Chainalysis Launches Software That Flags Suspicious Cryptocurrency Transactions on 15 Networks

Blockchain forensics firm Chainalysis has launched a “Know Your Transaction (KYT)…real-time anti-money laundering (AML) compliance solution for monitoring cryptocurrency transactions…across 15 cryptocurrencies.”

Networks covered by the software include Bitcoin, Ethereum, Bitcoin Cash, Litecoin, stablecoins and ERC-20 tokens such as Tether, Maker, and Dai. The company says additional coins will be covered by the software “soon.”

It is unlikely, however, that Chainalysis KYT alerts will be able to flag suspicious transactions on “privacy coin” networks like Monero, ZCash and Verge, which each use various cryptography systems that allow the shielding of identifying information about transactions.

There will likely be some demand for this software and other suites like it as cryptocurrency exchanges across the globe attempt to align themselves with increasingly explicit transaction monitoring requirements.

Chainalysis’ VP Product, John Dempsey, addresses the recent regulatory uptick:

“As lawmakers and regulators focus their attention on the industry, it is more critical than ever that cryptocurrency businesses demonstrate compliance best practices…Every minute counts when managing exposure to sanctioned entities, hacked funds, darknet markets, and other illicit activities, which is why Chainalysis is investing in fast, actionable alerts to help our customers mitigate risk across cryptocurrencies.”

According to the relevant release, Chainalysis’ latest product is, “…designed to help cryptocurrency businesses and financial institutions mitigate exposure to regulatory and reputational risk by helping compliance teams focus on the most urgent activity and enforce compliance policies while better allocating resources.”

The Seattle-based Bittrex exchange recently lost its bid to obtain a BitLicense in New York and serve customers there after the New York State Department of Financial Services (NYDFS) found the company exercised, “…deficient due diligence and control over Bittrex’s token and product launches,” and implemented, “…a manual transaction monitoring system in December 2018, only capable of handling a small volume of transactions…”

Michael Breu, Chief Compliance Officer at the New York-based Gemini crypto trading platform endorsed Chainalysis’ new system:

“As a New York Trust company we are required to monitor transactions on and off our platform…Tools like KYT alerts, which provide real time and ongoing blockchain analysis, coupled with Gemini’s own compliance policies, help us meet our regulatory obligations.”

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