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Elliptic Launches Anti-money Laundering Visualization Tool

Op-ed - Elliptic Launches Anti-money Laundering Visualization Tool

London-based bitcoin analytics and security firm Elliptic announced that it has launched “The Bitcoin Big Bang,” an interactive visualization that plots the emergence and interconnectivity of the key players in Bitcoin since its genesis in 2009.

Elliptic describes The Bitcoin Big Bang as a breakthrough in bitcoin transaction monitoring and compliance that will help “Bitcoin startups thoughout the UK gain banking services” according to Elliptic COO Dr. Tim Robinson. Elliptic has harnessed the underlying technology supporting the visualization to deliver a full suite of anti-money laundering (AML) services. The API will enable real-time compliance, by alerting recipients of bitcoin payments linked to known thefts, illicit marketplaces and other criminal activity.

The visualization identifies more than 250 of the largest entities and the historical transactions between them. Illicit marketplaces and money laundering services are identified by name, while standard entities are described purely by their primary business to protect privacy.

“If digital currency is to take its legitimate place in the enterprise it inevitably must step out of the shadows of the dark web,” said Elliptic CEO James Smith. “Our technology allows us to trace historic and real-time flow, and represents the tipping point for enterprise adoption of Bitcoin. We have developed this technology not to incriminate nor to pry; but to support businesses’ anti-money laundering obligations. Compliance officers can finally have peace of mind, knowing that they have performed real, defensible diligence to ascertain that their bitcoin holdings are not derived from the proceeds of crime.”

The Elliptic AML suite will be available in July to a select group of early customers.

Elliptic is the founding member of the U.K. Digital Currency Association (UKDCA), working with the U.K. government and financial regulators to help shape a regulatory framework for digital currencies.

The Swiss company Chainalysis offers a similar service that provides financial institutions with the means to obtain regulatory compliance through real-time analysis of the blockchain, including an API for sophisticated in-depth real-time blockchain transaction analysis. Chainalysis customers – including regulatory entities, law enforcement and financial service providers – can obtain insight on all transactions recorded in the Bitcoin blockchain and use tools to determine the origin of the bitcoin held by any address. Unlike Chainalysis however, Elliptic has strict privacy controls in places, only reporting a users risk profile to customers but not the specific parties transacted with.It is evident that 

Bitcoin is moving toward mainstreaming and regulations, and the services offered by Elliptic and Chainalysis are here to stay, but such services meet opposition from an important part of the Bitcoin community. In April, a leaked Chainalysis roadmap was received with anger and hostile comments, and it seems likely that the Elliptic announcement will cause similar reactions.

“Elliptic’s founding principle is to bring confidence and certainty to enterprises working with bitcoin,” said Smith. “We were the first bitcoin custodian to provide comprehensive insurance, the first to be Big Four-accredited and now the first to visualize the flows of bitcoin and explode the anonymity myth of the blockchain.”

Indeed, every transaction and the full transaction history of any bitcoin address are permanently recorded in the blockchain and open to analysis. The illusion of anonymity stems from the pseudonymous nature of Bitcoin addresses, which are not explicitly associated to their owners, but sophisticated blockchain analysis tools such as those provided by Chainalysis and Elliptic can often de-anonymize bitcoin users.