Synthetic KYC: Detecting Irregularities and Money Laundering on Blockchains
44 Pages Posted: 7 Jun 2024
There are 2 versions of this paper
Synthetic KYC: Detecting Irregularities and Money Laundering on Blockchains
Number of pages: 44
Posted: 17 Jun 2024
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Date Written: June 06, 2024
Abstract
This research introduces a new technique for the rapid classification of wallets based on their associations with other wallets on the blockchain. Using Ethereum as an example platform, we test our technique and document significant irregularities in the user structure. We show that questionable user "wallets" and transactions are widespread on Ethereum. Consequently, extensive money laundering and fraud cannot be ruled out. These insights should benefit investors, regulators, and developers of future blockchain platforms.
Suggested Citation: Suggested Citation
Aldridge, Irene, Synthetic KYC: Detecting Irregularities and Money Laundering on Blockchains (June 06, 2024). Available at SSRN: https://ssrn.com/abstract=4856062 or http://dx.doi.org/10.2139/ssrn.4856062
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