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Bittrex Leverages Chainalysis KYT Tool to Enhance Security and Regulation Compliance

Cryptocurrency exchange Bittrex will use Chainalysis Know Your Transaction (KYT) to meet new and existing regulatory and compliance standards, and establish a safer, more secure platform for their users.

Yesterday, Chainalysis Inc. announced the deployment of its real-time transaction monitoring software solution to the US-based blockchain trading platform Bittrex.

Enhanced Compliance

Chainalysis KYT software enhances the compliance and transparency of cryptocurrency exchanges, like Bittrex, by monitoring large volumes of cryptocurrency activity and identifying high-risk transactions on a continuous basis, feeding the exchange more accurate data on each of their users. By leveraging the software, businesses can identify transactions that require the most immediate attention utilizing real-time data with alerts and filters for levels of risk exposure.

“As our business continues to grow, having a thorough and reliable transaction monitoring system in place is crucial in demonstrating our commitment to compliance,” said Bill Shihara, CEO, Bittrex. “Chainalysis KYT is an important tool in having an effective anti-money laundering program by helping us prevent, detect, and address unlawful behavior.”Earlier this year, Chainalysis expanded Chainalysis KYT, its anti-money laundering (AML) compliance solution, to cover the most popular cryptocurrencies, including Ether, Bitcoin Cash, Litecoin, top stablecoins and ERC-20 tokens such as Tether, Maker, and Dai, with additional cryptocurrencies coming soon.

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Tether Brings into Play Anti-Money Laundering Solutions with Chainalysis Tool

Tether, the most leveraged stablecoin provider based on market capitalization, has deployed a tool provided by Chainalysis, a blockchain analytical company, in its quest to have anti-money laundering (AML) compliance solutions. Tether stated in a press release that the company will usethe Know Your Transaction (KYT) tool by Chainalysis to get more AML tracking insights.

Tether seeks real-time monitoring

By leveraging on the KYT tool, Tether intends to maximize the surveillance of its US dollar-backed stablecoin USDT usage in its blockchain network. This approach will be instrumental in red-flagging suspicious transactions in real-time.

Tether will, therefore, benefit from full-cycle surveys of its stablecoins from the time they were issued to the redemption moment. The data provided will be beneficial in mitigating any risks that may be prompted by suspicious activities on its entire network.

Tether’s CTO, Paolo Ardoino, asserted that they have the responsibility to have automated and transparent compliance solutions to regulators and the entire crypto ecosystem. As a result, the Chainalysis KYT tool will be useful in realizing this objective. He, however, noted that a user’s vital data would not be shared as it is safely stored in servers.

Jonathan Levin, CSO and co-founder of Chainalysis, acknowledged, “By putting proper AML transaction monitoring in place, Tether is demonstrating its commitment to transparency and regulatory compliance, further building trust among its growing user base.”

Regulators on the watch out

Tether’s intentions of deploying the KYT tool come, at a time when regulators across the globe have become more stringent on money laundering measures in the crypto space. This is intended to stamp more confidence and authority in this sector.

Tether has also shown its plan to propel its dominance in the stablecoin arena by forming formidable partnerships. For instance, it recently collaborated with Algorand making it the first stablecoin to be integrated into Algorand 2.0. Some of the benefits rendered will include reduced block confirmation to be accomplished in under four seconds.

Meeting new and existing regulatory compliance standards

Cryptocurrency exchange Bittrex has also been using Chainalysis Know Your Transaction (KYT) to meet new and existing regulatory and compliance standards, and establish a safer, more secure platform for their users. Chainalysis KYT software enhances the compliance and transparency of cryptocurrency exchanges, like Bittrex, by monitoring large volumes of cryptocurrency activity and identifying high-risk transactions on a continuous basis, feeding the exchange more accurate data on each of their users.

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Mr Dark's Depraved Rape and Child Porn Site Brought Down by Blockchain Analysis

A Dutch national has been indicted by a federal grand jury in the District of Columbia for operating a depraved and violent pornography site featuring minors and sexual assault. Michael Rahim Mohammed, known as Mr Dark, allegedly profited around $1.6 million which was paid in cryptocurrencies like Bitcoin and Ethereum.

The ‘Dark Scandals’ website hosted thousands of videos and images that were promoted as being “real” acts of sexual violence including blackmail and rape. The site operated on both the darknet and the clearnet since 2012.

Cryptocurrency Payments

According to the announcement by U.S Immigration and Customs Enforcement (ICE), the illegal content was distributed to clients via downloadable email packs. Users could either pay with Bitcoin or Ethereum, or they could add their own content to the site’s library.

