Major American cryptocurrency exchange Coinbase has been awarded a patent for a system that identifies and flags non-compliant accounts.
A filing with the United States Patent and Trademark Office on Nov. 19 details a system containing a scoring model that "Determines a compliance score for each one of the accounts based on the respective factors associated with the respective account." The system then compares the compliance score for each account to detect those accounts that fail compliance standards.
After a flagging unit identifies purportedly non-compliant accounts, the system assesses whether they are good or bad, enters the determination into a feedback system and decides whether or not to close the account.
"An investigator may be able to determine whether an account is being used for illicit activities by doing research on the parties of the transaction who receive or send payment and determining whether such parties are regularly involved in illicit activities. It may for example be relatively easy to determine that a party sending or receiving payment is in the business of conducting online services that may be illegal."
According to CipherTrace's report for the third quarter of 2019, the total volume of cryptocurrency-related fraud and theft resulted in losses worth $4.4 billion in 2019.
CipherTrace delved into the 120 most popular cryptocurrency exchanges' Know Your Customer and Anti-Money Laundering compliance requirements and analyzed patterns in crypto-related crimes.
Earlier in November, a lawyer and general counsel at decentralized finance startup Compound Finance, Jake Chervinsky, raised the question of whether exposing the public to data risks that KYC requirements entail is worth it.
He explained that KYC helps law enforcement to track illegal transactions, but also exposes the public to hacking, phishing and identity theft.
Coinbase Secures Patent for System to Identify Non-Compliant Accounts
Published on Nov 28, 2019
by Cointele | Published on Coinage
Coinage
Recent News
View All
Blockchain Bites: Bitcoin's Run, Uniswap's Hemorrhaging Value, Anchorage's Banking Bid
Bitcoin is nearing all-time highs in price and market cap last set three years ago.
Japan's megabanks to lead experiment with digital yen
We have, in order, Cheese Bank with a $3.3 million theft, Akropolis with its $2 million loss, Value DeFi with a whopping $6 million exploit and finally Origin Protocol's loss of $7 million.
Number of new Bitcoin addresses spikes amid growing FOMO
Japan's three largest banks, as part of a group of 30 private sector actors, are set to collaborate on an experiment with a digital yen.
Not just Wall Street: Quant trader explains why Bitcoin price is going up
Sam Trabucco, a quantitative trader at Alameda Research, believes four general factors are pushing up the price of Bitcoin.