DMG Blockchain Opens BitScore, an AML Risk API for Crypto Exchanges

Vancouver-based DMG Blockchain Solutions Inc. has announced the launch of its BitScore cryptocurrency risk assessment system.

Cryptocurrency exchanges and payment platforms can use BitScore to manage their risk of legal non-compliance. BitScore is available via a web API. It’s designed to help cryptocurrency exchanges manage Anti-Money Laundering (AML) and anti-fraud compliance.

DMG Blockchain Solutions offers a range of solutions for the blockchain and cryptocurrency industry. The Canadian company offers bitcoin mining and hosting, for example, blockchain technology platforms for supply chain and IoT, and a team of certified fraud examiners (CFEs) to conduct forensics and blockchain analytics, among other services.

Now, with BitScore, they aim to add another valuable product to their offerings.

The BitScore API was engineered by DMG’s Blockseer development team. The API functions as a cryptocurrency deposit and withdrawal risk-scoring web API for AML and anti-fraud compliance. Cryptocurrency exchanges and enterprise payment platforms can use the API to reduce their risk of being exposed to money laundering and other criminal activities.

How Does BitScore Work?

BitScore is powered by “sophisticated artificial intelligence (AI) and machine learning models,” explains an initial press release announcing the platform. Using AI, BitScore examines the flow of cryptocurrency through the blockchain in order to establish the provenance of funds in any crypto wallet.

Customers can submit a cryptocurrency source or destination address to the BitScore API. Then, the AI-powered algorithm will output a risk score evaluating the source of funds sent to that address.

For example, if a particular crypto address has sent funds to other high-risk parties – like known hacking addresses, dark markets, or money laundering services – then BitScore’s AI will notify the exchange or payment platform.

How does BitScore calculate this information? How can BitScore sort through the mess of information on various blockchains and addresses? BitScore relies on three core technologies to deliver powerful results for users:

Clustering: “Clustering” refers to the reduction of the topological complexity of the blockchain by algorithmically identifying addresses that belong to a single entity.

Address Labeling: Address labeling refers to the process of determining who owns a particular cluster. BitScore’s AI will scour the internet, the darknet, forums, data sharing websites, and third party data sources to attach an identity to a cluster of addresses.

Risk Scoring: BitScore will calculate risk by measuring the propagation of “tainted” currency through the cluster graph. The score assigned to a cluster is proportional to the amount of cryptocurrency flowing through it that either emanate from or are deposited to clusters associated with disreputable activity. This can refer to “first level” transactions that go directly to the cluster, or it can refer to transfers that occur through a series of transactions.

The system is delivered via an SaaS model. It’s designed for cryptocurrency exchanges, payment platforms, bitcoin wallets, and other similar tools.

Like similar risk analysis tools, BitScore will look at several generations of transactions – also known as “hops” in both directions. If your cryptocurrency funds were used to pay for drugs on the dark market three transactions ago, for example, then your transfer could be flagged through BitScore. However, BitScore is intelligent enough to attach a weighting function that captures the proportion of questionable cryptocurrency flowing through transactions.

Right now, BitScore only supports bitcoin. However, support for Ethereum and ERC20 tokens is expected to be added this summer, with Litecoin and Bitcoin Cash added in fall 2018.

Cryptocurrency exchanges and payment platforms can get exposed to significant risk by accepting cryptocurrencies – including the risk of supporting money laundering or fraud. Using BitScore, exchanges and payment platforms can minimize their risk using an advanced AI-based scoring system delivered via an SaaS model.

To learn more about the latest product from Vancouver’s DMG Blockchain Solutions, visit the official BitScore product page here:

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