A Supervised Model to Detect Suspicious Activities in the Bitcoin Network

• Main Authors: Al-Hashedi K.G., Magalingam P., Maarop N., Samy G.N., Rahim F.B.A., Shanmugam M., Hasan M.K.
• Other Authors: 57224367919
• Format: Conference Paper
• Published: Springer Science and Business Media Deutschland GmbH 2024
• Subjects: Bitcoin; Cybercrime; Fraud detection; Illicit addresses; Machine learning; Balancing; Classification (of information); Crime; Criminal activities; Cyber-crimes; Fraud detection system; Illicit address; Labeled dataset; Machine-learning; Supervised classifiers; Suspicious behaviours; Verification process

Shortly after its official launch in 2009, Bitcoin has gained rapid popularity worldwide, which in return attracted a variety of people especially malicious attackers, who get the advantage of its pseudo-anonymity to institute un-traceable threats, scams, and criminal activities. Recently, some Bitcoin thefts have been reported costing millions of dollars, causing serious harm and losses to innocent users or companies that lead them to declare bankruptcy. One of the main characteristics of Bitcoin is its anonymity, which makes Bitcoin the preferred choice for criminals to perform illicit activities that pose difficulties for law enforcement and financial authorities to identify suspicious behavior, making the existing fraud detection systems ineffective. In this paper, we propose a model for detecting suspicious activities in the Bitcoin network. We first construct a labeled dataset by collecting a set of illicit transactions from public online Bitcoin forums, as well as datasets from prior research. Next, a verification and filtration process has been performed to verify the gathered illicit transactions with the original dataset and manually marked them as either legal or illegal. Additionally, a new set of features that are based on time-slice was extracted, the skewed dataset was balanced, and three supervised classifiers (LR, NB, and ANN) were used for evaluating the proposed model. Finally, our findings found that the ANN classifier achieved the best performer among others, which attained Precision, Recall, F1 scores, and AUC of 95.2%, 88.7%, 89.8%, and 91.2% respectively. The performance of the supervised classifiers has significantly improved after balancing the training set. � 2023, The Author(s), under exclusive license to Springer Nature Switzerland AG.