The proliferation of cryptocurrencies and blockchain technology has significantly reshaped the financial sector, introducing decentralized and transparent digital transactions. Despite substantial advantages such as reduced transaction costs, enhanced transparency, and financial inclusion, the anonymous and decentralized nature of cryptocurrencies has also facilitated illicit financial activities, including fraud, money laundering, and tax evasion. This literature review systematically examines forensic methodologies, regulatory challenges, and theoretical frameworks relevant to cryptocurrency investigations. This study highlights advancements in blockchain analytics, AI-driven monitoring tools, and regulatory frameworks such as the FATF Travel Rule and EU MiCA. However, it also underscores persistent challenges posed by privacy-focused technologies, decentralized finance (DeFi), cross-border jurisdictional inconsistencies, and technical limitations in forensic methodologies. This paper proposes an integrated forensic framework incorporating AI analytics, international regulatory collaboration, specialized forensic training, and privacy-preserving investigative techniques. Through this comprehensive review, it provides critical insights for enhancing forensic investigation capabilities, regulatory compliance, and policymaking, while outlining future research opportunities addressing emerging threats in cryptocurrency-based financial systems.