Crypto glossary
Peel chain
A peel chain is a laundering pattern in which a large balance is moved through a long series of transactions, each peeling off a small amount to a new address.
On Bitcoin and other UTXO chains, each step spends one large output, sends a small slice to a destination, often an exchange deposit, and returns the remaining change to a fresh address that repeats the process. After dozens or hundreds of hops, the original sum has been broken into many modest payments that look ordinary on their own.
Peel chains are one of the oldest laundering techniques in crypto and still appear in ransomware and hack cases. Investigators look for the telltale shape: a single path of transactions with one large change output and one small payment at each step, sent in quick succession. Tracing the small outputs to exchanges is how many cases reached real identities, including those tied to the 2016 Bitfinex theft.
The pattern is distinctive enough that analytics software flags it automatically, which is why launderers often combine it with mixers or chain hopping. Not every peel-like sequence is criminal: some wallets and services batch payouts in a similar way.
Example
An address holding 500 BTC sends 0.8 BTC to an exchange and 499.2 BTC to a new address, which then sends 0.6 BTC to another exchange and passes the rest on, repeating this for weeks.