React vulnerability and cryptocurrencies

Comprehensive and Concise Guide to Wallet Verification Before Transactions

Introduction

With the growing adoption of cryptocurrencies, personal security is no longer the only priority—compliance is equally essential. Transferring funds to addresses linked to illegal activities or sanctions can lead to account suspensions, asset freezes, and legal complications. Below is a condensed guide on how to verify a wallet before a transaction and minimize your risks.

Main Risks

• "Dirty" addresses: Linked to money laundering, hacker thefts, darknet markets, or sanctioned entities.
• Blocks and freezes: Exchanges and service providers are legally obligated to suspend suspicious transactions.
• Reputational and legal consequences: Even an unintentional transfer of funds can trigger a regulatory investigation.

Quick Pre-Transfer Checklist (Fast)

1. Scan the address via an AML service (Chainalysis, Elliptic, TRM, etc.).
2. Review transaction history in a block explorer (Etherscan, Blockchair).
3. Verify token/contract legitimacy (if it's a token—check the contract address and audit status).
4. Do not grant excessive dApp permissions—limit the "allowance."
5. For significant amounts, use a hardware wallet (Ledger, Trezor) and distribute funds across multiple wallets.

Step-by-Step Verification Instructions

1) Use AML Screening

• Run the address through professional services (Chainalysis, Elliptic, TRM Labs, etc.). They provide a risk score and indicate connections to known incidents or sanctions.
• For basic checks, free tools or block explorers with address search functions are often sufficient.

2) Analyze Address History in a Block Explorer

• Look at the types of operations and the sources of funds: are there transfers to/from exchanges, mixers, or known compromised addresses?
• Pay attention to mass incoming/outgoing payments and frequent transfers through mixers.

3) Verify Tokens and Smart Contracts

• For tokens, study the contract (version, audit, number of holders). Verify the contract address on Etherscan/Polygonscan/BscScan.
• Do not interact with suspicious tokens: check for the existence of an audit and community feedback.
• When working with dApps, limit token permissions and periodically revoke unnecessary allowances (using tools like revoke.cash).

4) Transaction Signing Security

• Sign critical transactions using a hardware wallet (Ledger, Trezor).
• Verify transaction parameters on the device screen before confirming (recipient address, amount, contract data).

5) Use Reliable Platforms and Follow KYC

• Trade and store funds on reputable exchanges/platforms with strict KYC requirements—they are more likely to provide additional transaction monitoring.

6) Automation and Internal Procedures (for Businesses)

• Implement automated address checks before transfers and set rules for blocking suspicious transactions.
• Maintain logs and establish an escalation procedure for questionable cases.

Asset Diversification — Practical Examples

• Cryptocurrencies: Keep a reserve in BTC and ETH (as core scarce assets) and a portion in stablecoins (USDT, USDC) for liquidity. If interested in altcoins, limit their share in your portfolio.
• Wallets: Store the bulk of your funds on hardware wallets (Ledger, Trezor), and small amounts in software wallets (MetaMask, Trust Wallet) for daily operations.
• Strategy: 70% cold storage, 20% exchange/liquidity, 10% operational hot wallet (approximate ratio, adjust based on your risk profile).

Useful Tools and Resources

• AML/Compliance: Chainalysis, Elliptic, TRM Labs.
• Block Explorers: Etherscan, Blockchair, BscScan, Polygonscan.
• Permission Management: revoke.cash.
• Hardware Wallets: Ledger, Trezor.
• Regulatory Info: OFAC sanction lists and FATF recommendations—to understand global compliance standards.

Wallet Type Summary (Text Table)

Wallet Type	Description	Examples	Best Use Case
Hardware	High security level, suitable for long-term storage	Ledger, Trezor	Long-term/cold storage
Software (Soft)	Convenient for operations, less secure, suitable for small amounts	MetaMask, Trust Wallet	Daily operations/small sums
Custodial (Exchanges)	Convenience and liquidity, but require trust in the platform and KYC	Centralized exchanges (CEXes)	Trading and quick liquidity

Conclusion

Checking an address before a transfer is a simple and effective risk-mitigation measure. A combination of AML screening, block explorer history analysis, cautious handling of dApp permissions, and the use of hardware wallets significantly reduces the likelihood of blocks and legal issues. For businesses, it is advisable to automate checks and have a clear protocol for handling suspicious addresses.

If needed, I can:

• Condense this checklist into a printable card.
• Prepare an internal procedure template for a company.