Banks Tracing Illicit Bitcoin Transaction Must Pitch Wider Net, Says CipherTrace
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Banks Tracing Illicit Bitcoin Transaction Must Pitch Wider Net, Says CipherTrace

September 10, 2020      Jyoti Singh

The blockchain forensics firm CipherTrace published a report notifying that most banks around the world usually, ignore the crypto-related transactions on smaller exchanges. This could result in up to 90 percent of transactions being missed by them. 

According to the researchers, “CipherTrace research has found that a typical name-based system may entirely miss up to 70% or more of the crypto exchanges out there, and up to 90% of the actual transaction volume.”

Banks Home-Grown System

The report published by CipherTrace titled ‘Best Practices for Monitoring Virtual Currency-Related Transactions at Your Bank.’

As per the report, most banks around the world use ‘home-grown’ system to trace the crypto-related transactions. Now the problem in those systems is that they only analyze the largest crypto exchanges and ignore hundreds of other smaller exchanges.  

CipherTrace in its report further mentioned that banks usually analyze the top 100 exchanges and leave over 600 exchanges because of which the open-source lists remain incomplete.

The blockchain forensic firm has specified that many of the crypto exchanges do not operate their business under their popular name.

Additionally, it has been reported that as the financial institutions do not look after the small exchanges, therefore, they mostly process the transaction through unregistered P2P exchanges or crypto kiosks.

System Uses Name-Based Recognition Approach, CipherTrace

CipherTrace has stated that the financial institution systems use the name-based recognition approach for tracking transactions. The approach used by the systems could provide false-positive results to the institutions.

Like if the system searches about Gemini, as result the bank would also get information about Gemini Middle School in Maine, Gemini the interior and exterior wood coating manufacturer and so on.

Researchers believe that such kind of systems used by the banks not only provide false-positive information but also consume a lot of time and effort. 

In April 2019, Binance appoints CipherTrace to expand its drive and develop greater trust among users.

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Jyoti Singh
Jyoti Singh

Jyoti is a graduate from GGSIPU and has done her PG Diploma in English Journalism from IIMC. Presently, she is working as a content writer with Agio Support Solution Pvt. Ltd. Her aim is to provide informative content about cryptocurrency and blockchain, to the tech-enthusiasts.