Probing the Mystery of Cryptocurrency Theft: An Investigation into Methods for Taint Analysis

Abstract

Since the creation of Bitcoin, transaction tracking is one of the prominent means for following the movement of Bitcoins involved in illegal activities. Although every Bitcoin transaction is recorded in the blockchain ledger, which is transparent for anyone to observe and analyse, Bitcoin's pseudonymity system and transaction obscuring techniques still allow criminals to disguise their transaction trail. While there have been a few attempts to develop tracking methods, there is no accepted evaluation method to measure their accuracy. Therefore, this paper introduces a metrics-based evaluation framework to investigate the performance indicators of a theft transaction tracking. We use this framework to investigate strategies for transaction tracking. This paper also introduces two new tainting methods and an address profiling approach. We run an experiment to compare the accuracy of tainting strategies using data from real Bitcoin theft and a set of controls.