How can AI detect Bitcoin money laundering?

A recent study reveals how artificial intelligence (AI) can be a crucial ally in identifying suspicious activity with cryptocurrencies, especially in Bitcoin.

Conducted by the MIT-IBM Watson AI Lab in collaboration with blockchain analytics firm Elliptic, the report details how advanced deep learning techniques are being employed to uncover money laundering schemes on this global platform.

Elliptic and MIT-IBM’s innovative approach leverages AI’s ability to analyze vast amounts of data in record time. The study focuses on tracking illicit transactions, identifying characteristic patterns of money laundering. Furthermore, it is possible to reveal the wallets involved in these criminal practices.

By exploiting Bitcoin’s decentralized blockchain, the team was able to differentiate between legitimate and illegal transactions. Furthermore, the company managed to establish connections between the latter to uncover possible money laundering schemes.

According to Elliptic, this initiative is part of an ongoing effort that began in 2019. At that time, the company collaborated with an undisclosed cryptocurrency platform to test its theory. The results are promising, with the successful identification of subgraphs related to money laundering.

AI and its potential to identify fraud

According to the results obtained in the tests, the effectiveness of the AI ​​model is remarkable. On average, less than one in every 10,000 accounts is associated with money laundering, indicating that the approach is highly accurate and reliable.

The importance of this research goes beyond the academic and technological world. In several countries, including the United States, authorities have used anti-money laundering laws as part of their regulatory strategy. These actions have mainly affected the cryptocurrency sector.

Recently, the case involving Binance founder Changpeng Zhao and the arrest of the founders of Samourai Wallet have drawn attention to the urgency of curbing illegal activities in this space.

The accusations highlight the need for innovative solutions, such as those developed by MIT-IBM and Elliptic, to address the challenges posed by cryptocurrencies and ensure the integrity of the global financial system. Furthermore, by using machines and artificial intelligence, the likelihood of errors and interference decreases.

Thus, technology, which is often seen as an enabler of crimes, is now being mobilized as a powerful tool for law enforcement and strengthening financial security.