Bittrex Selects Chainalysis Software to Detect Suspicious Transactions

Bittrex Implementing KYT
Bittrex Implementing KYT

Bittrex a cryptocurrency exchange that has been in operation since 2014 and a Top-100 exchange by trade volume, has introduced a real-time monitoring solution to help it detect suspicious activity on its cryptocurrency trading platform, developed by the blockchain analysis company Chainalysis.

The new software is known as Chainalysis KYT (Know Your Transaction) and it covers Bitcoin, Bitcoin Cash, ETH and Litecoin among digital coins that are listed on Bittrex.
“As our business continues to grow, having a thorough and reliable transaction monitoring system in place is crucial in demonstrating our commitment to compliance. […] Chainalysis KYT is an important tool in having an effective anti-money laundering program by helping us prevent, detect, and address unlawful behaviour,” said the Chief Executive Officer of Bittrex, Bill Shihara.

Bittrex adopted the software following the increasingly intensive supervision of governments and regulators worldwide regarding crypto exchanges. A couple of months ago, the Financial Action Task Force (FATF) forced the exchanges of its 37 member countries to start tracking complete consumer data on every activity for 12 months.

FATF required that cryptocurrency exchanges will make sure that traded cryptocurrencies aren’t a part of money laundering efforts or similar crimes and will have to obey the anti-money laundering and combat the financing of terrorism (CFT) protocols in the same manner traditional organizations do.

Although the US-based exchange operates in accordance with existing US regulations, Chief Compliance and Ethics Officer John Roth stated the new software goes a step further. The software incorporates a database of shady addresses such as “darknet sites, child exploitation sites”. He added that the Chainalysis solution is a whole other level of monitoring. Roth stated that Bittrex will now be ahead of the curve, thanks to the database.
“Having real-time information coming in from which we can make risk decisions is really an amazing step forward, and frankly one that’s not available to traditional financial institutions,” said Roth.

In August, Chainalysis rolled out alerts for suspicious activities for 15 major digital currencies, according to the report. Nowadays, Chainalysis KYT oversees 25 cryptocurrencies and plans to add more cryptocurrencies sometime soon.
The report says that Chainalysis KYT rolled out the software to help digital currency exchanges and other financial companies minimize the legislative and reputational risks. Roth also described the KYT solution as a response to the crypto world’s evolution and maturation as financial organizations examine exchange-based trades.

“As a New York Trust company, we are required to monitor transactions on and off our platform. […] Tools like KYT alerts, which provide real-time and ongoing blockchain analysis, coupled with Gemini’s own compliance policies, help us meet our regulatory obligations,” said  Michael Breu, chief compliance officer at the Winklevoss-run crypto exchange Gemini.

The KYT software includes real-time activity monitoring for large amounts of cryptocurrency operations to recognize the high-risk actions. Nonetheless, now the software sends alerts whenever a transaction involves a suspicious counterparty and goes past a value threshold.

As Chainalysis KYT software monitors illicit transactions, Bittrex analysts have to establish their status. In case a Bittrex specialist identifies a questionable transaction, one is supposed to inform the regulatory authorities.