Mohammed was the administrator of the site and received 188 Bitcoin and 27 Ether among the 1650 deposits made to Dark Scandals. He also set very specific rules prohibiting “fake” or simulated violence insisting that the content be “real rape” and preferably homemade.

“The obscene material distributed by Michael Rahim Mohammed victimizes innocent and vulnerable people in our communities,” said Alysa Erichs, acting executive associate director of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations. “We will continue to work with our law enforcement partners to investigate and prosecute these crimes, using all available resources to ensure that additional vulnerable victims aren’t exploited.”

Cryptocurrency was the sites main source of financial support, however,the blockchain’s supporting the transactions recorded all the payment details of the crime which allowed law enforcement agencies to track them.

303 Bitcoin and Ethereum accounts that paid cryptocurrency to the site using Chainalysis transaction tracing software were tracked by a combination of agencies. A forfeiture complaint seeks to recover the funds and offer them to the victims.

Blockchain Analysis

The forfeiture complaint notes that many of the cryptocurrency accounts tracked had incomplete KYC verification and had only been used for one transaction.

A thorough blockchain analysis of the accounts revealed further illicit transactions. From the complaint, “Law enforcement observed numerous payments from these accounts to other darknet markets, which were flagged by blockchain analytics companies, enabling law enforcement to identify illicit transactions.”

Michael Rahim Mohammed has been officially charged with the crimes of distribution and production of child pornography, engaging in the selling and transferring of obscene material, and laundering of monetary instruments.

Trustless Not Anonymous

When the Financial Action Task Force (FATF), issued new guidelines on how digital assets should be regulated last June, there was a lot of pushback from the crypto community and exchanges regarding the need for know you customer (KYC) compliance with many highlighting that cryptocurrency privacy was over.In an interview with Blockchain.News, Matthew Unger, CEO of IComply investor services addressed the concerns on privacy saying,”While we want to be free, money has a direct impact on people’s lives. The reality is that crypto is often used in the child sex trade, to launder massive amounts of money, and to undermine the free democratic process in favor of corruption and foreign influence, such as was the case in the 2016 U.S. election (re: the Mueller report). We’ve seen even more extreme values on privacy in the last few years. While some people say privacy is more important, these people limit the current and potential uses of crypto in the financial system.”

According to Unger, many are missing the point of cryptocurrency as he says, “The original objective of this technology is not to be anonymous—it’s to be trustless. You don’t need to know anything about an individual to know that you can trade with them and that their money is real. What the tech can’t do is tell you if the crypto is stolen, was used to harm someone, or was used to facilitate acts of terrorism, crime, or other illicit or harmful activities. In order to use crypto in good conscience, it’s prudent that users deal with people that they have vetted.”

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May 13: ALT Coins Give You Wings

Trading Crypto with Eugene is a series of daily commentary of market analysis and trading advice shared by Eugene Ng of Matrixport, a veteran trader with 10 years of experience in top-tier global investment banks. If you like the article, please follow us here on Blockchain.News so you won’t miss our future publications.

BTC managed to snap out of its 4-day losing streak as it stayed well bid up close to 3% in the past 24 hours. This is likely the result that miners holding BTC are not selling their coins (see chart below that shows mining pools are holding BTC instead of selling ahead of halving) and are well-hedged post halving i.e. put-to-call ratio continues to stay elevated at ~1.70. In an interesting development, JPM has now onboarded Coinbase and Gemini as customers; paving the way of crypto being accepted as an asset class. ETH also sparked some headlines as Vitalik clarified that the July launch of ETH 2.0 isn’t set in stone yet. Last week, I highlighted that the Bitcoin dominance (i.e. % of the entire crypto market share) has hit a key trendline resistance at 69%, which is why a few alt tokens are now putting in some pretty outsized performance last evening. For example, Stellar was up more than 10%. If this XLM trend continues, expect Ripple to follow suit. Zcash was up more than 5% on the back that Electric Coin Company announced the launch of the Zcash developers alliance (ZDA). Cardano also did around 5% as its founder Charles Hoskinson tweeted yesterday “there is no delay of Shelley. Pioneer is set for launch today”.

