Let’s imagine someone, say, Emma, meets a nice person on a dating site who seems very caring and genuine. After building trust, that person asks Emma to accept a crypto transfer and send it back to a different account in portions.

“I’m abroad now, and my accounts are restricted due to local regulations. Could you help me by accepting the transfer and sending it back to a different account in smaller parts? It’s just a temporary issue until I can sort things out here,” the new acquaintance explains.

Later, the police show up at Emma’s office. It turns out that their account was used for terrorist financing.

Shock, embarrassment, confusion, fear, anger, regret for not checking that address… How would you feel in Emma’s shoes? Perhaps, pretty much the same. Let’s check out why even simple checks can help you avoid ending up in a situation like this or even worse.

Why every coin’s origin matters to you

There are three main reasons:

1) Understanding the source of your funds is not just good practice — it's a necessity. Anti-money laundering (AML) laws are designed to prevent the flow of money from illegal activities such as drug trafficking, terrorism, and fraud. Accepting illicit money and violating AML rules could result in a penalty, fine, or even a prison sentence.

IRL examples

In 2022, the US charged 21 individuals with helping criminals launder money via crypto. Some have received 46-month prison sentences!

In the same year, the Commodity Futures Trading Commission fined three BitMEX co-founders a total of $30 million for failing to comply with AML and other regulatory requirements.

In 2023, Changpeng Zhao, Binance’s founder, pleaded guilty to failing to maintain an effective AML program, part of a $4.3 billion settlement with regulators. He stepped down as CEO, paid a $50 million fine, and was sentenced to four months in prison in April 2024.

Luckily, checking where crypto comes from is easy. For example, in Satoshi Eye, a new wallet checker, you just enter the address in the search line and get the necessary info. In this report, you can clearly see that the address is associated with hacks, scams, and sanctions. It’s associated with the notorious Huoine Group, recently shut down by FinCEN.

2) When crypto exchanges/services are sanctioned or involved in illegal activities, you could get your assets frozen. Moreover, unregulated services often don’t have the mechanisms to protect user assets during legal actions. This means reclaiming your funds will be challenging or even impossible.

IRL examples

When Tornado Cash mixer was sanctioned, funds were locked in the tool’s wallets. Average users who utilized the mixer for legal purposes had to file for a specific license to get their crypto back. Some even sued the US Treasury for those sanctions and blocked funds.

OKX CEO wrote that accounts interacting with sanctioned services like Garantex and Tornado Cash will be blocked, and the funds in such accounts might be frozen.

Again, with a few clicks, you can get the necessary data. The report clearly shows that the address in question is owned by the sanctioned hacker group Lazarus.

Colleagues, clients, and acquaintances may lose trust in you if they suspect your involvement in shady transactions. No one wants to be associated with criminal activity: it’s huge reputational damage.

This all sounds scary, but the good news is that you can protect yourself by checking key details about addresses and crypto services you engage with. But where do you even start if you’re not an expert? Hang tight for Satoshi Eye. Your new crypto wallet checker is coming soon!