DMG Blockchain Solutions, cryptocurrency and blockchain platform company, launched its Bitscore Risk API. The API provides risk scoring for cryptocurrency deposits and withdrawals. The risk score helps promote anti-money laundering and anti-fraud compliance.
"Understanding the provenance of source and destination addresses is imperative for any exchange or payment platform sensitive to regulatory compliance," DMG CTO, Danny Yang, said to Bitcoin Magazine. "Allowing an address that accepts deposits from, or makes payments or deposits to disreputable networks is potentially abetting their activities, which creates legal liabilities for banks, exchanges and traders."
The Bitscore provides a measure to each cryptocurrency transaction. The Bitscore is calculated by reviewing transactions across several generations, in multiple directions, with a weight designation determined by the network handling the transaction. A particular network's weight is determined by the proportion of tainted cryptocurrency that flows through transactions on that network.
The Bitscore API itself includes three processes:
- Clustering: blockchain topological complexity reduced through algorithms that pair addresses with single entities
- Address Labeling: determines the owner of a specific cluster
- Risk Scoring: measures the prevalence of "tainted" currency through the cluster graph
In addition to the Bitscore API, DMG has a beta version of its Geolocation API. The Geolocation API provides developers access to source/destination country data and confidence levels for Bitcoin transactions. DMG anticipates going live with the Geolocation API late 2018.