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Chainalysis and Paxful Set Compliance Standard for Peer-to-Peer Exchanges

New blockchain analytics capabilities to boost Paxful's reputation.

Key Takeaways

  • Paxful to adopt Chainalysis tools and boost compliance standards.
  • The two companies have set a new benchmark for peer-to-peer exchanges.
  • New monitors will help fight criminal activity such as fraud, extortion, and money laundering on the blockchain.

Blockchain analysis company Chainalysis has announced a partnership with Paxful to boost the Bitcoin marketplace’s KYC compliance efforts.

Chainalysis’ Dim View of P2P Exchanges 

For Chainalysis, peer-to-peer (P2P) cryptocurrency exchanges have always been labeled as risky, because many are decentralized and often do not 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.

In this way, Chainalysis now investigates P2P exchanges in the same manner as it does centralized 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.”

Paxful Sets Compliance Benchmark

Paxful, the global, P2P Bitcoin marketplace, uses Chainalysis KYT (Know Your Transaction) to monitor 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 set a new compliance benchmark for P2P cryptocurrency exchanges globally.

According to Chainalysis’ Chief Revenue Officer, Jason Bonds:

“Paxful transformed the way that we think about P2P exchanges. Their compliance standards, complete with real-time transaction monitoring, set a new bar for P2P exchanges globally.”

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, its 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 authorities on criminal activity such as fraud, extortion, and money laundering on the blockchain.

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