Cryptographic taint tracking
A method for detecting and tracking tainted cryptographic wallets. The method measures a wallet's propensity to engage in criminal or suspicious activity. Naturally, transacting with a criminal is tantamount either to funding crime or laundering its proceeds, so it is in our collective interest to identify—and then monitor or quarantine—any wallet with criminal association. The method also automatically flags risky withdrawal requests in real-time for further review before committing them to the blockchain. In some embodiments, the exchange can quarantine wallets at a certain Walletscore.
1. A method of identifying tainted cryptographic wallets comprising:
identifying a cryptographic transaction between a first wallet and a second wallet on an anonymous blockchain data structure open for public inspection, wherein the first wallet has a first taint score, the cryptographic transaction having a first amount of cryptocurrency;
determining a total value in cryptocurrency of the second wallet;
assigning a second taint score to the second wallet, wherein the second taint score is a fraction of the first taint score based on a relative comparison between the first amount of cryptocurrency of the cryptographic transaction and the total value in cryptocurrency of the second wallet
in response to the second taint score being above a threshold, quarantining, by a cryptographic wallet management exchange associated with the second wallet, the second wallet;
reducing the second taint score of the second wallet over time at a rate inversely proportional to the second taint score; and
in response to reducing the second taint score below the threshold, removing from quarantine, by the cryptographic wallet management exchange associated with the second wallet, the second wallet.
2. A method of identifying tainted cryptographic wallets comprising:
identifying a cryptographic transaction between a first wallet and a second wallet on an anonymous blockchain data structure open for public inspection, wherein the second wallet has a first taint score, the cryptographic transaction having a first amount of cryptocurrency;
determining a total value in cryptocurrency of the first wallet;
assigning a second taint score to the first wallet, wherein the second taint score is either of:
a fraction of the first taint score based on a relative comparison between the first amount of cryptocurrency of the cryptographic transaction and a total value in cryptocurrency of the first wallet in response to the first amount of cryptocurrency being greater than or equal to a threshold percentage of the total value in cryptocurrency of the first wallet; or
or zero in response to the first amount of cryptocurrency being lower than the threshold percentage of the total value in cryptocurrency of the first wallet
in response to the second taint score being above a threshold, quarantining, by a cryptographic wallet management exchange associated with the first wallet, the first wallet;
reducing the second taint score of the first wallet over time at a rate inversely proportional to the second taint score; and
in response to reducing the second taint score below the threshold, removing from quarantine, by the cryptographic wallet management exchange associated with the first wallet, the first wallet.
3. A system of identifying tainted cryptographic wallets comprising:
a processor; and
a memory including instructions that when executed cause the processor to:
identify a cryptographic transaction between a first wallet and a second wallet on an anonymous blockchain data structure open for public inspection, wherein the first wallet has a first taint score, the cryptographic transaction having a first amount of cryptocurrency;
determining a total value in cryptocurrency of the second wallet;
assign a second taint score to the second wallet, wherein the second taint score is a fraction of the first taint score based on a relative comparison between the first amount of cryptocurrency of the cryptographic transaction and the total value in cryptocurrency of the second wallet
in response to the second taint score being above a threshold, quarantine, by a cryptographic wallet management exchange associated with the second wallet, the second wallet;
reduce the second taint score of the second wallet over time at a rate inversely proportional to the second taint score; and
in response to reducing the second taint score below the threshold, remove from quarantine, by the cryptographic wallet management exchange associated with the second wallet, the second wallet.