Behind the Scenes with Our Cryptocurrency Investigation Software in 2018

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A look back at how cryptocrime evolved this year

As the hacks and thefts of previous years have risen in both prevalence and severity, cryptocurrency-enabled crime is now considered a more urgent threat to national security. Governments and exchanges have stepped up their response, investigating international crime facilitated by cryptocurrency, sanctioning cryptocurrency addresses, and screening blockchain transactions associated with them.

In addition, while Bitcoin remains a top choice for mainstream users and illicit actors alike, Ethereum, Litecoin, Bitcoin Cash, and other cryptocurrencies have gained traction and attracted new forms of criminal activity.

Investing in multi-currency support

Building trust in blockchains is broader than just Bitcoin. Among investigators who use our software, there’s increasing demand for the inclusion of additional cryptocurrencies, including a burgeoning class of stablecoins and tokens. In response, we overhauled our infrastructure and completely rethought how to best support multiple cryptocurrencies in a single interface.

After significant upgrades, we’re currently testing support for the core functions of Chainalysis Reactor—our cryptocurrency investigation product—on more than 10 cryptocurrencies. This will allow investigators to:

  • Better analyze the funds involved in money laundering schemes
  • Track contributions to ICO scams
  • Identify other forms of illicit activity

Maintaining our rigorous standards

Our relationships with top institutions around the world are built on trust in our data, and we’re committed to ensuring that data for new cryptocurrencies is held to rigorous standards. As such, expanding coverage to multiple cryptocurrencies in our investigation software has been an opportunity to make significant investments in our products from both a technical and security standpoint.

After launching multi-currency Beta functionality this fall, we have our eyes set on a complete rollout, with more than 10 other coins, in early 2019.

Looking forward

In addition to supporting multiple cryptocurrencies next year, new efforts will yield a seamless experience for users investigating the flow of funds across multiple coins.

We're lucky to work with passionate and engaged investigators who spend their days understanding what's happening on the blockchain in order to make the entire space safer for everyone. Without them, we wouldn't be able to accomplish our mission of building trust in blockchains, for all users.

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Learn more about KYT for Stablecoins & Token Issuers

Monitor transactions across the token’s full lifecycle, from issuance to redemption—and any transaction in between.

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How Transaction Monitoring Works at Chainalysis

One of the reasons Chainalysis KYT is so popular is that it uses global anti-money laundering (AML) standards common across regulatory bodies. We apply these standards when each transaction is screened.

Cryptocurrency businesses also need to understand the aggregate risk profile of each of their users. That’s why Chainalysis KYT provides a view of risk profiles at the user level, which reflects all of a user’s screened transactions. For example, if an organization has a user who receives funds from a darknet market, our software automatically flags that transaction as high risk. If the user sends funds to a regulated exchange, our software marks that transaction as low risk. And so on. Every screened transaction feeds into a user’s risk profile. Chainalysis KYT displays all user profiles, sortable by high, medium or low risk (using traffic light colors) for easy scanning.

We apply our risk methodology in real time to all users within an organization’s user base. This saves compliance teams from laborious, manual screening work. They can instead focus on developing comprehensive compliance programs. Organizations that work with us tell us this has enabled them to meet regulatory expectations and launch or grow their businesses.

Customizable risk level

We’re now giving our customers the ability to adjust the risk level of a category or a service. For example, not all jurisdictions around the world treat gambling the same way. In some countries, gambling is not considered a legitimate business activity and thus online gambling sites would be treated as high risk. In other countries, gambling is not considered illicit, which means properly licensed online gambling sites would be treated as low risk.

The ability to customize the risk level of categories and specific services means our customers can automate even more of their compliance workflows.

Organization-wide dashboard

One of the most useful facets of Chainalysis KYT is having a view of all users and their risk profiles directly accessible upon first logging in. It provides a visual alert of which users have high risk profiles and therefore require the most immediate attention. In keeping with the spirit of simplified visual cues, we have now launched a dashboard that summarizes key indicators at the total organization level. For example, organizations can now see what percentage of their user base is falling under high, medium or low risk. They will soon be able to see things like total exposure by category, or total transaction volume per day. These and other metrics will provide our customers additional understanding of their organization’s total exposure trends over time.

In-app chat

At Chainalysis, we strive to provide as much support to our customers as we can. To make it easier to interact with us, we added in-app chat to Chainalysis KYT. This allows our customers to send us questions or feedback without having to leave the environment. Our team typically responds within minutes.

Looking ahead

We know software is most valuable when it makes the lives of our customers easier and more productive. This means we’ll continue to add intuitive capabilities to our compliance products while increasing versatility for ongoing transaction monitoring. In the coming months, we will improve how transaction information is displayed. We will also boost our monitoring capabilities for other cryptocurrencies beyond Bitcoin. And we will deepen the integration with Chainalysis Reactor, which is used for enhanced due diligence and investigations.

The momentum around cryptocurrency compliance is only just starting and we look forward to continuing to offer software that builds trust in blockchains.

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