22.10.2020

CipherTrace’s New Crypto Tracing Tool Is Meant for Banks

In contrast, Armada is a tool for the banks. It “plugs into” their existing transaction monitoring systems, said John Jefferies, chief financial analyst for CipherTrace. There, it monitors illicit activity via machine learning, clustering algorithms and CipherTrace’s database of high-risk entities.

Crypto investigations firm CipherTrace has developed a bank transaction monitoring tool, CipherTrace Armada, that flags payments to high-risk virtual asset service providers (VASPs). 

Announced Tuesday, Armada sifts through banking indicators such as routing and account numbers in search of transactions that may present institutional risk including payments to crypto ATMs, which have been tied to money laundering.

Armada differs from many investigations programs in its focus on payments across established financial infrastructure. Many other crypto analytics tools – including those from CipherTrace – trace payments between wallet addresses as they scout out potential troublespots, bypassing the banks. Such programs often appeal to exchanges and law enforcement investigators.

This “enables Armada to catch money services businesses (MSB) that may be obscuring their true nature through different names or hidden accounts,” said Vice President of Product Management Catherine Woneis.

CipherTrace offered the case of unlicensed bitcoin seller Kunal Kalra as an example of how Armada could be used. Kalra pled guilty last August to running an unlicensed crypto MSB for darknet drug dealers, using fake names, bank transfers to a Gemini account and an anonymous bitcoin ATM to exchange up to $25 million in cash and crypto total.

Kalra’s three-year campaign was ultimately busted by federal investigators. Armada would have flagged Kalra’s activity with the banks, CipherTrace said.

Jefferies said Armada will also help improve ties between legitimate VASPs and their bankers,

“Armada helps VASPs open and keep bank accounts, which is critically important because they typically have problems maintaining banker relationships that can lead to risky behaviour,” he said.

Circle Founder: Digital Currencies at Key Growth Moment as Governments Take Notice

Throughout the seven volatile years during which Circle founder Jeremy Allaire has been developing crypto products, he has consistently warned there’s much work to do before the technology is ready for mass usage.

Now, with governments starting to explore digital currencies, new stablecoin models emerging and big tech platforms like Facebook getting involved, he finally sees the potential for a tipping point that brings about mass adoption.

On the sidelines of the World Economic Forum in Davos, he spoke to Michael Casey about the convergence of forces leading to what he sees as a wholesale shift in how money and value moves around the world.

“Digital currency, stablecoins and the role of central banks in that is now a central theme for world economic leaders,” Allaire said. “The conversations are with people who run major currencies in major countries, with finance ministers that are looking over those economies, with supranational leaders that work on the monetary system.”

Those political conversations, Allaire said, are now aligning with technological improvements.

“We are at a moment in time now, [with] the dramatic continued improvements in the fundamental infrastructure for public blockchains and these models for things like stablecoins are meeting [while] major tech platforms and others are potentially creating mass distribution, that we can really now see a world in which, in the next couple of years, there could be hundreds of millions or billions of people using digital currency in their everyday life.”

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