Data mining for detecting Bitcoin Ponzi schemes

Soon after its introduction in 2009, Bitcoin has been adopted by cyber-criminals, which rely on its pseudonymity to implement virtually untraceable scams. One of the typical scams that operate on Bitcoin are the so-called Ponzi schemes. These are fraudulent investments which repay users with the funds invested by new users that join the scheme, and implode when it is no longer possible to find new investments. Despite being illegal in many countries, Ponzi schemes are now proliferating on Bitcoin, and they keep alluring new victims, who are plundered of millions of dollars. We apply data mining techniques to detect Bitcoin addresses related to Ponzi schemes. Our starting point is a dataset of features of real-world Ponzi schemes, that we construct by analysing, on the Bitcoin blockchain, the transactions used to perform the scams. We use this dataset to experiment with various machine learning algorithms, and we assess their effectiveness through standard validation protocols and performance metrics. The best of the classifiers we have experimented can identify most of the Ponzi schemes in the dataset, with a low number of false positives

Legislative responses to data breaches and information security failures

On July 23, 2008, the Payment Cards Center of the Federal Reserve Bank of Philadelphia hosted a workshop to discuss federal and state legislative responses to data breaches. The workshop addressed several laws and legislative initiatives designed to create greater safeguards for personal consumer information frequently targeted by data thieves and often subject to the failures of information security protocols. Diane Slifer, J.D., M.B.A., who has frequently presented at forums on data security and has represented clients in matters related to data breaches, led the workshop. Slifer examined several highly publicized data breaches and explained how various laws and regulations have been put in place in order to protect and inform consumers whose personal information has been compromised. Additionally, she discussed several legislative initiatives designed to potentially create a more structured and secure environment for private consumer data overall. This paper summarizes Slifer's presentation, the ensuing discussion, and additional Payment Cards Center research. In addition, it offers a brief overview of recent data breaches, a description of various ways that federal and state laws operate, and some thoughts on how effective these laws and regulations have been.Payment systems ; Identity theft ; Fraud ; Law and legislation

Cloudy with a Chance of Taxation

The growth of the digital economy, and, in particular, cloud computing, has put a significant strain on sales taxation and other consumption tax systems. The borderless, anonymous, and digital nature of cloud computing raises questions about the paradigm used to determine the character of the transaction and the location where consumption, and therefore, taxation occurs. From a U.S. perspective, the effective resolution of these issues continues to grow in importance in light of the recent Supreme Court decision in South Dakota v. Wayfair and the growing number of U.S. businesses transacting overseas in jurisdictions that impose value-added taxes (VATs). The cloud magnifies difficulties with VAT compliance and enforcement, as businesses increasingly are subject to VAT laws in multiple jurisdictions. Tax authorities therefore have to collect from remote vendors who have numerous opportunities for VAT avoidance and evasion. The outcome of these challenges is unfair competition, a burden on international trade, and a huge gap in VAT revenues. In this important Article, we closely analyze these cutting-edge challenges and contribute to the debate on how to tax the digital economy. We argue that while the approaches taken by both the Organisation for Economic Co-operation and Development, of which the United States is a member, and the European Union introduce some noteworthy improvements to the current system, more substantial measures are necessary. Thus, we propose a range of fundamental changes that include improving the existing registration-based VAT system through the enhanced use of new technologies, replacing the current system with a blockchain real-time basis VAT system, and shifting the VAT collection burden from suppliers to payment intermediaries. As the digital transformation of the economy accelerates, each of these changes will help adapt consumption taxation to the modern realities of our digital era