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Grant Enables a Partnership with Technology Leader BIG
A grant from the Criminal Investigations and Network Analysis Center (CINA) at George Mason University will enable Schar School of Policy and Government Professor of Public Policy Maurice D. Kugler Foteini Baldmitsi (Computer Science) and Jiasun Li (Business Administration), to apply tools from economics, cryptography, and finance using groundbreaking blockchain technology in an effort to trace possible money laundering and financial fraud in cryptocurrency markets.
The two-year $400,000 grant from CINA, a Department of Homeland Security “Center of Excellence,” supports a new partnership with the Blockchain Intelligence Group (BIG), the Vancouver-based crypto-currency technology company responsible for creating a suite of cutting-edge tools for analyzing Bitcoin, Ethereum, and other blockchain currency transactions. BIG is owned by BIGG Digital Assets Inc., a publicly traded developer of blockchain compliance and investigation technology.
“The U.S. Department of Homeland Security created CINA to convene leading experts and researchers to pursue multidisciplinary approaches to disrupt criminal activities across the physical and cyber spaces,” said CINA Center Director, Jim Jones. “Criminals use cryptocurrencies to launder money and hide transactions, and this work promises to expose those transactions and provide a critical investigative tool for law enforcement as they seek to disrupt criminal activity.”
Kugler and his co-principal investigators will use BIG’s tools to generate a database linked to high-risk transaction histories that could be perceived as money laundering and other illicit activities in the crypto-currency field. Bitcoin accounts for some $300 billion in market capitalization. Money laundering and crypto-currency crime is valued at an estimated nearly $3 billion-a-year global problem—and growing.
“Money laundering is pervasive in organized criminal activity as the stage in which illegal profits are mainstreamed into the financial system,” said Kugler. “Impeding these operations is essential to stopping many forms of heinous crimes including slavery, as well as sex and organ trafficking, terrorism, and other illicit activities.”
In order to tackle this challenging research problem, “we have partnered with the Blockchain Intelligence Group [BIG], which has developed a dynamic, constantly updated database of labeled Bitcoin and Ethereum addresses,” he added. “BIG has agreed to provide us access to their data. In addition to BIG’s dataset, we will create datasets for cryptocurrencies beyond Bitcoin and Ethereum, focusing on the top 20 cryptocurrencies based on market capitalization.”
The second phase of work involves developing a machine learning tool that will increase precision over time as the training sample expands, he added.
“Our tools will enhance law enforcement efforts facing new technologies to disguise and obfuscate the origin and destination of financial resources,” he added.
“The goal of this undertaking will provide additional information to trace transaction patterns across crypto-currency markets and large-scale ‘smart-contract’ records,” said BIG president Lance Morginn in making the announcement of the partnership.
“We are very pleased to have been awarded this opportunity by Professor Kugler to show how our suite of tools, developed in-house, could give clarity to the crypto transactional ecosystem and give some general background on the legitimacy of those transactions,” he said.
Schar School fact: The current lifetime value of active grants is $25 million; the Schar School is a significant contributor to George Mason University’s Carnegie Research 1 status.