How to check a wallet: a Binance guide
Risks associated with using cryptocurrencies require a serious approach to verifying wallet addresses. Ignorance regarding the nature of the funds you interact with can lead to account blocking, loss of assets, or even legal consequences. In this guide, we will explore how to minimize these risks using AML screening and other essential tools.
Why Is It Important to Check Wallet Addresses?
Interacting with suspicious addresses linked to "dirty crypto" (funds obtained through illegal activities) can lead to severe repercussions:
- Account Blocking. Centralized exchanges and platforms, such as Binance, actively utilize AML screening to identify suspicious transactions. If your address is flagged, access to your funds may be suspended.
- Sanction Labels. Addresses associated with sanctioned jurisdictions or criminal activity are monitored by regulators. Transacting with such addresses poses a risk of asset freezing.
- Reputational Risks. Even if your account is not blocked, your counterparties may refuse to cooperate if you have a history of transferring funds to suspicious wallets.
How to Check a Wallet: A Step-by-Step Guide
1. Use Blockchain Explorers
Start with a basic analysis through public blockchain explorers like Etherscan or BscScan.
- Check the transaction history: who sent and received the funds?
- Assess transfer volume and frequency. Unusual activity (sharp spikes or regular transfers of small amounts) can be a red flag.
2. Check Address Connections
Use relationship analysis tools like Nansen or Dune Analytics. These help determine if an address has interacted with:
- Mixers (tumbler services);
- Known hacker wallets;
- Sanctioned addresses.
3. AML Screening
AML (Anti-Money Laundering) screening is a mandatory step for verifying a wallet before large transactions. Services such as Chainalysis, TRM Labs, and Elliptic provide information on risk scores and address labels.
4. Evaluate the Legality of Funds
If you are working with counterparties, request documentation indicating the source of funds. This may include:
- Client KYC (Know Your Customer) data;
- Contracts and receipts.
5. Save the Results of the Check
Maintain a log of your verifications. Save screenshots of transactions, AML screening results, and correspondence with counterparties. This can be invaluable in the event of a dispute or a block.
How to Protect Yourself: Key Recommendations
1. Conduct Preliminary Checks
Always verify addresses through blockchain explorers and AML tools before transferring funds. This helps avoid interaction with suspicious wallets.
2. Work Only with Trusted Platforms
As previously mentioned, use reliable platforms. Exchanges that comply with KYC/AML requirements minimize the risks of dealing with toxic assets.
3. Diversify Your Assets
Store funds in different stablecoins (e.g., USDT, USDC) to reduce risks associated with sanctions or reserve issues.
4. Seek Help if Problems Arise
If your funds have been frozen, gather evidence and contact a lawyer specializing in cryptocurrency matters. We have covered this in more detail in the section what to do if funds are frozen.
Tools for Checking Wallets
Here is a list of useful analysis tools:
- Free: Etherscan, BscScan, Solscan.
- Paid: Chainalysis, TRM Labs, Elliptic.
- Additional: Nansen for address behavior analysis; free tools and labels in blockchain explorers for quick screening.
Conclusion
Verifying wallet addresses is no longer just a recommendation—it is a necessity in an environment of tightening regulatory control. Utilizing AML screening, working with verified platforms, and maintaining records of checks will help you avoid most risks. Follow this 5-step checklist to ensure the security of your crypto assets.
Call to Action: Start by checking your current addresses using a blockchain explorer and additional free tools (such as labels on Etherscan).