BlockTrace, a pioneer in secure blockchain intelligence (BlockINT) information sharing, is proud to announce the launch of Fusion™, a first-of-its-kind, collaborative API solution that powers full-spectrum blockchain visibility and coverage.
With fraud and cybercrime metastasizing during the pandemic, and legacy money-laundering supply chains disrupted by declining cash use due to sanitary concerns, threat actors are increasingly using cryptocurrency to obfuscate their illicit financial flows. A broader crypto-macroeconomic environment that has seen Bitcoin and Ethereum repeatedly test new record highs this year has further accelerated the adoption of decentralized value transfer.
From crypto investment scams, to dark-net market (DNM) commerce for hacking services and drugs, intensifying ransomware attacks, and complex, transnational smurfing networks, cybercrime and illicit finance have converged into a hybrid threat. While identified illicit crypto activity reportedly dropped to $10 billion last year, rapidly developing threat typologies in the non-custodial and unregulated decentralized finance (DeFi) sector topped $140 billion in market cap this year.
Research from cryptocurrency intelligence firm CipherTrace reveals that flash-loan attacks and other DeFi exploits represent over 60% of total hack and theft volume today. As decentralized exchange (DEX) volumes continue to rise, devoid of any know-your-customer (KYC) compliance, the full extent of malign DeFi crypto-activity is unknown.
Recent attacks against healthcare services in Ireland and critical infrastructure in the U.S., such as the Colonial Pipeline attack, highlight ransomware as another fast growing crypto-enabled threat against both the public and private sector. According to Elliptic, over $90 million in Bitcoin ransom payments have been made to DarkSide, the ransomware group responsible for the Pipeline attack, since it first surfaced in Russian hacking forums in August 2020.
Attribution data from CipherTrace provides the forensic insight needed to trace illicit payment chains related to these ransomware actors. CipherTrace also noted in a May report that sanctioned countries like Iran are exploiting crypto as a mechanism for nuclear-proliferation finance.
There is also the growing threat of nation-state actors exploiting crypto to meddle with U.S. elections, as evidenced by recent Office of Foreign Asset Control (OFAC) sanctions against 16 entities and 16 individuals sponsored by the Russian government. OFAC said these entities conspired to subvert the 2020 U.S. presidential election and blacklisted five cryptocurrency addresses linked to this group.
BlockTrace Fusion™ securely integrates BlockINT from multiple sources, enabling Fusion™ clients with a 360-degrees view of illicit wallet clusters.
Fusion’s vendor-agnostic API integration enables law enforcement agencies (LEAs), fintech platforms, virtual asset service providers (VASPs), and financial institutions (FIs) to build a comprehensive crypto-compliance ecosystem, rooted in the most high-dimensional BlockINT data exchange on the market. Fusion™ aggregates suspicious wallet and cluster data from some of the largest BlockINT vendors in the world, illuminating the blind sides.
This cloud-based architecture fuses redundancy into blockchain forensics, multiplying wallet and cluster coverage by orders of magnitude. Fusion’s API also promotes system resilience via its standard request/response protocol, which allows integrated applications to continue operating should another provider go offline.
Fused Cryptocurrency Intelligence
The Fusion API hub framework enables secure, compliant, and selectively anonymized data exchange between BlockINT providers and end clients.
Some cybercrimes such as ransomware and Child Sexual Abuse Material (CSAM) use one time deposit addresses and are not committed to the blockchain prior to the crime. Accordingly, no BlockINT provider ever collects all transaction attribution data generated by any other vendor. Instead, ledger data streams are transmitted to and custodied by Fusion’s API in the cloud. The API only provides end-clients with full-spectrum BlockINT of customer wallets and counterparty clusters.
Crypto 3.0 & Fusion Data Partners
The rise of DeFi and the greater adoption of digital assets by transnational criminal organizations (TCOs) have given rise to third-generation crypto laundering threats.
As cryptocurrency enables cybercriminals to threaten the integrity of elections, the safety of children, and the efficacy of sanctions against nuclear proliferators and terrorists, BlockINT gaps can easily lead to legal, reputational, and compliance risks for all platforms that transact in digital assets.
BlockTrace has partnered with two world leaders, CipherTrace and Elliptic, in offering BlockINT through Fusion™.
Greg Favitta, the director of U.S. Federal accounts at cryptocurrency intelligence provider CipherTrace, says, “Fusion is an excellent and powerful example of just one of the ways that smart companies and agencies can leverage the CipherTrace dataset to achieve impactful results. The CipherTrace Sentry API is one of the data solutions which sits at the core of Fusion and empowers its users with data sourced from as early as 2015 to present.”
Elliptic’s Co-founder and Chief Product and Technology Officer, James Smith, says: “Fusion offers both cloud-based and on-premise deployment combined with API key management capabilities. Government agencies and financial institutions are now able to use Fusion to benefit from Elliptic’s data, in order to build a comprehensive crypto-intelligence ecosystem.”
BlockTrace is also a staunch ally of high-impact nonprofit organizations like the Anti-Human Trafficking Intelligence Initiative (ATII). ATII works through their cryptocurrency consortium to tag crypto addresses known to have received funds linked to DNM CSAM transactions.
Aaron Kahler, Founder & CEO of ATII, had this to say: “Leveraging the Fusion API as a resource to power investigations, along with risk and compliance is a no-brainer for those organizations in the crypto-forensics space. The ability to deploy Fusion as a collective utility of attribution from the world’s leading blockchain intelligence firms is the type of collaborative approach needed to tackle the threats of illicit finance and cybercrime.”
Initial results of fusing attributional data across consortium participants have shown great potential, as client-side tools built around Fusion™ have the ability to overcome coverage gaps that are inherent to siloed provider databases.
Applicants and/or other data providers interested in joining the program are welcomed to inquire about the Fusion™ program via the e-mail address below. Joining the network enables partners to monetize their data streams via Fusion™ customers, which are currently limited to U.S. government agencies participating in the pilot program.
In the era of rapidly evolving crypto-crime 3.0 typologies, consisting of increasingly complex DeFi exploits and layered over entrenched professional money laundering (PML) networks, nimble collaboration is the best strategy to combat the next generation of cyber-enabled financial crime.
With Fusion™, U.S. government clients and authorized financial crime compliance professionals can enhance their investigative coverage and efficiency by harnessing the transformative power of full-spectrum BlockINT.
To learn more about BlockTrace Fusion contact info@BlockTrace.com.