Proceedings of the Usenix Security Symposium
Proceedings of the Usenix Security Symposium Year 2019 Peer-reviewed
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Security · Vulnerability Detection

When the Signal is in the Noise: Exploiting Diffix

Andrea Gadotti Florimond Houssiau Luc Rocher Yves-Alexandre de Montjoye Benjamin Livshits
2019
Publication year
USENIX Security
Venue
Peer-reviewed
Type
§ Abstract

Problem

Abstract While pump-and-dump schemes have attracted the atten- tion of cryptocurrency observers and regulators alike, this paper represents the first detailed empirical query of pump- and-dump activities in cryptocurrency markets. We present a case study of a recent pump-and-dump event, investigate 412 pump-and-dump activities organized in Telegram chan- nels from June 17, 2018 to February 26, 2019, and discover patterns in crypto-markets associated with pump-and-dump schemes.

Approach

We then build a model that predicts the pump likeli- hood of all coins listed in a crypto-exchange prior to a pump. The model exhibits high precision as well as robustness, and can be used to create a simple, yet very effective trading strat- egy, which we empirically demonstrate can generate a return as high as 60% on small retail investments within a span of two and half months.

Results

The study provides a proof of concept for strategic crypto-trading and sheds light on the application of machine learning for crime detection. 1

Cite this paper — BibTeX 
@InProceedings{gadotti19diffix,
  title = "When the Signal is in the Noise: Exploiting {Diffix}'s Sticky Noise",
  author = "Andrea Gadotti and Florimond Houssiau and Luc Rocher and Yves-Alexandre de Montjoye and Benjamin Livshits",
  year = "2019",
  month = aug,
  booktitle = "Proceedings of the Usenix Security Symposium",
}
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