Trade Strategy: Similar to yesterday. I’ve closed my long volatility trades, and will start to sell some volatility here and whenever it spikes. While implied volatility has sharply declined from 100% to 80% since Sunday, the longer-term average before the 12 March crash is around 55-60% so there’s still juice to be short vol. Short the 2-day $8,000 put or the 9-day $7,000 put for 20% annualized interest. Message me if you need to discuss trade ideas, good luck. Chainalysis did a blockchain analysis shows that mining pools have been holding more Bitcoin as the halving approaches… Suspect they are mostly well hedged with puts; hence they are holding (than selling them)…

Bitcoin Put/Call ratio continues to stay elevated; either the market wants to be hedged against a lower move in the short term or they are skeptical of the current bid… or the miners haven’t taken off their downside hedge…

Bitcoin dominance.. look at that beautiful resistance trendline capping BTC from outperforming the market.. Sometimes technicals work like a charm, and here’s one of those occasions..

Implied volatility pre the March 12 is averaging around 50 to 60%, which is why at 80% I am a seller…

Disclaimer

Opinions expressed are solely the analyst’s own and do not express the views of Matrixport the company.
The views and opinions expressed in this article are those of the contributor and do not necessarily reflect the view of Blockchain.News.

Chainalysis Adds Compliance Support to Track Privacy Coins Dash and Zcash

Chainalysis has just launched support for two of the most popular privacy coins, Dash and Zcash. Privacy coins are cryptocurrencies with privacy-enhancing features that allow users to gain total anonymity when making blockchain transactions.

Privacy coins protect the identity of the users and the origins of the transactions, taking the anonymous and private nature of Bitcoin to the next level. Comparatively, Bitcoin protects some information, hence remaining pseudo-anonymous. The rest of the information, including transactions, addresses, and balances, is recorded in a public and permanently available ledger.

With around 63 different privacy coins in the cryptocurrency market, each project tries to offer the best approach to privacy, however, five projects overshadow the rest. These include Monero, Dash, Zcash, Verge, and Bitcoin Private.

Although privacy coins are known to be used for illicit purposes, research by the RAND corporation mentioned that 0.2 percent of all the cryptocurrency addresses mentioned on the dark web was either for Dash or Zcash.

Dash

Dash is a fork of the original Bitcoin code, similar to many other altcoins. Launched in 2014, Dash is a combination of the words digital and cash and is considered the first-ever privacy coin in the crypto history.

Dash uses an anonymization strategy revolving around PrivateSend, which hides transactions by mixing them together as a single transaction, which is then added to the blockchain.

Although Dash is known for its privacy features, only 9 percent of all Dash transactions make use of mixing transactions related to PrivateSend. This portion of Dash transactions take up a relatively small and declining percentage of Dash transactions, according to Chainalysis.

Zcash

Zcash uses an anonymity tool called Zero-Knowledge Proof, which allows users to transact with each other without revealing addresses to anyone. These transactions on the Zcash network are verified, using zk-SNARKS, also known as Zero-Knowledge Succinct Non-Interactive Argument of Knowledge.

Launched in 2016, Zcash (ZEC) also allows the encryption of blockchain activity, known as shielding, and Zcash provides this using shielded pools. Of the transactions that interact with a shielded pool, only 6 percent is completely shielded, and around 14 percent of all Zcash transactions involve shielded pools.

Chainalysis claims that it can provide the transaction value and at least one address for over 99 percent of ZEC activity.

The Algorand Foundation to Integrate Chainalysis KYT for Transaction Monitoring and Compliance

The Algorand Foundation will be leveraging Chainalysis’ Know Your Transaction (KYT) for transaction monitoring and compliance processes after its integration.

Investigations and due diligence will be enhanced by using Chainalysis KYT for Algorand’s native token, ALGO. The Algorand Foundation is led by Turing award-winner Silvio Micali and a renowned team of cryptographers to build an open-source, public blockchain for an inclusive ecosystem.

“Algorand is committed to providing an inclusive, transparent, and secure system for its global users,” said Algorand Foundation’s Chief Operating Officer (COO), Fangfang Chen, in a release shared with Blockchain.News.

“We needed a compliance partner that could not only help us adhere to regulations in Singapore where we are based but also global regulatory best practices. This will enable us to build the best transaction monitoring solution for the Algo token so that we can realize our mission of providing the world’s first open, permissionless, pure proof-of-stake blockchain protocol securely and scalably.”

With the integration of the Chainalysis KYT, Algorand is able to monitor large volumes of activity and identify high-risk transactions on an ongoing basis.

Chainalysis adds compliance support to track privacy coins Dash and Zcash

Chainalysis has recently launched support for two of the most popular privacy coins, Dash and Zcash. Privacy coins are cryptocurrencies with privacy-enhancing features that allow users to gain total anonymity when making blockchain transactions.

