10 Best Fraud and Risk Monitoring Tools for Crypto

In this article, we’ll go through some of the best fraud and risk monitoring tools.

Published in

Coinmonks

8 min readJul 3, 2024

Cryptocurrency fraud has become a significant issue due to the decentralized and anonymous nature of digital currencies. Common types of crypto fraud include phishing scams, where fraudsters trick individuals into revealing private keys or personal data through deceptive emails or websites. Exchange hacks are another prevalent form, with cybercriminals targeting cryptocurrency exchanges to steal large amounts of digital currency by exploiting security vulnerabilities.

For instance, according to a report by Chainalysis, cryptocurrency thefts, hacks, and frauds totaled $1.7 billion in 2023.

Pump-and-dump schemes involve manipulators artificially inflating the price of a cryptocurrency through misleading information, only to sell off their holdings at a profit, leaving other investors with significant losses. Additionally, ransomware attacks see cybercriminals encrypting a victim’s data and demanding cryptocurrency as ransom for the decryption key. Understanding these types of fraud and the associated challenges is crucial for developing effective prevention and mitigation strategies

As digital currencies become more mainstream, the importance of implementing strong fraud and risk monitoring tools for crypto businesses and investors is very essential. These fraud and risk monitoring tools are crucial for safeguarding assets to ensure compliance with regulations and maintaining the trust of stakeholders. In this article, we’ll go through some of the best fraud and risk monitoring tools.

Features To Look for in Crypto Fraud Detection and Risk Monitoring Software

Here are the features to look for in Crypto risk management software:

Transaction Monitoring

Effective transaction monitoring involves real-time analysis to detect unusual patterns and flag fraud, advanced algorithms for anomaly detection, and user behavior analytics. It must be scalable to handle business growth and integrate seamlessly with existing systems for comprehensive monitoring.

KYC/AML Compliance

KYC/AML (Know Your Customer/Anti-Money Laundering) compliance ensures user identity verification, continuous monitoring for illicit activities, and adherence to regulatory updates. It includes risk scoring to prioritize monitoring and detailed reporting for regulatory compliance and internal audits.

Blockchain Analytics

Blockchain analytics trace fund flows, identify suspicious transactions, and provide address clustering for easier analysis. They offer visualizations, pattern recognition, and historical analysis to uncover trends and potential risks.

Counterparty Identification

Counterparty identification tools verify transaction participants, assess their risk based on history, and integrate with blacklists to flag high-risk entities. They support enhanced due diligence and relationship mapping to identify fraud networks.

Alerting and Case Management

Alerting and case management systems provide real-time alerts, customizable rules, and automatic case creation. They offer collaboration tools and maintain detailed audit trails for transparency and regulatory compliance.

Reporting

Reporting capabilities generate detailed transaction and compliance reports, offer customizable dashboards, and automate regulatory reporting. They track performance metrics and support data export for further analysis and integration.

Top 8 Fraud and Risk Monitoring Tools for Crypto

Here are some of the leading tools available for fraud detection and risk monitoring in the cryptocurrency space, along with their key features:

1. Bitquery

Bitquery indexes data from 40+ blockchains and provides GraphQL APIs and additional interfaces, including WebSocket. Bitquery provides detailed insights into blockchain data for in-depth analysis. This helps businesses understand transaction flows, identify anomalies, and make informed decisions based on comprehensive blockchain data.

Extensive Blockchain Data Analytics: Bitquery provides detailed insights into blockchain data for in-depth analysis, helping businesses understand transaction flows and identify anomalies.
Real-Time Monitoring: Bitquery offers real-time crypto transaction monitoring to detect and prevent fraud immediately, ensuring quick intervention.
API Integration: The platform integrates seamlessly with existing systems through robust APIs, enhancing data accessibility and efficiency.
Compliance Solutions: Bitquery supports KYC and AML compliance with strong verification processes, ensuring regulatory adherence and building stakeholder trust.
Custom Reports: Bitquery generates customizable reports, including transaction histories and risk assessments, to support strategic decision-making and regulatory compliance.
Counterparty Information: Bitquery provides extensive labels on whales and flagged accounts, offering good counterparty information. This feature helps users identify and monitor large holders of cryptocurrency (whales), accounts associated with fraudulent activities, and other flagged entities, enhancing the ability to detect and prevent crypto fraud.

Bitquery’s process for recovering stolen cryptocurrency like USDT involves three key stages: Consultation, Investigation, and Resolution. During the consultation stage, Bitquery analyzes the client’s unique situation and identifies recovery options. In the investigation stage, advanced blockchain analysis tools are used to trace the stolen assets.

