P055. Graph-based Analysis to Dissect the Modus Operandi of a Cryptocurrency Mixer

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Abstract

Cryptocurrency users increasingly rely on obfuscation techniques such as mixers, swappers, and decentralised or no-KYC exchanges to protect their anonymity. However, criminals exploit these services to conceal and launder illicit funds. Among obfuscation services, mixers remain among the most challenging entities. This is because their owners are often unwilling to cooperate with Law Enforcement Agencies, and technically, they operate as 'black boxes'.
To better understand their functionalities, this paper proposes an approach to analyse the operations of mixers by examining their address-transaction graphs and identifying topological similarities to uncover common patterns that can define the mixer's modus operandi. The approach utilises community detection algorithms to extract dense topological structures and clustering algorithms to group similar communities. The analysis is further enriched by incorporating data from external sources related to known Exchanges, in order to understand their role in mixer operations. The approach is applied to dissect the Blender.io mixer activities within the Bitcoin blockchain, revealing: i) consistent structural patterns across address-transaction graphs; ii) that Exchanges play a key role, following a well-established pattern, which raises several concerns about their AML/KYC policies. This paper represents an initial step toward dissecting and understanding the complex nature of mixer operations in cryptocurrency networks and extracting its modus operandi.

Authors

• Francesco Zola, Vicomtech

• Jon Ander Medina, Vicomtech

• Andrea Venturi, Vicomtech

• Raúl Orduna, Vicomtech