\textsc{Perseus}: Tracing the Masterminds Behind Cryptocurrency Pump-and-Dump Schemes
This addresses the critical gap in tracing organizers of cryptocurrency manipulation schemes, providing regulators with tools to mitigate financial losses for investors, though it appears incremental as it builds on existing detection methods.
The paper tackles the problem of identifying masterminds behind cryptocurrency pump-and-dump schemes, developing a system called Perseus that uses temporal attributed graphs and GNNs to detect 438 masterminds in real-world deployment from February to October 2024, achieving higher F1 scores and precision than state-of-the-art methods.
Masterminds are entities organizing, coordinating, and orchestrating cryptocurrency pump-and-dump schemes, a form of trade-based manipulation undermining market integrity and causing financial losses for unwitting investors. Previous research detects pump-and-dump activities in the market, predicts the target cryptocurrency, and examines investors and \ac{osn} entities. However, these solutions do not address the root cause of the problem. There is a critical gap in identifying and tracing the masterminds involved in these schemes. In this research, we develop a detection system \textsc{Perseus}, which collects real-time data from the \acs{osn} and cryptocurrency markets. \textsc{Perseus} then constructs temporal attributed graphs that preserve the direction of information diffusion and the structure of the community while leveraging \ac{gnn} to identify the masterminds behind pump-and-dump activities. Our design of \textsc{Perseus} leads to higher F1 scores and precision than the \ac{sota} fraud detection method, achieving fast training and inferring speeds. Deployed in the real world from February 16 to October 9 2024, \textsc{Perseus} successfully detects $438$ masterminds who are efficient in the pump-and-dump information diffusion networks. \textsc{Perseus} provides regulators with an explanation of the risks of masterminds and oversight capabilities to mitigate the pump-and-dump schemes of cryptocurrency.