How to Check a Wallet for Cleanliness and Avoid Blocking (and Not Misinterpret the Results)

The use of cryptocurrencies for payments is growing rapidly: more and more individuals and businesses are choosing digital assets for purchases, transfers, and investments. However, this growth also brings a major risk — the possibility of receiving “dirty” coins that have been involved in fraud or illicit activities. If such coins enter your wallet, it can result in serious consequences: from transaction or account blocking on an exchange to legal liability in some jurisdictions.

To avoid such risks, investors and businesses check wallet addresses and transactions for “cleanliness” using Risk Scoring. This tool expresses in percentage terms the likelihood that a given wallet or transfer is connected to criminal activity. Understanding how it works and regularly monitoring transactions is now a key element of crypto security for both private users and organizations.

What is Risk Score and “Dirty” Cryptocurrency?

Risk Score is a numerical indicator ranging from 0% to 100%, reflecting the reliability of a cryptocurrency address or transaction. The higher the score, the greater the chance that the funds are linked to unlawful activity. Risk scores are calculated by specialized AML platforms that operate using the KYT (Know Your Transaction) principle. These platforms analyze transaction histories, wallet connections, fund origins, and whether the address appears on sanction lists.

“Dirty” coins are those that are linked to criminal activity. Common categories of such assets inсlude:

• Terrorism financing and illegal trade — such as arms or drugs trafficking.
• Payments in darknet marketplaces — where crypto is frequently used for illicit purchases.
• Money laundering through mixers — using transaction-mixing services to hide fund origins.
• Fraud — including scams, phishing, and theft from users.

Working with such assets may result in blocked wallets, regulatory scrutiny, and in some cases, funds being permanently frozen. That is why both incoming funds and counterparties must be checked early on.

What Are the Levels of Risk?

To simplify the assessment of crypto “cleanliness,” analytics platforms classify every address and transaction into one of three risk levels — low, medium, or high. Each level helps users understand how safe an interaction may be and what precautions are needed.

• Low Risk (green): The wallet has no ties to illegal activity. Funds circulate through compliant exchanges with strong KYC/AML policies. The “cleanest” assets are freshly mined coins with no prior history.
• Medium Risk (yellow): The wallet or transaction is associated with services that operate without strict AML practices, such as certain P2P platforms or online casinos. Decisions about interacting with such assets should be made individually.
• High Risk (red): A direct connection to sanctioned entities, mixers, or scam addresses has been found. Such assets are almost always blocked and may trigger legal consequences.

How is Risk Score Calculated?

Risk scoring is based on multiple factors. The most important inсlude:

• Transaction history — analysis of the entire chain of transfers, including previous wallets and related addresses.
• Links to known criminal wallets — if an address has been flagged in investigations or marked as a scam, its risk score rises sharply.
• Presence on sanction lists — one of the strongest indicators. If an address belongs to a sanctioned entity, it is automatically treated as high risk.

It’s worth noting that each analytics platform has its own algorithms and databases, so results may differ. However, well-known criminal wallets (mixers, hacker addresses, etc.) are usually flagged consistently across different services. Another important concept is Coinbase transactions — coins freshly mined into circulation. Since they have no incoming addresses, they are considered the “cleanest” type of crypto assets.

Risk Score vs. Credit Score vs. Social Score

For clarity, it’s important to distinguish Risk Score from other rating systems:

• Credit score reflects a person’s financial discipline within traditional banking systems.
• Social score (such as in China) measures a citizen’s compliance and loyalty to government policies.
• Risk Score (AML) does not assess the person — it evaluates a specific crypto address or transaction to determine the likelihood of criminal connections.

Thus, Risk Score is purely a crypto-industry tool designed to evaluate asset flows, not personal trustworthiness.

How Does CoinKyt Verification Work?

Complying with every AML requirement on your own is difficult: regulators frequently updаte policies, and manually analyzing transactions is highly resource-intensive. That’s why many companies use automated tools such as CoinKyt.

1. Risk Profile. Users sеlect categories to monitor (e.g., sanctioned wallets, mixers, or scam projects) and set risk thresholds. The systеm automatically tracks them and sends alerts about changes, saving time and reducing risks.
2. Automation via API. CoinKyt’s API integrates into business workflows, checking incoming and outgoing transactions in real time based on your Risk Profile and global AML databases. This protects businesses from accidentally handling dirty coins.
3. Telegram notifications. Users receive instant alerts whenever monitored wallets perform suspicious activities or thresholds are exceeded. This is particularly useful for companies processing high transaction volumes.
4. Manual investigations. CoinKyt also allows deeper analysis of specific addresses or transactions, tracing linked wallets. Corporate clients gain access to transaction visualizations that map connections for investigative purposes.

Conclusion

Every participant in the crypto industry — from individual investors to large exchanges — risks dealing with “dirty” coins. Using Risk Score analysis significantly reduces these risks, helps avoid account freezes, and protects reputation. Understanding how risk scoring works and applying professional tools like CoinKyt enables users to filter out dangerous transactions in time and shield themselves from financial and legal consequences.

The key takeaway: in today’s regulatory climate, checking wallets and transactions for cleanliness is no longer optional — it’s an essential practice for anyone engaging with cryptocurrencies.