Asset tracing is the process of following stolen or suspicious cryptocurrency as it moves across addresses, blockchains, bridges, and exchanges. Because blockchain transfers are public, investigators can map flows from an initial theft to later hops, swaps, or consolidation wallets, even when attackers try to obscure ownership.
It matters because speed often determines whether funds can be frozen, flagged, or recovered. In practice, defenders use transaction graphs, exchange deposit records, token swap analysis, and bridge event logs to identify where assets went and which services handled them. Attackers may split funds into many wallets, bridge them to other chains, or convert them into different tokens to reduce traceability, but these steps usually leave on-chain breadcrumbs. Asset tracing is also useful for incident response, sanctions screening, and proving the scope of a breach. In bridge attacks and DeFi drains, it is often the first step toward containment and recovery.