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 database, 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 investigates strategies for transaction tracking by introducing two new tainting methods, and proposes an address profiling approach with a metrics-based evaluation framework. We use our approach and framework to compare the accuracy of our new tainting methods with the previous tainting techniques, using data from two real Bitcoin theft transactions and several related control transactions.