How to obtain a tracing report after the theft of cryptocurrency or digital assets

This is the second in our five-part series on recovering digital assets following cryptocurrency fraud. The first article explored how to report fraud when your digital assets are stolen.

Whether you’re a company director or a private individual, understanding how to trace stolen assets is a crucial early step in the recovery process. A tracing report can form the foundation of your legal strategy under English law.

As financial transactions become increasingly digital, the theft of cryptocurrency and other digital assets has become more frequent and more sophisticated. In 2024, global losses from cryptocurrency-related crime exceeded £1.4 billion.

A growing number of individuals and companies in England are discovering they have fallen victim to fraud, hacking, or unauthorised transfers involving their digital wallets or exchange accounts.

This article explains what a tracing report is, who produces it, why it is essential in digital asset litigation, and how our solicitors can help you act swiftly and effectively in pursuing your claim.

What is a tracing report, and why is it important under English law?

A tracing report is a forensic investigative document that follows the movement of a digital asset (most often cryptocurrency) from the point it was unlawfully transferred through multiple transactions. Its purpose is to determine the current form or location of the asset so that the rightful owner can assert a proprietary claim.

Under English law, tracing supports equitable remedies by establishing a continuing proprietary interest in the asset, even after it has changed hands. These reports are prepared by specialist blockchain analytics firms and forensic technology providers who use advanced software to trace blockchain activity and link addresses to known exchanges or, in some cases, identified individuals. To ensure the report is admissible in court, it is typically commissioned in coordination with legal counsel.

What makes a tracing report valuable?

A professionally prepared tracing report may include:

• Identification of the originating wallet and the initial unauthorised transaction.
   
• A visual transaction path showing how (and when) the asset moved between wallets and exchanges.
   
• Risk assessments of wallet activity and connections to flagged addresses.
   
• Identification of regulated exchanges where the assets may now be located.
   
• Jurisdictional analysis relevant to enforcement and disclosure applications.
   
• Supporting charts and diagrams to assist the court or other stakeholders.

Challenges and limitations in producing a tracing report

The production of a tracing report is a highly technical and complex process. Fraudsters use tactics specifically designed to hide their tracks, including:

• Mixers or tumblers that obscure transaction origins.
   
• Privacy coins such as Monero that mask key blockchain information.
   
• Chain hopping across different blockchain networks.
   
• Decentralised exchanges that operate without regulatory oversight.

While blockchain is inherently transparent, these techniques can significantly increase the difficulty of identifying the ultimate destination of stolen funds. Additionally, although wallet addresses can be traced, they often cannot be linked to a known individual without further legal processes, such as court-ordered disclosure from an exchange.

Costs

Tracing reports are considered essential, but they are also resource-intensive. The cost reflects:

• The complexity of the transaction data.
   
• The number of addresses and blockchains to be analysed.
   
• The need for expedited reporting in urgent legal applications.
   
• Whether the forensic expert must provide a formal witness statement or oral evidence

Typical costs for tracing reports range from several thousand pounds to upwards of £25,000, depending on the complexity of the case. However, this should be viewed in the context of the potential recovery—particularly in cases involving significant cryptocurrency holdings or high-value fraud.

Legal significance in England and Wales

Under English law, tracing reports are an important component of a successful digital asset recovery strategy. They support applications for:

• Proprietary injunctions and freezing orders.
   
• Norwich Pharmacal or Bankers Trust disclosure orders.
   
• Identifying unknown defendants in crypto fraud claims.
   
• Establishing a basis for equitable remedies such as constructive trusts.

English courts have demonstrated a willingness to act on the strength of well-drafted tracing reports. In many cases, the report is pivotal in obtaining interim relief and setting the foundation for later recovery proceedings.

Key case law supporting digital asset tracing in England

The courts of England and Wales have been quick to adapt to the realities of digital asset theft, recognising cryptocurrency as a form of property and providing victims with access to traditional and equitable remedies.

Notable cases include:

• AA v Persons Unknown [2019] EWHC 3556 (Comm): The court confirmed that cryptocurrency constitutes property under English law and granted a proprietary injunction over Bitcoin.
   
• Ion Science Ltd v Persons Unknown (unreported, 2020): A worldwide freezing order and permission for service out of jurisdiction were granted in a crypto fraud matter.
   
• Osbourne v Persons Unknown [2024] EWHC 732 (Ch): Reaffirmed that tracing reports are admissible in court and that interim relief can be granted swiftly when supported by such evidence

These cases demonstrate that English courts are responsive to the unique challenges of cryptocurrency-related disputes and recognise tracing reports as credible tools in the administration of justice.

How to obtain a tracing report under English legal practice

Obtaining a tracing report involves both legal and technical steps. The process should be carried out with precision to ensure the findings are admissible and aligned with the client’s litigation strategy.

Key steps include:

• Instructing a solicitor early: A solicitor experienced in digital asset recovery will advise on the scope, evidential requirements and potential legal remedies.
   
• Preserving all available data: This includes wallet addresses, screenshots, transaction hashes and communication with the fraudster.
   
• Engaging a reputable forensic firm: The quality of the analysis is critical. The report should be clear, accurate and court-ready.
   
• Complying with evidential standards: The report must meet the Civil Procedure Rules and often forms part of a witness statement or affidavit.
   
• Using the report to support court applications: Once completed, the tracing report forms the basis for freezing orders, disclosure applications and identification of defendants, including potential cryptocurrency platforms.

Proper coordination between legal counsel and forensic experts is essential to ensure the report strengthens rather than undermines your claim.

Jurisdictional hurdles and the role of cryptocurrency exchanges

Although the English courts can act swiftly, jurisdictional complexity often arises when stolen digital assets are transferred through offshore platforms or foreign exchanges.

Common legal issues include:

• Differing definitions of property and remedies in foreign jurisdictions.
   
• Exchange policies requiring local orders before complying with disclosure or freezing requests.
   
• Data protection and privacy legislation that may restrict access to account information.

Despite these obstacles, exchanges are increasingly regulated and subject to KYC and AML laws. Many are willing to cooperate if presented with a valid and professionally supported court order from a common law jurisdiction. Timing is crucial, and delays can allow fraudsters to move funds into anonymous or inaccessible accounts.

Building a comprehensive legal strategy using tracing reports

Tracing reports are most effective when embedded into a wider legal strategy that focuses on speed, accuracy and effective enforcement.

Key considerations:

• Interim relief should be sought immediately following receipt of a credible tracing report.
   
• Proprietary claims may preserve a claimant’s interest in specific assets.
   
• Disclosure orders can help identify individuals behind pseudonymous wallet addresses.
   
• Coordination with law enforcement or regulatory bodies can enhance recovery efforts

Our solicitors assist clients in using tracing reports not just as a technical document but as the strategic foundation of their digital asset litigation. Our approach is tailored, commercial and informed by current developments in both technology and the law.

Conclusion

If you have been a victim of cryptocurrency fraud, your legal position depends on taking prompt and strategic action. A tracing report provides the clarity needed to understand where your assets have gone and how the law can be used to recover them.

As part of our five-part series on digital asset recovery, this article highlights why tracing is essential under English law and how it fits within a wider litigation strategy.

With our expertise in commercial litigation and crypto asset recovery, we offer clients a practical path to enforcement, resolution and restitution.

Please note: Due to the specialist work and costs involved in tracing and recovering cryptocurrency, these services are generally only suitable where the value of the assets lost is £10,000 or more. We may refer enquiries relating to cryptocurrency fraud, tracing and recovery to an independent third-party specialist where appropriate.