Machine Learning-Based Detection and Analysis of Suspicious Activities in Bitcoin Wallet Transactions in the USA

• URL: http://arxiv.org/abs/2504.03092v1
• Date: Fri, 04 Apr 2025 00:07:32 GMT
• Title: Machine Learning-Based Detection and Analysis of Suspicious Activities in Bitcoin Wallet Transactions in the USA
• Authors: Md Zahidul Islam, Md Shahidul Islam, Biswajit Chandra das, Syed Ali Reza, Proshanta Kumar Bhowmik, Kanchon Kumar Bishnu, Md Shafiqur Rahman, Redoyan Chowdhury, Laxmi Pant,
• Abstract summary: The study aims to create a model with a feature for identifying trends and outliers that can expose illicit activity.<n>The dataset is composed of in-depth Bitcoin wallet transactional information.<n>The application of machine algorithms in tracking cryptocurrencies is a tool for creating transparent and secure U.S. markets.
• Score: 1.588234879488451
• License: http://creativecommons.org/licenses/by/4.0/
• Abstract: The dramatic adoption of Bitcoin and other cryptocurrencies in the USA has revolutionized the financial landscape and provided unprecedented investment and transaction efficiency opportunities. The prime objective of this research project is to develop machine learning algorithms capable of effectively identifying and tracking suspicious activity in Bitcoin wallet transactions. With high-tech analysis, the study aims to create a model with a feature for identifying trends and outliers that can expose illicit activity. The current study specifically focuses on Bitcoin transaction information in America, with a strong emphasis placed on the importance of knowing about the immediate environment in and through which such transactions pass through. The dataset is composed of in-depth Bitcoin wallet transactional information, including important factors such as transaction values, timestamps, network flows, and addresses for wallets. All entries in the dataset expose information about financial transactions between wallets, including received and sent transactions, and such information is significant for analysis and trends that can represent suspicious activity. This study deployed three accredited algorithms, most notably, Logistic Regression, Random Forest, and Support Vector Machines. In retrospect, Random Forest emerged as the best model with the highest F1 Score, showcasing its ability to handle non-linear relationships in the data. Insights revealed significant patterns in wallet activity, such as the correlation between unredeemed transactions and final balances. The application of machine algorithms in tracking cryptocurrencies is a tool for creating transparent and secure U.S. markets.

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