Bittrex, the U.S. crypto exchange, has adopted blockchain compliance firm Chainalysis’ real-time monitoring software for transactions to flag suspicious activity across many of its leading coins, Bittrex executives told CoinDesk.
Bittrex’s adoption of Chainalysis KYT comes as governments and regulators around the world are increasing their oversight of crypto exchanges. In June, the Financial Action Task Force (FATF) gave the exchanges of its 37 member countries 12 months to begin tracking complete customer details on every transaction handled.
Though Bittrex was already in compliance with similar U.S. regulations, Chief Compliance and Ethics Officer John Roth said Chainalysis KYT goes further. Its built-in knowledge base of suspicious addresses — “dark net sites, child exploitation sites” — puts Bittrex a step ahead, he said.
“Having real-time information coming in from which we can make risk decisions is really an amazing step forward, and frankly one that’s not available to traditional financial institutions,” Roth said.
“The key to supporting a large exchange like Bittrex is building features that enable them to automate their compliance process, prioritize their workflow, and customize their alerts to speed up how fast they can do due diligence,” Levin said.
Automation helps high-volume exchanges retain compliance “sustainability” -- the capacity to identify a handful of suspicious transactions among millions of otherwise banal crypto trades.
The software flags the most likely criminal transactions, but a Bittrex-employed compliance analyst still needs to determine if the threat is valid and then file a suspicious activity report with regulators.
Bittrex ethics chief Roth said the new software is a response to the crypto space’s development and maturation as financial institutions explore exchange-based trades.
“They need to be assured that we are doing things the right way.”
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