Financial Crime Prevention is on the Radar for FTX US

Financial services companies are constantly dealing with attempts to use their platforms for nefarious purposes, such as fraud or money laundering, Brett Harrison, President of FTX US, said.

Brett Harrison

Crypto industry is no different and probably has a higher density of these kinds of attempted attacks, because it’s a younger industry, he said.

“A huge part of what we do as an exchange is to build software and integrate with third-party software solutions to help prevent against these kinds of things,” he told Traders Magazine.

“It’s our job to encourage our users to use a variety of authentication and security techniques to ensure that they don’t end up giving improper access of their account to a third-party,” he added.

It’s not really traders’ responsibility to know or understand who the counter-party is in their transactions, Harrison said, adding that it’s their job as the virtual asset service provider to make sure that the customer on the other end of the trade is a legitimate actor.

Last week, FTX US, a US-regulated cryptocurrency exchange, implemented a full suite of anti-financial crime compliance and risk management tools developed by TRM Labs (TRM), a blockchain intelligence provider.

FTX US has integrated TRM’s Transaction Monitoring and Forensics tools to monitor transactions on the platform for indicators of financial crime risk and investigate suspicious activity through integrated case management.

Harrison said the technology in the crypto industry is incredibly advanced. 

“There are very advanced technological solutions, particularly for crypto transaction monitoring,” he said.

Harrison said that TRM Labs is one such company that provides a risk and compliance software suite for helping monitor deposits and withdrawals on the blockchain. 

FTX US is using TRM labs in addition to a number of other pieces of software for doing transaction monitoring on the exchange.

“As far as our technology is concerned, we consider these kinds of financial crime prevention as one of the most important pieces of what we have to build. And we’re going to constantly go out and reevaluate who the best vendor is for such technology or if we have to build it ourselves,” he commented.

Investing in the right compliance and risk management solutions can accelerate growth.

Harrison said that FTX US is constantly evaluating potential third-party vendors for software. 

“It’s something that we are aware of in terms of what other companies are using, we go to conferences for compliance and try to find out what the latest vendors are, we try a number of the solutions ourselves,” he commented.

There are times when a vendor might produce software and it works on a small scale, but when you have an exchange operation with millions of transactions, it really needs to be able to scale up to that level, Harrison stressed.

“A lot comes from evaluating the product and the team on a very personal level,” he added.

The latest integration comes amid rapid growth and expansion at FTX US. The exchange recently announced the completion of its acquisition of regulated futures exchange LedgerX and subsequent rebrand to FTX US Derivatives, which followed the launch of a non-fungible token (NFT) marketplace in October.

FTX US is looking to expand that marketplace through a couple of different ways, according to Harrison.

Firstly, to add support for Etherium NFT and be one if not the first platform to offer multiple chain NFT’s including the Solana blockchain for NFTs. Secondly, FTX US has a lot of partnerships that support sports or high profile individuals that are interested in being able to release exclusive NFT collection, Harrison said.

We’re working with those partners to work out those details,” he added.