Bitcoin taint check

Blockchain info used to have which now s, are there any similar tools available to check coin taint? I am looking to be able to see an.
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In the Bitcoin world, as in the real world, there is no way to answer that question. And that causes problems when it comes to tracking the proceeds of crime. When bitcoins are stolen, the loot cannot be tracked and then reclaimed.

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Computer scientists have always held out hope that there may be a clever way to do so, but the algorithms developed so far have had limited success. These guys have built an algorithm adapting a 19th-century UK law that sets out a set of simple rules for dividing up money left over when a bank collapses.

Talk:Bitcoin/Archive 26

This law has become the basis for allocating money in a wide range of situations. And the researchers say that when they apply it to the public record of bitcoin transactions, it reveals remarkable patterns of criminal money-laundering activity that had been hidden until now.

The new algorithm is called Taintchain, and it has the potential to give law enforcement agencies an entirely new and powerful way to track the proceeds of cryptocurrency crime for the first time. First some background. The theft of cryptocurrency is a big and growing business. The inability to track stolen funds efficiently is part of the attraction for cybercriminals.

A common tactic, for example, is to place three stolen bitcoins in a wallet and add seven clean bitcoins. The 10 bitcoins are then split up and transferred to a large number of other accounts, and from there into still other accounts. Since there is no way to know which of the 10 bitcoins are tainted, the stolen currency quickly becomes diluted and lost. This process is called laundering.

One way to track this activity is to assume that all 10 bitcoins in the wallet are tainted and then follow the chain of transactions they are involved in. But that method ends up pointing the finger at an impractically large numbers of wallets, many of which will have unknowingly accepted the funds from other wallets. This established the first-in-first-out FIFO principle, which stipulates that when it comes to divvying up funds from an account, the first person to have paid in is the first person to be paid out. This principle has become enshrined in law all over the world as the fairest way to distribute funds when a bank or similar entity collapses.

The new Taintchain algorithm applies this principle to bitcoin wallets: if the first bitcoins paid into the wallet are stolen, then the first ones paid out are considered stolen too. So in the example above, where the first three bitcoins paid into the wallet were stolen, the algorithm assumes that the first three paid out are the stolen ones and then follows them to their next wallet, where it applies the same rule. The Taintchain algorithm then displays the results in a way that allows suspicious patterns of behavior to appear.

This visualization process is difficult because of the sheer volume of transactions, but the team was able to identify a range of behaviors linked to money laundering. For example, one pattern shows the way criminals divide the proceeds of a crime in a splitting pattern. But Anderson argues that haircut tracing quickly leads to enormous parts of the blockchain being a little bit tainted, with no clear answers about how to treat an infinitesimally unclean coin.

Often the fraction can be so small it has to be rounded up, leading to artificial increases in the total "taint" recorded.


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But when Anderson mentioned this problem in January to David Fox, a professor of law at Edinburgh Law School, Fox pointed out that British law already provides a solution: An precedent known as Clayton's Case, which dealt with who should be paid back from the remaining funds of a bankrupted financial firm.

The answer, according to the presiding judge, was that whoever put their money in first should take it out first. The resulting first-in-first-out—or FIFO—rule became the standard way under British law to identify whose money is whose in mixed-up assets, whether to resolve debts or reclaim stolen property.

US20210167791A1 - Crypto taint tracking - Google Patents

So Anderson and his team of researchers started to consider what that rule would look like applied to Bitcoin's blockchain. Mix up a dirty coin and nine clean ones in a laundry address or exchange, and all 10 coins that came out would be defined by the same order they went in—even if that order was just a millisecond's difference in which transaction was written to the blockchain's record first. If the first bitcoin to go into the mix were stolen, the first to come out of the mix would be considered that same coin, and thus still stolen.

And doesn't that essentially make bitcoin laundries into reverse lottery systems, where an arbitrarily chosen person ends up holding a stolen coin that might be claimed back by a theft victim? Anderson argues that the principle has worked for centuries as part of British law. And if innocent users end up having their coins claimed as stolen property, they'll quickly learn to stay away from Bitcoin laundries and shady exchanges.

When the researchers tried out their FIFO analysis on Bitcoin's actual blockchain, they found that in massive thefts—like the heist that took 46, bitcoins from the cloud provider Linode, or the theft of bitcoins from bitcoin "bank" Flexcoin—they could create far tidier answers about where those stolen coins ended up than the haircut method could.

Money Laundering in Cryptocurrency | Hello Soda

Using the FIFO method, they linked the Linode haul to fractions of tainted bitcoins at around , addresses, compared with 2. The latter number would mean a single theft had tainted nearly 5 perceent of the whole blockchain, the researchers point out. For the Flexcoin attack, they traced fractions of the stolen coins to just 18, accounts, compared with 1. For the Cambridge researchers' technique to be put into practice, of course, it would have to be adopted by the people who actually make the rules about what constitutes a tainted bitcoin—governments around the world, or at the very least, Bitcoin exchanges or banks trying to avoid handling dirty money.

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But simply by publishing the results of their FIFO blockchain, as they plan to do later this year, the researchers may influence how those power brokers determine which coins they consider tainted. If their system is adopted, it would come at a price, argues Sarah Meiklejohn, a professor of cryptography and security at the University College of London.

How can I be traced from my bitcoin address?

After all, innocent users sometimes put their bitcoins through laundries, too, to keep their legal but sensitive transactions private. In some cases, judges instead use pro rata tracing—the haircut approach in which all the mixed accounts hold a proportional amount of the tainted assets—or a technique called "Jessel's Bag," which takes money from guilty parties before innocent ones. And how ownership tracing works in practice can depend on myriad factors like the statutes of a particular state, the decisions of a judge, and whether the asset is defined as money or as a commodity, which is hardly a simple question in the case of Bitcoin.

FIFO is "just a convention.