Coinbase,major American cryptocurrency exchange has been merited a patent for a system that identifies and flags non-compliant accounts.
On November 19, a filing with the United State Patent and Trademark Office details a system containing a rating model that “determines a compliance score for every one amongst the accounts based on the various factors related to the various account”
The system then compares the compliance score for every account to observe those accounts that fail compliance standards.
Eliminating non-compliant accounts
The system assesses whether or not they are good or bad, after a flagging unit identifies purportedly non-compliant accounts,enters the determination into a feed back system ad decides whether or not to shut the account. The filing stated:
“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.”
The entire volume of cryptocurrency-related fraud and theft resulted in losses worth $4.4 billion in 2019,according to CipherTrace’s report for the third quarter of 2019. CipherTrace delved into the 120 most well liked cryptocurrency exchanges’ Anti-Money Laundering compliance requirements and Know Your Customer(KYC) and analyzed pattens in crypto-related crimes.
Recently in November, Jake Chervinksy, a general counsel and lawyer at decentralized finance startup Compound Finance, raised the question of whether exposing the public to data risks that Know Your Costumer requirements entail is worth it. Jake explained that KYC helps law enforcement to trace illegal transactions, however, conjointly exposes the general public to phishing, hacking and fraud(identity theft)