Although Dash is known for its privacy features, only 9 percent of all Dash transactions make use of mixing transactions related to PrivateSend. This portion of Dash transactions takes up a relatively small and declining percentage of Dash transactions, according to Chainalysis.

Chainalysis Secures $13M From Ribbit Capital and Sound Ventures, Continuing to Fuel Crypto Adoption

Chainalysis announced that it has secured an additional $13 million in a strategic investment from Ribbit Capital and Sound Ventures for its Series B investment round, taking its total to $49 million.

Chainalysis has previously secured $36 million from Accel, Benchmark, MUFG, and Sozo Ventures last year. The blockchain analysis firm aims to further expand its relationship with government agencies and the public and private sectors to fuel the crypto industry’s growth.

Among the addition of software engineers, government sales, and business roles, Sigal Mandelker, General Partner at Ribbit Capital and former Under Secretary for Terrorism and Financial Intelligence at the US Department of Treasury will also join Chainalysis as an advisor.

As the government and law enforcement sectors are still getting comfortable with dealing with cryptocurrencies, Chainalysis hopes to enable financial institutions to enter the crypto ecosystem safely and responsibly. JPMorgan recently decided to accept cryptocurrency exchanges Coinbase and Gemini as banking clients, and will also offer cash-management services to the exchanges, as well as dealing with dollar-based transactions for their US-based clients.

Chainalysis Reactor, the company’s blockchain data, and foundational investigative product has seen a growth in revenue in the past year, and by almost 400 percent with its government clients.

Michael Gronager, the CEO and co-founder of Chainalysis said in a statement provided to Blockchain.News:

“Chainalysis is founded on the belief that providing data insights into cryptocurrency activity will unite government agencies, exchanges, and financial institutions to fuel the industry’s growth. Ribbit Capital’s deep fintech, cryptocurrency, and government experience and Sound Venture’s commitment to creating safer digital environments through enterprise software make them natural partners as we continue our high-growth trajectory and global expansion.”

Chainalysis Know Your Transaction (KYT) and Chainalaysis Kryptos, two of the firm’s compliance products, have been used by over 180 private sector customers across 44 countries. These compliance products boost transparency, demonstrating the need for more secure and transparent blockchain-based processes across the industry. The Algorand Foundation also chose to leverage Chainalysis KYT for transaction monitoring and compliance processes.

Chainalysis assisted the shutdown of the largest-ever child sex abuse site

On April 21, 2020, Chainalysis reported an alarming and rising trend of cryptocurrency transactions being linked to coin wallets that are connected to human trafficking and slavery as well as Child Sexual Abuse Material (CSAM).

The forensics firm reveals that over the course of 2019 they were able to track nearly $1 million dollars worth of Bitcoin and Ethereum payments to addresses associated with CSAM providers which represent a “32% increase over 2018, which in turn saw a 212% increase over 2017.”

Although a horrific increase, these transactions actually represent an incredibly small portion of the cryptocurrency market and Chainalysis attributes most of the increase to the rise of cryptocurrency adoption rather than an increased demand for child and blackmail porn.

Ashton Kutcher, the General Partner at Sound Ventures said:

“Chainalysis’s market-leading position at the intersection of fintech and cybersecurity makes them an essential part of the economy of the future. They are also one of the rare companies whose work protects society’s most vulnerable people, as demonstrated by their work on assisting the shutdown of the largest ever child abuse material site.”

Chainalysis Releases Crypto Market Intelligence Site Catered to Asset Managers and Regulators

Blockchain analysis firm Chainalysis launched Market Intel, a new website catered to asset managers and regulators for access to live crypto data and insights. Chainalysis’ Market Intel will leverage the firm’s proprietary data, which has been collecting and linking to real-world entities since 2014.

Regulators and compliance professionals are currently leveraging Chainalysis on-chain data, which provides information regarding transactions registered on blockchain, which helps these individuals to detect and investigate illicit activities. Chainalysis is looking to bridge the gap for traditional institutional investors, as the firm believes that cryptocurrencies are poised to become a mainstream asset class.

In a press release shared with Blockchain.News, Chainalysis Co-founder and Chief Strategy Officer Jonathan Levin said:

“Market Intel is the next step in realizing this vision. By providing metrics and context for cryptocurrency activity, we’re empowering asset managers and regulators to leverage the transparency of blockchains to make data-driven decisions about why and how to invest in cryptocurrencies and ensure the markets function safely and efficiently.”

According to Chris Tyrer, Head of Fidelity Digital Assets Europe, the company found that one of the major concerns of institutional investors have of investing in crypto is the “lack of data to provide insight into the health and growth of digital assets and networks.”

