Matrixport collaborates with Chainalysis to enhance regulatory compliance through on-chain data monitoring

"Chainalysis address screening is an important part of our multifaceted operations, significantly enhancing our ability to monitor in real-time and reduce the risks associated with cryptocurrency transactions." -- WEI FEN ONG, Compliance Manager at MATRIXPORT.

Matrixport is a one-stop financial services platform for crypto assets headquartered in Singapore, and it is the largest and most trusted digital asset ecosystem globally. Its mission is to meet the emerging investment needs of investors and lower the barriers to entry for investing in crypto assets. Matrixport's clientele is highly diverse, including native crypto asset investors, high-net-worth individuals, family offices, individual investors, as well as institutional investors such as crypto asset funds, trading platforms, and traditional financial investment firms.

The company also helps more innovators achieve development, growth, and scalability through strategic partnerships with web3 startups. Matrixport's services include Cactus Custody™, spot OTC, bulk brokerage services, asset management, and tokenization of real-world assets. Its digital bulk brokerage business, Matrixport Institutional, serves over 800 institutions across the United States, Europe, and Asia, bridging a trusted gap between traditional finance and the crypto asset market.

Challenge: Rigorous Monitoring of Suspicious On-Chain Activities

As a crypto asset company covering multiple business lines, Matrixport is busy and has a compliance team of nearly 25 professionals who firmly believe that a strong regulatory framework is a key factor for success. Matrixport has developed a compliance solution for crypto assets but also recognizes some existing issues, such as frequent false positives in products and the lack of Chinese language support from solution providers, making communication with Matrixport's development team difficult. The compliance team needs better tools for monitoring on-chain customer behavior and more comprehensive blockchain and token coverage. The ability to quickly access accurate data is also a top priority.

Wei Fen Ong, Compliance Manager at Matrixport, leads the Monitoring and Investigation (M&I) team, which consists of analysts dedicated to identifying potentially suspicious transactions in on-chain activities and conducting market oversight on customer transactions. She stated, "In addition to managing our own risks well, we are also committed to helping our clients. We need to closely monitor suspicious behaviors and better understand our risk situation to timely alert our clients."

Matrixport is looking for reliable partners with a proven track record to develop new compliance solutions. This solution not only requires ease of use but also aims for seamless integration with the company's existing systems.

Solution: Comprehensive and Accurate On-Chain Monitoring

Matrixport evaluated four different solution providers. During the screening process, Matrixport tested each solution using wallet address coverage and transaction screening features, including the granularity of alert transaction details and the accuracy of the data provided.

Chainalysis combines off-chain research with on-chain data for attribution analysis, and its coverage left a deep impression on Ong. During the evaluation, Chainalysis was able to identify sanctioned addresses that other service providers did not mark. Ong learned that Chainalysis's forensic experts found the sanctioned address through a YouTube video.

During the evaluation, Matrixport discovered that Chainalysis not only has a smooth product interface but also performed outstandingly in various tests. Integration, training, deployment, and after-sales support were all key decisive factors in this procurement, and Chainalysis stood out with its excellent product training and ongoing high-quality service provided by customer success managers.

After deciding to choose Chainalysis, Matrixport's M&I team began using the compliance solution daily to strengthen its end-to-end compliance architecture. The team analysts also passed Chainalysis product training certification, maximizing their skills. Using Chainalysis in KYT monitoring significantly enhanced Matrixport's ability to identify high-risk activities in real-time. After integrating the Chainalysis API, the team can screen customer inflows for any high-risk behaviors, and if there is a sanction risk or funds flow related to a sanctioned address, the compliance team will block the transaction and conduct a review.

Matrixport's Chief Compliance Officer, Christopher Liu, stated, "Chainalysis provides us with more information, and now we can truly take action."

Matrixport's qualified institutional custodian, Cactus Custody™, provides digital asset protection services for over 300 institutional clients across more than 30 blockchains. The ability to quickly identify and address high-risk activities brings significant value to Cactus Custody.

Ong stated, "The key is to balance our own risk management with client expectations."

Smooth Integration and Access Experience

Matrixport's internal development team found the integration process with Chainalysis to be very smooth and received ample support. The team received detailed information and guidance, significantly reducing the workload for developers, making the integration process easier. Liu greatly appreciates that Chainalysis provides Chinese language support, allowing Matrixport engineers to receive effective guidance throughout the entire integration process.

Chainalysis data can seamlessly integrate with the company's existing systems, enhancing the efficiency and effectiveness of compliance processes. The platform, as an important part of Matrixport's tech stack, provides the capability for real-time monitoring of risks associated with transactions and addresses. Additionally, it empowers the compliance team to make more informed decisions.

