Identity Solutions Help the New Kids on the Block Transform Cryptocurrency

Posted June 7, 2018

Identity Solutions Help the New Kids on the Block Transform Cryptocurrency

Cryptocurrencies are getting increasing amounts of public attention, but the question remains on how far into the mainstream they will go. One of the biggest question marks on their future is down to their reputation for being unregulated and a safe haven for criminals. However, as reported by Forbes this week, there is a new type of cryptocurrency exchange hitting the market looking to transform that.

Moving away from the anonymity of early cryptocurrency exchanges, Australian-based Blockbid, are launching a platform that offers security and trust. In order to do so, they are embracing identity services from the newly combined LexisNexis Risk Solutions and ThreatMetrix organisation.

This move aligns with the Blockbid vision to ensure its users “Trade with Confidence’ by offering the most secure trading experience available in order to operate successfully on the global stage. They are looking to differentiate themselves on the security of their platform and by voluntarily complying with stringent global anti-money laundering requirements.

As previously revealed in the ThreatMetrix Q4 2017 Cybercrime Report, cryptocurrency marketplaces are being hit with a spectrum of fraudulent activity. Bogus new accounts are created using stolen or synthesized identities to set up mule accounts to launder money. Additionally, legitimate accounts are being hacked to make fraudulent payments and transfer cryptocurrency balances out when at their highest value.

Cryptocurrency marketplaces such as Blockbid have recognized the need for a more accurate way to verify the identity of new customers who open accounts, in order to prevent the infiltration of criminals. Using intelligence from the ThreatMetrix Digital Identity Network, these marketplaces can better differentiate between good customers and fraudsters the moment they arrive, and consequently see an immediate reduction in fraudulent activity on their platforms.

The question of how and when cryptocurrency exchanges will face regulation as an industry is still under debate, yet it seems inevitable that it will occur at some point. And historically the unregulated nature of their business has proved to be a barrier for cryptocurrency exchanges looking to obtain bank accounts from traditional banks as they need corporate account holders to prove that funds were not illegally obtained.

Blockbid are implementing bank-grade know your customer (KYC) solutions to ensure that their platform is used by legitimate customers only. Implementing similar controls to those used by the biggest banks in the world adds credibility to cryptocurrency exchanges and instils consumer confidence. Ultimately these safeguards will be able to provide a solid foundation on which cryptocurrency marketplaces can grow profitably.

David Sapper, Blockbid Chief Operating Officer commented on the alliance with LexisNexis Risk Solutions and ThreatMetrix, saying that “the technology, KYC processing, and fraud prevention that they provide will enhance the user experience, empowering our customers to trade with confidence and not worry about fraudulent behaviour. We look forward to opening our doors worldwide to all traders and investors who want to use a platform that is legitimate and provides asset insurance, as well. This step signals the intention of our company to set the pace and raise the bar for what it means to be a secure cryptocurrency exchange.”

Safeguarding platforms from fraud attacks and ensuring they are being used by legitimate users rather than anonymous transactions from criminals requires a holistic approach that adopts identity verification, digital identity intelligence and KYC solutions. This helps organisations unmask fraudsters and other bad actors, like money launderers, human traffickers and terrorist financiers, who threaten cryptocurrency platforms.

A proactive approach to security and compliance by cryptocurrency marketplaces could be a major step in cryptocurrencies truly hitting the mainstream.

For further information on Blockbid’s work with ThreatMetrix and LexisNexis Risk Solutions read the press release here.

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