Chainalysis, the blockchain analysis company, has partnered with Paxful, a global, peer-to-peer (P2P) Bitcoin marketplace, which is raising the bar for compliance standards for P2P exchanges. Paxful uses Chainalysis KYT (Know Your Transaction) to monitor its platform’s cryptocurrency transactions in real-time and Chainalysis Reactor to build investigations when it detects suspicious activity. Together, these tools amplify Paxful’s compliance expertise and sets a new compliance benchmark for P2P cryptocurrency exchanges globally.
Previously, Chainalysis considered all P2P cryptocurrency exchanges as inherently risky and labelled them as such in its products because most are decentralized and oftentimes don’t even require users to set up an account. Paxful, however, set a new precedent for P2P exchanges by focusing on top-notch compliance and Know Your Customer (KYC) standards, driving Chainalysis to evolve its policy and evaluate P2P exchanges on a case-by-case basis before labeling them as risky, just as it does for other cryptocurrency exchanges.
“Compliance is the key factor for establishing trust in cryptocurrency exchanges,” said John Dempsey, VP Product, Chainalysis. “By adopting a case-by-case approach to evaluating P2P venues, we are helping to broaden trust and transparency across the cryptocurrency ecosystem.”
“At Paxful, compliance and security are top-of-mind as we work to keep the marketplace free from fraud and scammers,” said Lana Schwartzman, Chief Compliance Officer at Paxful. “Partnering with Chainalysis was a great choice as we work to protect our users and instill in them the importance of regulation and compliance on P2P marketplaces like ours.”
Through its work with Chainalysis, Paxful is well-equipped to develop new controls for customer protection, including blocking outgoing transactions to high-risk addresses linked to terror financing, sanctioned addresses, child abuse websites, and stolen credit card platforms. As Paxful continues to complete additional risk assessments in the coming months, their compliance capabilities will continue to expand.
By leveraging Chainalysis KYT, cryptocurrency businesses like Paxful can monitor large volumes of cryptocurrency activity and identify high risk transactions on a continuous basis. Real-time alerts on the highest-risk activity, coupled with enhanced due diligence, allow compliance teams to focus on the most urgent activity, better allocate resources to enforce compliance policies, and fulfill their regulatory obligations to report suspicious activity.
Chainalysis Reactor assists cryptocurrency businesses including Paxful to further investigate suspicious transactions and provide more detailed reporting to regulators and law enforcement on criminal activity such as fraud, extortion, and money laundering on the blockchain.