw firsthand how digital tools were being exploited for harm — and how they could also be harnessed for justice.
She firmly believes: “Victims and cases are the best teachers.” Every scam pattern analyzed, every stolen fund recovered — these experiences shape better methodologies and foster empathy-driven innovation.
Through her work, she’s witnessed how collaboration between victims, private analysts, and law enforcement can break cycles of abuse and prevent future harm.
Today, XREX continues to advance this mission by:
- Enhancing frontline response capabilities
- Building comprehensive risk databases
- Deepening institutional understanding of blockchain ecosystems
Founded in 2018 and licensed across multiple jurisdictions — including Singapore’s MAS Major Payment Institution license in May 2024 — XREX operates as a full-service digital asset platform offering custody, wallets, cross-border payments, trading, and fiat on/off ramps.
But beyond services, their vision centers on financial inclusion — ensuring everyone, especially underserved communities, can access secure and transparent financial tools.
Frequently Asked Questions (FAQ)
Q: Can anyone really trace crypto transactions without special tools?
A: Yes — while advanced analysis benefits from specialized software, basic transaction tracking is possible using free blockchain explorers like Etherscan or Blockchair. Understanding context and patterns is key.
Q: Is tracing crypto transactions legal?
A: Yes. Since blockchains are public ledgers, viewing transaction history doesn’t violate privacy laws. However, misusing data or doxxing individuals may have legal consequences.
Q: How do criminals try to hide their tracks on-chain?
A: Common methods include using mixers (like Tornado Cash), chain-hopping across networks, or converting funds into privacy coins. Skilled analysts can often detect these patterns through behavioral clustering.
Q: Can blockchain analysis help recover lost or stolen funds?
A: While recovery depends on jurisdiction and exchange cooperation, tracing provides crucial evidence that can freeze assets or support legal action.
Q: What makes XREX’s XRAY tool different from other blockchain analytics platforms?
A: XRAY is specifically designed for law enforcement efficiency — it quickly identifies exchange affiliations and risk factors without requiring login or payment, reducing unnecessary inquiries.
Q: Do I need technical skills to become a chain detective?
A: Basic familiarity helps, but many tools offer intuitive interfaces. Persistence, logical thinking, and ethical intent matter just as much as technical know-how.
👉 Turn curiosity into action — dive into blockchain intelligence and see how you can contribute.