P2P Exchange LocalBitcoins Adds Crypto Surveillance Tools From Elliptic

Elliptic's tracing software bolsters the peer-to-peer exchange's anti-money laundering safeguards.

Jul 28, 2020 at 7:00 a.m. UTC
Updated Sep 14, 2021 at 9:36 a.m. UTC

Longtime peer-to-peer exchange LocalBitcoins, a former hub for anonymous bitcoin swaps, has added two blockchain-tracing tools from analytics company Elliptic as it continues to chip away at criminal crypto cashouts.

  • LocalBitcoins announced Tuesday it’s using Elliptic’s Navigator risk analysis tool and Lens wallet screener to crack down on illicit crypto. Blockchain analysis firms have previously claimed that LocalBitcoins receives the bulk of Finland’s criminal coin.
  • The Helsinki-based platform has been bolstering its anti-money laundering (AML) safeguards in response to the European Union’s AMLD5 and tough new Finnish business regulations, both of which turned up the heat on regional crypto businesses.
  • In the run-up to Finland’s enforcement deadlines, LocalBitcoins ditched cash-for-crypto trading and added mandatory identity verification. It also banned Iranian users from trading bitcoin, likely in response to U.S. sanctions.
  • Elliptic Chief Scientist Tom Robinson told CoinDesk that such policy shifts have contributed to a 50% drop in darknet crypto inflows for the year.  
  • “The reduction in flows from dark markets to peer-to-peer exchanges is a clear consequence of these businesses introducing strong KYC and AML controls,” he said. “Criminals are now thinking twice before trying to cash-out through the major peer-to-peer exchanges.”
  • LocalBitcoins did not respond to requests for additional comment.

Ian Allison contributed reporting.

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