Peer-to-peer exchange Paxful has deployed Chainalysis cryptocurrency investigation and transaction intelligence software tools, the companies announced Monday at a joint press release. The deal represents a sea change for Chainalysis, one of the industry's most prominent crypto surveillance developers and a regular partner to exchanges, governments, and private companies.
He had never signed with a peer-to-peer customer because these companies were considered too risky to do business with, said John Dempsey, vice president of product for Chainalysis. In a P2P model, the parties move cryptocurrencies directly between their wallets without any financial institution processing the trade. That represents a purer form of cryptocurrency trading: after all, Bitcoin was conceived as a decentralized P2P network.
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Paxful makes sure to walk the path of law
P2P exchanges often play fast and flexibly on the regulatory compliance front. Said Maddie Kennedy, director of marketing for Chainalysis. Some ignore the laws of knowing your clients by allowing users to work without an account or identification required by law.
That tarnished the category's reputation and made Chainalysis hesitant to partner with any P2P exchange.This is a reputational risk for us.“said Dempsey, the Chainalysis executive. Dempsey said Paxful came to Chainalysis looking for investigative tools. The company agreed to a partnership after seeing that Paxful had “transformed its business model to prioritize compliance,” according to Kennedy.
Paxful compliance officer Lana Schwartzman told CoinDesk in a statement that the exchange began pivoting to “principles of 2019» after realizing that its future depended on toeing the regulatory line. He joined the company in late 2018. Earlier that year, Paxful co-founder Ray Youssef had said that his exchange was «redo our entire KYC process [meet your client].
The biggest players in crypto are centralized exchanges. Binance, a Chainalysis partner, moved more than $ 800 million worth of bitcoin (BTC) in the last 24 hours, according to Bitwise . Paxful processed no more than $ 30 million in the last week .