Blockchain analytics firm Chainalysis has partnered with peer-to-peer (P2P) crypto exchange Paxful to help improve its compliance.
As part of the partnership, Paxful uses Chainalysis’s “Know Your Transaction (KYT)” and “Reactor” compliance tools to identify and investigate high-risk crypto transactions.
Notably, this is the first time Chainalysis is working with a P2P crypto exchange. “Paxful, which accounts for around 25% of all P2P cryptocurrency activity, is currently the only P2P exchange Chainalysis currently works with,” a Chainalysis spokesperson told The Block, adding: “We are open to talking to other P2P exchanges” on a case-by-case approach.
Previously, Chainalysis considered all P2P cryptocurrency exchanges as “inherently risky” because most of them are decentralized and don’t require users to set up an account.
Paxful told The Block that it has “invested heavily” in compliance and uses “many tools” to monitor crypto transactions. “Our goal is to keep the marketplace free from fraud and scammers,” it added.
Paxful joins several other crypto exchanges that currently use Chainalysis’s software to monitor suspicious transactions, including Bitfinex, Binance and Bittrex, among others.