Blockchain Analyzer, CipherTrace Rolls Out Predictive Risk Scores To Flag Risky Transactions


CipherTrace, a blockchain tracing firm, is launching a new software with real-time analytics and predictive risk-scoring, which can help exchanges freeze crypto transactions whose source of origin is dubious or associated with someone with a recorded criminal history. The software would analyze the transaction before its confirmation on the blockchain.

The software, if it works as advertised, could prove to be a big boon for exchanges who fall prey to scammers often using their platform to launder scammed cryptocurrencies. The software would help different business entities from avoiding any such transactions.

Cybercriminals often launder cryptocurrencies by using mixing tools or gambling websites to help obscure stolen funds. However, the blockchain tracing firms like CipheTrace have also made significant progress and can trace the source of the criminal funds despite them using these tactics.

The newly developed predictive risk scoring tool is one such example of the progress made by the blockchain tracing firms. The tool is expected to reach the clients by July end.

The Timing Could Not Have Been Better

The launch of the crypto transaction freezing tool comes just days after a massive collaborative attack on Twitter, which resulted in the hacking of more than 100 prominent Twitter accounts, including that of Jeff Bezos, Elon Musk, Kanye West and many more crypto-related accounts as well. The scammers tweeted a bitcoin address asking followers to send Bitcoin to these addresses to get it doubled in return.

While the scam looked evident from a distance but given they were tweets from famous people with millions of followers, scammers managed to siphon $120,000 in Bitcoin before Twitter and exchanges like Coinbase sprung into action and started freezing transactions. In contrast, Twitter disabled tweets from all blue tick account for a few hours.

John Jefferies—a chief financial analyst at CipherTrace, explained how the newly developed tool would enable exchanges and business entities to steer away from any suspicious transaction entering into their system. He explained that transactions would be scored using a money monitoring system. He said:

“Exchanges, [crypto] ATMs, [over-the-counter] desks, hedge funds, and other [virtual asset service providers] use our software to score transactions as they flow into their platforms. By ingesting data from the blockchain, our AI scores transactions from low to high money laundering risk based on whether the funds have been tainted.”

“When transactions enter the mempool, CipherTrace can see these risky transactions and know where they came from before they are written to the blockchain. This allows our customers to ‘see into the future’ and stop the funds while they’re on route to a [virtual asset service provider].”

If the CipherTrace tool detects a transaction involving any address involved with suspicious activity, then the tool would deem it risky and place it under one of the categories, namely criminals, dark market, gambling, malware, ransomware, or mixer.

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