CipherTrace now has the technology to track 87% of virtual asset trading

Self-described as the “world’s first blockchain forensics team”, CipherTrace is now also the world’s number one provider of cryptocurrency intelligence. Set up to develop cryptocurrency and blockchain tracing and security capabilities, the company yesterday announced that it had completed its most comprehensive digital asset tracing system to date. 

CipherTrace can now trace more than 700 tokens

Through its expanded cryptocurrency intelligence platform, CipherTrace can now trace more than 700 tokens. To give you an idea of the magnitude of this achievement, that represents 87% of the volume of the top 100 cryptocurrencies as of 7 October 2019. 

The intelligence agency can now trace all the main cryptocurrency movements including Ether, Bitcoin Cash, and Litecoin. But its monitoring now also extends to “several hundred” ERC20 tokens.

“I would emphasise that this giant leap in blockchain visibility was no easy feat,” said CipherTrace CTO Shannon Holland.

“It has taken intense work and technological breakthroughs over the last four years, as well as collaboration with regulators and financial investigators. We can now discern and automatically verify previously unfathomable amounts of blockchain data and characterise it with a high level of confidence. We will continue to add more tokens, stablecoins, and blockchains in the coming months”.

Helping to clean up the cryptocurrency space

CipherTrace has been compiling anti-money laundering, crypto threat intel solutions, and blockchain analytics since 2015. Using techniques such as advanced clustering, digital enrichment, and the company’s own proprietary algorithms, it is able to provide a level of traceability that is unprecedented in the space. This type of transparency in the industry may be the push that regulators need in order to accept cryptocurrency and create adequate legislation for it.

Dave Jevans, CEO of CipherTrace said: “Only by helping virtual asset service providers rid their networks of criminals and terrorists will the industry achieve the level of trust required for widespread adoption and government acceptance.

“Until now, large swaths of the cryptocurrency ecosystem have remained opaque to AML and CTF monitoring.

“By delivering the most comprehensive cryptocurrency intelligence, we are helping to create a multi-trillion-dollar global crypto-economy”.

Support for 700 currencies is immediately available

Users can now have the tools at their fingertips (via the CipherTrace API), to explore complete ETH, BTC, BCH, LTC, USDT, and ERC20 addresses. This means that they can see valuable transaction details on certain wallets, exchanges, and smart contracts. According to the company, financial investigators can now also trace Ether, Bitcoin Cash, and Litecoin addresses forwards and backwards in their transaction history.

This type of tracing should greatly help to reduce market manipulation and ‘pump and dump’ schemes that are all too frequent in the space. It will also help to flush out money launderers and terrorist financing.

“Bitcoin takes centre stage in financial crime investigations because it is the easiest crypto to obtain and has the largest transaction volume. Still, billions of dollars move through altcoins daily,” explained Pamela Clegg, CipherTrace’s head of financial investigations. 

“To close cryptocurrency money laundering gaps, we must expose more of the true number of illicit transactions that occur across the entire ecosystem.

“This platform expansion does just that by providing regulators, exchanges, and investors visibility into more than 87% of the virtual asset market trading volume”.

The ability to trace ERC20 tokens as well

CipherTrace users can now finally explore ERC20 transactions as well and research and explore smart contracts. With a simple click, the intelligence firm can provide the details of the smart contract. This includes any and all transactions and counterparties.

This could help many legitimate blockchain companies struggling to get a bank account to comply with the AML requirements that many banks need to issue them one.

“Banks and other crypto asset businesses will benefit immensely from the addition of support for ERC20 and other significant tokens,” added Jevans.

“Fully complying with AML/CFT regulations requires monitoring ERC20 transactions for illicit activity.

“In addition, exchanges need to assure their banking partners that they understand and can monitor the risks associated with these and similar tokens”.

CipherTrace has also gathered more than 500 million attribution data points. These include the type of account, account holder, contract type, contract owner, and key other metadata on cryptocurrency addresses. The company can also create alerts and a watchlist of addresses that are monitored constantly. Each time a payment is sent or received on one of these monitored addresses, an alert will be sent.

The takeaway

The ability to research and monitor the majority of previously unknown transactions in the blockchain space is a major breakthrough. Investors can feel more secure knowing that the coin they are interested in is not involved in any shady dealings and banks should be able to work with cryptocurrency companies without worrying about AML compliance. 

With improved traceability and transparency in the space, the number of scams and fraud will be reduced, and governments and the general public may be more willing to finally look past the assumption that crime and cryptocurrency go hand in hand.