Vancouver-based blockchain and cryptocurrency firm DMG Blockchain Solutions Inc. has announced the official launch of its BitScore web API. The platform is designed to provide cryptocurrency deposit and withdrawal risk-scoring for both anti-money laundering (AML) and anti-fraud compliance.
DMG Blockchain Solutions seeks to manage, operate and develop end-to-end solutions for monetizing the blockchain ecosystem, and BitScore is already being used by crypto exchanges and enterprise payment platforms so they can assess their risks of legal non-compliance. BitScore was engineered by DMG’s Blockseer development team and is powered by sophisticated artificial intelligence and machine learning models to examine the flow of cryptocurrency funds through the blockchain and establish their respective origins.
Speaking with Bitcoin Magazine, DMG CTO Danny Yang explained, “Understanding the provenance of source and destination addresses is imperative for any exchange or payment platform sensitive to regulatory compliance. Allowing an address that accepts deposits from, or makes payments or deposits to disreputable networks is potentially abetting their activities, which creates legal liabilities for banks, exchanges and traders.”
Here’s how it all works. Customers can submit any cryptocurrency source or destination address to BitScore. The platform’s algorithm returns a risk score to the user after evaluating the source of the funds. Customers are also informed if at any time in the past the monitored address has ever sent funds to high-risk parties. These typically include dark markets, hacking sites or money-laundering services.
BitScore also examines several generations of transactions in both directions (receiving and sending) and applies a weighting function that determines the amount of questionable cryptocurrency flowing through studied transactions. At press time, BitScore supports bitcoin only, though it plans to add ether and ERC20 tokens this coming summer. Litecoin and bitcoin cash will be added by the end of 2018.
BitScore is not the first effort of its kind. As regulatory compliance for cryptocurrency platforms becomes more crucial, several ventures involved in the blockchain arena are working to implement changes to their operations to certify rules are followed, customer safety is intact and monetary authorities remain satisfied.
One such company — cryptocurrency exchange platform Vaultbank — recently entered a partnership with Gordian Compliance Solutions to guarantee AML and Know-Your-Customer (KYC) compliance.
COO Aaron Travis stated, “If you’re on an exchange, or buying digital assets in which the originator or person selling them to you has not gone through great efforts to get to know you, and [has not] undergone KYC and AML checks, then I would be wary of it. If the platform you’re buying a digital currency from is not going through those hoops — those standard, basic efforts to protect the investor — you need to be wary of that.”
Other companies — like Coinfirm, a risk and compliance platform designed predominantly for cryptocurrency businesses — have also released APIs built for further customer security and AML protection.
Nick is a writer, author and journalist that has been covering the cryptocurrency scene since 2014.