Wallet Type Classification via Transaction Pattern Analysis
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Solution Overview
Problem
Current technologies face challenges in identifying and tracking wallet addresses associated with virtual asset service providers on the dark web, particularly in distinguishing between cold, hot, and personal wallets, which hinders efforts to combat cybercrimes involving virtual assets.
Innovation Solution
A method and apparatus that receive a target wallet address, obtain associated transactions, and utilize determination routines to classify the wallet type by comparing the target address with a list of known wallet addresses of virtual asset service providers, based on transaction patterns and conditions specific to each type of wallet.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Reliability
If encryption technology and anonymity protocols are used on the dark web, then user privacy and security are improved, but the ability to track and identify criminal activities deteriorates
Solution Approach 1:
The patent introduces intermediary entities such as mixers, custodians, and service providers that handle virtual assets between criminals and the dark web. These intermediaries create traceable transaction paths while maintaining the anonymity protocols of the dark web, allowing law enforcement to track crimes through the intermediary layer without breaking end-to-end encryption for legitimate users
Solution Approach 2:
The patent segments the tracking process into multiple stages: identifying service provider wallets, tracing fund flows through intermediaries, and analyzing transaction patterns. This segmentation allows selective application of tracking techniques only where necessary (at intermediary points) while preserving anonymity in encrypted communication channels
2Reliability
If decentralized blockchain technology is used for virtual assets, then transaction security and reliability are improved, but the ability to identify and track service providers deteriorates
Solution Approach 1:
The patent performs preliminary identification and classification of service provider wallets before criminal activities occur. By pre-establishing a database of known service provider addresses and their types (custodian, mixer, exchange), the system can immediately flag and trace transactions involving these entities, maintaining blockchain decentralization while enabling precise identification
Solution Approach 2:
The patent implements feedback loops where transaction patterns are continuously analyzed and used to refine service provider identification. The system learns from transaction behaviors, updates service provider profiles, and improves identification accuracy over time while maintaining the integrity of the decentralized blockchain system
3Measurement precision
If multiple determination routines are implemented to classify wallet types, then identification accuracy is improved, but system complexity and processing time increase
Solution Approach 1:
The patent implements dynamic determination routines that adapt their complexity based on the transaction context. The system starts with simple classification rules and progressively applies more complex routines only when necessary, adjusting the analysis depth according to transaction amount, frequency, and pattern recognition results
Solution Approach 2:
The patent applies different levels of determination routine complexity to different wallet types and transaction scenarios. High-value or suspicious transactions receive more intensive multi-stage analysis, while routine transactions use simplified classification, optimizing the balance between accuracy and system complexity
Data Source
AI summary
A method for identifying a wallet address associated with a virtual asset service provider is provided. The method comprises receiving a target wallet address, obtaining a transaction of a virtual asset associated with the target wallet address, obtaining a list of a plurality of known wallet addresses of virtual asset service providers (VASPs) and identifying a type of the target wallet address, by performing at least one of a cold wallet determination routine and a hot wallet determination routine for the target wallet address, based on the transaction and the list of known wallet addresses of the VASPs.