"The compliance trends in crypto assets are constantly changing, and Chainalysis provides us with strong support to meet this challenge, ensuring the safety of our operations."

-- WEI FEN ONG

MATRIXPORT Compliance Manager

Results: Data Accuracy, Continuous Monitoring, and Responsive Support Promote Regulatory Compliance

Since deployment, the Chainalysis system has helped Matrixport identify varying degrees of potential illegal activities through granular categories and classifications tailored to different regional regulatory characteristics. For example, activities defined as "gambling" in some regions may not necessarily be illegal in others, and this identification capability has strengthened the team's compliance measures. Such localized measures ensure that Matrixport's risk management can adapt to the regulatory environments of different operational regions.

Moreover, Chainalysis has also helped Matrixport shorten the response time from initial alerts to subsequent investigations and report generation, enabling the team to make faster and more informed decisions. The breadth and depth of Chainalysis data also allow Matrixport to generate higher-quality Suspicious Activity Reports (SARs), and Chainalysis charts are frequently used by the team in SAR reports.

Ong stated, "Chainalysis address screening is an important part of our multifaceted operations, significantly enhancing our ability to monitor in real-time and reduce the risks associated with cryptocurrency transactions. Our clients are more confident when using our platform because they know we are actively strengthening institutional risk management protocols to safeguard their transactions and assets. Providing more assurance to clients aligns with our original intention of offering a safe and trustworthy environment for all clients."

Under previous compliance solutions, if alerts indicated a risk from a sanctioned wallet address, Ong's team could only determine whether the risk occurred before or after the sanctions by finding the date of the risk event, as the service provider could not provide transaction dates. Now, if a new address is sanctioned, the team does not have to worry about risk issues because Chainalysis's monitoring function will issue necessary and accurate alerts. This type of continuous monitoring is extremely useful for reducing the team's workload and ensuring more effective and proactive compliance measures.

Liu also shared how Chainalysis specifically alleviates the team's workload. He stated, "Chainalysis meets our core demands, and its outputs are measurable, including dashboards and review reports, which allow us to quantify the convenience of investigations and usage. Now Wei Fen's team no longer has to log into two systems. When alerts arise, they can immediately switch from one part of the product to another and start charting, reporting urgent matters to me. Or when I receive a law enforcement request, I can quickly search and start planning subsequent matters."

In many people's eyes, compliance functions are obstacles to business development, but Matrixport's compliance team can drive business. Liu stated, "We believe that establishing a strong compliance culture can create business opportunities because compliance can bring us licenses and customer trust, and people will be willing to cooperate with us because we are doing the right thing. This is a huge selling point for us."

Customization, Sensitivity, and the Importance of Collaboration

The collaboration between Matrixport and Chainalysis stems from a commitment to innovation and responsiveness to customer feedback, with the role of customer success managers being indispensable. The Matrixport IT team can communicate with Chainalysis in Chinese, and the support received has been very valuable. The company actively participates in feedback sessions, suggesting product features that have been taken seriously. One good example is Chainalysis's full support for the launch of the BNB Smart Chain, which Matrixport users love.

Matrixport has observed that Chainalysis products, such as active support for Ethereum and Optimism tokens, are continuously updated. The company believes that the automated support for new ERC-20 tokens reflects Chainalysis's commitment to being a pioneer, which will also help Matrixport lead the crypto asset industry forward.

Investing in Success and Long-Term Partnerships

Looking ahead, against the backdrop of the continuous expansion of the digital asset ecosystem and the evolving compliance demands, the partnership between Matrixport and Chainalysis will continue to deepen. Ong stated, "The compliance trends in crypto assets are constantly evolving, and Chainalysis provides us with strong support to meet this challenge, ensuring the safety of our operations."

Liu believes that Chainalysis will help Matrixport grow in the right way and provide peace of mind to investors and clients. Liu stated that every time he mentions the company's use of Chainalysis to investors, they know it is a top-tier solution. One institutional client requested confirmation that Matrixport was using Chainalysis services before signing the contract. Providing a service confirmation letter highlights the company's commitment to compliance and boosts client confidence. Such requests from clients also underscore their emphasis on the transparency and credibility of the compliance solutions adopted by the company.

Liu stated, "By collaborating with Chainalysis, we can leverage industry-leading security and compliance tools to enhance our services, helping clients adapt to the ever-changing compliance reporting standards and achieve sustainable growth."