Mixing detection on Bitcoin transactions using statistical patterns
Ardeshir Shojaeinasab, Amir Pasha Motamed, Behnam Bahrak
Abstract
Abstract Cryptocurrencies, particularly Bitcoin, have garnered attention for their potential in anonymous transactions. However, their anonymity has often been compromised by deanonymization attacks. To counter this, mixing services have been introduced. While they enhance privacy, they obscure fund traceability. This study seeks to demystify transactions linked to these services, shedding light on pathways of concealed and laundered money. We propose a method to identify and classify transactions and addresses of major mixing services in Bitcoin. Unlike previous research focusing on older techniques like CoinJoin, we emphasize modern mixing services. We gathered labelled data by transacting with three prominent mixers (MixTum, Blemder, and CryptoMixer) and identified recurring patterns. Using these patterns, an algorithm was created to pinpoint mixing transactions and distinguish mixer‐related addresses. The algorithm achieved a remarkable recall rate of 100%. Given the lack of clear ground truth and the vast number of unlabelled transactions, ensuring accuracy was a challenge. However, by analyzing a set of non‐mixing transactions with our model, it was confirmed that the high recall rate was not misleading. This work provides a significant advancement in monitoring mixing transactions, presenting a valuable tool against fraud and money laundering in cryptocurrency networks.