CipherTrace Launches DeFi Compli, a Compliance Oracle Solution on Chainlink, to Enable DEXs and DeFi Protocols to Abide by OFAC Sanctions
DEXs and other DeFi applications can now use the CipherTrace DeFi Compli solution on Chainlink to abide by Office of Foreign Assets Control (OFAC) sanctions.
Leading cryptocurrency intelligence company CipherTrace is using Chainlink to release CipherTrace DeFi Compli: a compliance solution enabling DEXs and other DeFi applications to abide by Office of Foreign Assets Control (OFAC) sanctions requirements. As part of its DeFi solution, CipherTrace has launched a DeFi compliance oracle service on Chainlink to make relevant compliance data available directly on-chain for easy integration with existing DeFi frameworks.
Given half of all crypto hacks in 2020 were from DeFi protocols and exchanges, the regulatory spotlight is shining brighter on DeFi. Additionally, funds stolen from centralized exchanges are increasingly being laundered through DeFi, as was the case in the $281M KuCoin hack.
“The $40B locked in DeFi protocols puts an even bigger target on DeFi exchanges and protocols,” said CipherTrace CEO Dave Jevans. “Ensuring that sanctioned addresses cannot use DeFi to fund weapons of mass destruction programs should be among DEXs’ chief concerns right now. CipherTrace’s DeFi Compli regulatory compliance oracle on Chainlink can support DeFi protocols in achieving the compliance needed to ensure crypto’s long-term viability.”
Head of Partnerships at Chainlink Labs Daniel Kochis, shared “Despite the significant growth DeFi has witnessed in the past year, many DeFi protocols are currently limited in their ability to leverage compliance tools. By launching their own Chainlink node, CipherTrace brings a compliance oracle solution to DeFi, making integrating compliance data as simple as possible for DEX and other protocols.”
As Valerie Szczepanik, Head of the Strategic Hub for Innovation and Financial Technology at the U.S. Securities and Exchange Commission (SEC), warned at the September 18 Parallel Summit, “We’ve seen structures that purport to enable users to lend money, earn interest, borrow money, exchange, take positions; these are all financial activities, and they are likely subject to various laws already, including securities law, potentially banking and lending laws—definitely AML/CTF laws.”
“Szczepanik’s statements suggest imminent enforcement of sanctions as well as AML and CTF laws,” added CipherTrace’s Dave Jevans. “The time for DeFi to adopt compliance solutions is now, or risk facing the consequences.”
The CipherTrace Chainlink node will be able to both broadcast CipherTrace’s API data onto any blockchain network as well as digitally sign CipherTrace’s data on-chain to generate strong cryptographic assurances that it came from CipherTrace and has not been tampered.
CipherTrace’s highly-refined AML data will be ported directly to smart contracts. With this data on-chain through Chainlink, smart contract developers everywhere can build more advanced and data-driven products that are suitable for users, institutions, and governments alike. This is a major step towards bringing DeFi applications to the masses.
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CipherTrace, the leading cryptocurrency intelligence company, bridges virtual currencies and financial services together with fraud protection, anti-money laundering, and financial crime prevention. CipherTrace derives superior cryptocurrency intelligence from analyzing massive amounts of validated blockchain transaction attribution. CipherTrace founders are dedicated to protecting consumer privacy and growing the blockchain economy, while defending against illicit finance. Deep expertise in cybersecurity, eCrime, payments, banking, encryption, and virtual currencies form the foundation for CipherTrace’s commercial offerings. For more information, visit CipherTrace.com, subscribe to the CipherTrace Newsletters, and follow us on Twitter @CipherTrace.