Binance Smart Chain Adds CipherTrace To Track Illegal Transactions

Binance's blockchain network, Binance Smart Chain (BSC), now uses CipherTrace's solutions to track illegitimate transactions.

The integration, which was announced on Thursday, will provide observers with tools to identify any suspicious activity on the network. The new feature allows crypto service providers such as exchanges, banks, custodian wallets, and other financial institutions to flag suspicious transactions on BSC and prevent illegal activities such as fraud.

CipherTrace stated that its objective is to identify the highest risk financial transactions that take place in BSC and its decentralized applications, which are already more than 600. CipherTrace already tracks the activity of more than a thousand digital assets.

This is important because CipherTrace, which has counted Binance as a client for some time, will likely appease crypto regulators with regard to the experimental DeFi space, an area the global anti-money laundering (AML) watchdog the Financial Action Task Force (FATF) recently warned is on its radar.

One of CipherTrace’s duties is assessing the degree of know-your-customer (KYC) activity that happens across the universe of virtual asset service providers (VASPs) and awarding scores, such as green for good, yellow for middling, and red for poor.

Binance Chief Compliance Officer Samuel Lim noted that compliance with global anti-money laundering regulations is paramount and CipherTrace will help them achieve this.

“The incorporation of Binance Smart Chain data by CipherTrace into its attribution system to support applications and exchanges is a measure to combat illicit activities," stated Lim. "In the long term, this will see BSC gain more credibility and partnerships in the fiat and regulated space. ”

Binance Smart Chain has been the epicentre of illicit activity and DeFi exploits in recent months. The list of protocols that have lost money to malicious actors is growing; the biggest of them is PancakeBunny, which lost up to $200 million in BNB and its native token in a massive flash loan attack on May 20.

Other DeFi protocols running on BSCs that have recently been hacked or exploited include Cream Finance, bEarn,Bogged Finance, Uranium Finance, Meerkat Finance, SafeMoon, and Spartan Protocol.