The nilcatenation problem and its application for detecting money laundering activities in cryptocurrency networks

【Author】 Tomacheski, Clynton; Milanes, Anolan; Urrutia, Sebastian

【Source】INTERNATIONAL TRANSACTIONS IN OPERATIONAL RESEARCH

【影响因子】3.610

【Abstract】This work considers a combinatorial optimization problem in graphs, the nilcatenation problem, and investigates its potential application for detecting money laundering activities in cryptocurrency networks. The nilcatenation problem consists of finding a set of arcs that can be removed from an arc-weighted directed graph without changing the balance of any vertex. The balance of a vertex is defined as the difference between the sum of the weights of outgoing and incoming arcs. We propose a 0/1 integer linear programming formulation and a local branching algorithm. The approaches are computationally evaluated and compared using three sets of test instances, two of them generated from Bitcoin's testnet and mainnet networks. An experiment on the testnet showed that it is possible to retrieve a nilcatenation artificially introduced with fake bitcoin transactions. Experiments on the mainnet showed that it is possible to find large nilcatenations, possibly indicating money laundering activities.

【Keywords】nilcatenation; local branching; integer programming; cryptocurrency; Bitcoin; blockchain; money laundering

【发表时间】2023 2023 JUL 19

【收录时间】2023-08-10

【文献类型】实证数据

【主题类别】

区块链治理-技术治理-异常/非法交易识别