Wallet tracing is the process of following cryptocurrency transfers across wallet addresses to understand where funds move. Investigators and defenders examine public blockchain transaction records, linking transfers into a timeline or transaction graph. Addresses do not inherently reveal the real-world identity of their owners, so tracing shows patterns of movement rather than proving who controls a wallet.
During a suspected theft, tracing can help responders identify connected transfers, assess whether funds have reached a service that may be able to restrict them, and coordinate timely action. It is useful for investigation and containment, but it does not itself recover funds or establish how an incident occurred. Accurate conclusions depend on reliable transaction data and careful interpretation; reported amounts or address links should not be treated as confirmed facts without supporting evidence.