By providing data and insight into cryptocurrency markets, Philip Gradwell, Chainalysis Chief Economist believes “cryptocurrency is poised to become a mainstream asset class.

Chainalysis Market Intel highlights the most important daily changes, as well as information including daily on-chain metrics on trading, demand, supply, generation, and the risk of cryptocurrencies.

Chainalysis secures $49 million Series B round

Among the addition of software engineers, government sales, and business roles, Sigal Mandelker, General Partner at Ribbit Capital, and former Under Secretary for Terrorism and Financial Intelligence at the US Department of Treasury will also join Chainalysis as an advisor.

As the government and law enforcement sectors are still getting comfortable with dealing with cryptocurrencies, Chainalysis hopes to enable financial institutions to enter the crypto ecosystem safely and responsibly. JPMorgan recently decided to accept cryptocurrency exchanges Coinbase and Gemini as banking clients, and will also offer cash-management services to the exchanges, as well as dealing with dollar-based transactions for their US-based clients.

One Million Bitcoin Held By Dark Web Marketplaces and Cybercriminals, Chainalysis Data

Data from Chainalysis reveals that nearly one million Bitcoin is circulating on the dark web between bad actors and illicit darknet markets being moved through reputable exchanges.

According to Chainalysis, roughly 900,000 Bitcoin (BTC) is being held by cybercriminals and darknet markets on the dark web with reputable cryptocurrency exchanges acting as crucial links within the underground space.

While Chainalysis reveals that less than 1% of Bitcoin transactions are illegal the graph above still shows an alarming picture. Reading the data, it shows 892,000 BTC being held on the darknet is broken down as; 585,000 BTC is being held on illegal darknet markets; 205,000 BTC in stolen funds are circulating on the dark web; 99,000 BTC is attributed to scams and all others hold an additional 3,000 BTC.

According to Chainalysis, only 0.32% of all current Bitcoin flows are tainted by illicit activity.

Cryptocurrency exchanges are still being leveraged heavily for illicit Bitcoin transactions which is consistent with the BTC movements of the recent illicit gains made by cybercriminals during the recent hacks on Twitter.

Chainalysis Launches Market Intel

As recently reported by Blockchain.News, Chainalysis has launched Market Intel, a new website catered to asset managers and regulators for access to live crypto data and insights. Chainalysis’ Market Intel will leverage the firm’s proprietary data, which has been collecting and linking to real-world entities since 2014.

Regulators and compliance professionals are currently leveraging Chainalysis on-chain data, which provides information regarding transactions registered on blockchain, which helps these individuals to detect and investigate illicit activities. Chainalysis is looking to bridge the gap for traditional institutional investors, as the firm believes that cryptocurrencies are poised to become a mainstream asset class.

Chainalysis Research: Crypto Assets Worth $50 Billion Exited China in 2019

Blockchain analysis company Chainalysis has disclosed that cryptocurrency assets valued at nearly $50 billion left China in 2019. The exit of wealth via crypto shows the likelihood of investors evading capital transfer restrictions in China, according to Bloomberg.

Annual limit of $50,000

China has stringent rules as its citizens are only permitted to transfer about $50,000 out of the country yearly. In the past, wealthy Chinese dodged this rule by creating shell companies or investing in overseas real estate.

Chainalysis noted that technological advancements like cryptocurrencies might be used to circumvent this limitation in the present era. For instance, Tether made up at least $18 billion of the transfers from East Asia in the past year.

As per the announcement:

“Stablecoins like Tether are particularly useful for capital flight, as their USD-pegged value means users selling off large amounts in exchange for their fiat currency of choice can rest assured that it’s unlikely to lose its value as they seek a buyer.”

Nevertheless, Chainalysis ascertained that it was not clear how much of the Tether outflows or the $50 billion transfers stemmed from capital flight.

Tether favored in China

According to Dovey Wan, the co-founder of crypto investment firm Primitive Ventures:

“Tether has become a US dollar replacement for many people in China. Lots of Chinese businesses and merchants, especially those working overseas, now accept Tether.”

Kim Grauer, Chainalysis’s head of research, added that tether is getting the upper hand because of its stable price, low fees, deep liquidity, and fast settlement. As a result, merchants use it for cross-border transactions, as evidenced by Chinese companies doing business with Latin America favoring Tether and Bitcoin for payment.

China is also making headways because reportedly, it has established more than 10,000 new blockchain companies in the first seven months of 2020 despite the coronavirus (COVID-19) pandemic.