Paper 2026/259

Blockchain Stacking Fraud and Deterrence

Abstract

As crypto-assets become increasingly integrated into global financial systems, they are now employed to demonstrate solvency, establish creditworthiness, and satisfy wealth verification requirements for various financial and regulatory purposes. A fundamental challenge in these applications is proving that a given wallet address is controlled exclusively by a single legal entity, as fraudulent multiple claims can undermine the integrity of asset-based verification systems. In this paper, we propose a binding of wallet address to legal identity that makes conflicting claims cryptographically inconsistent. In the main design, claimants post to a public, privacy-preserving bulletin board a zkSNARK that proves knowledge of both the private key and the address–identity binding without revealing either; proofs are structured so that duplicate claims for the same address are publicly detectable. When a shared bulletin board is not available, we introduce a self-deterrence proof: a zero-knowledge protocol in which producing two valid proofs for the same address under different legal identities would enable efficient extraction of the private key, creating a strong economic disincentive against double claiming. These cryptographic primitives provide effective countermeasures against blockchain stacking fraud attacks and enhance the reliability of crypto-assets in traditional financial applications, contributing to the broader integration of digital assets into established economic systems.