Blockchainis often criticised as a solution in search of a problem.
But one group of people has already found immense value in the tech: money launderers.
EnterElliptic, a British firm that specialises in cryptocurrency forensics.
The company uses blockchain analytics to protect customers from financial crimes.
Its latest safeguard taps the power ofAI.
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With further testing, the company believes the AI model could directly flag illicit transactions.
Tom Robinson, Elliptics co-founder and chief scientist, envisions two core use cases.
Unfortunately for them, blockchains are also ripe for AI analysis.
This probably makes cryptocurrencies more amenable to AI-based financial crime detection than traditional financial assets, Robinson said.
Elliptic has explored the possibilities for years.
The new research updated the techniques.
It then applied them to an enormous dataset, containing over 200 million transactions.
Elliptic worked with researchers from the MIT-IBM Watson AI Lab to develop the method.
They decided to apply a novel approach.
Some of these transactions involved money laundering.
By focusing on subgraphs rather than wallets, the model could analyse the broader multi-hop laundering process.
Theirmodel promptly identified 52 suspicious subgraphs that ended with deposits.The exchange then reviewed the findings.
The response was promising.
Although the remaining 38 accounts had no definitive connection to illicit activity, that doesnt mean theyre guiltless.
The exchange had flagged under 0.1% of its customer accountsas suspicious.
Yet these insights derived entirelyfrom off-chain information.
The model conducts a deeper analysis.
Adding this capacity to the confirmed predictions suggests the system is already performing well.
With further refinement, Elliptic hopes to commercialise the techniques.
The company also investigated the laundering patterns that the model spotted.
By identifying these behaviours, Elliptic plans to expand the scope of its tools.
The company has also made the underlying datapublicly available.
Were only scratching the surface of what is possible here, Robinson said.
One of the themes of this years TNW Conference is Ren-AI-ssance: The AI-Powered Rebirth.
Story byThomas Macaulay
Thomas is the managing editor of TNW.
He leads our coverage of European tech and oversees our talented team of writers.
Away from work, he e(show all)Thomas is the managing editor of TNW.
He leads our coverage of European tech and oversees our talented team of writers.
Away from work, he enjoys playing chess (badly) and the guitar (even worse).