The resolution stage focuses on working with law enforcement and exchanges to recover the assets and provide legal support. This structured approach enhances the chances of successfully recovering lost funds and achieving legal closure.

2. Chainalysis

Chainalysis provides powerful tools for analyzing blockchain data and identifying suspicious activities. It offers advanced investigation tools to trace and recover stolen funds and ensures compliance with KYC and AML regulations.

Comprehensive Blockchain Analysis: Offers powerful tools for analyzing blockchain data and identifying suspicious activities.
Investigation Tools: Provides advanced investigation tools to trace and recover stolen funds.
Risk Management: Assesses and manages risks associated with cryptocurrency transactions.
KYC/AML Compliance: Ensures compliance with KYC and AML regulations through automated processes.
Training and Support: Offers training and support to help users effectively utilize the platform.

3. BitFury

Bitfury Group, founded in 2011, is a leading full-service blockchain technology company, offering a range of products from bitcoin mining hardware to blockchain analytics and high-performance computing solutions. Their mission is to enhance the security and sustainability of digital assets through innovative technology.

Exonum Enterprise: Bitfury’s premier blockchain-as-a-service (BaaS) solution, Exonum Enterprise, helps governments and companies integrate blockchain into their operations for secure and transparent data management.
Blockchain Integration: Exonum provides customizable, secure, and efficient blockchain integration, ideal for applications like government record-keeping and supply chain management.
Crystal: Bitfury’s Crystal is a web-based software tool designed to assist financial institutions and law enforcement in managing blockchain investigations by offering real-time analytics and monitoring capabilities.
AML Compliance: Crystal enhances fraud detection, anti-money laundering (AML) compliance, and forensic investigations through comprehensive blockchain analytics and risk assessment.

4. CipherBlade

CipherBlade focuses on blockchain forensics to trace and recover stolen digital assets. It also provides enhanced due diligence services and offers expert analysis and consulting for fraud detection and prevention.

Blockchain Forensics: Focuses on blockchain forensics to trace and recover stolen digital assets.
Asset Recovery: Specializes in recovering lost or stolen cryptocurrencies through advanced investigation techniques.
Due Diligence: Provides enhanced due diligence services to verify the legitimacy of counterparties.
Expert Analysis: Offers expert analysis and consulting services for fraud detection and prevention.
Training and Education: Provides training and educational resources to enhance fraud detection capabilities.

5. Coinfirm

Coinfirm is known for its comprehensive AML and risk management solutions for blockchain and cryptocurrency. It provides advanced blockchain analytics, assigns risk scores to transactions and users, and ensures ongoing regulatory compliance. Lukka acquired Coinfirm in mid-2023, integrating Coinfirm’s blockchain analytics and compliance solutions into its own suite of products.

AML and Risk Management: Known for its comprehensive AML and risk management solutions for blockchain and cryptocurrency.
Blockchain Analytics: Provides advanced blockchain analytics to detect and investigate suspicious activities.
Regulatory Compliance: Ensures ongoing compliance with regulatory requirements through automated processes.
Risk Scoring: Assigns risk scores to transactions and users to prioritize monitoring efforts.
Customizable Solutions: Offers customizable solutions to meet the specific needs of different businesses.

6. BlockSeer

BlockSeer offers blockchain analytics and visualization tools to monitor transactions in real-time and detect unusual patterns. It also provides detailed reports to support investigations and compliance efforts.

Blockchain Analytics and Visualization: Provides tools for visualizing and analyzing blockchain data.
Transaction Monitoring: Monitors transactions in real time to detect unusual patterns and potential fraud.
Address Clustering: Groups-related addresses to simplify the analysis of blockchain activities.
Risk Assessment: Assesses the risk associated with transactions and counterparties.
Detailed Reports: Generates detailed reports to support investigations and compliance efforts.

7. TRM Labs

TRM Labs offers blockchain intelligence solutions to detect and investigate crypto-related fraud. It provides tools for transaction monitoring, risk management, and ensures compliance with KYC/AML regulations.

Blockchain Intelligence: Offers blockchain intelligence solutions to detect and investigate crypto-related fraud.
Transaction Monitoring: Monitors transactions for signs of fraud and suspicious activities.
Risk Management: Provides tools for assessing and managing risks in the cryptocurrency space.
Compliance Solutions: Ensures compliance with KYC/AML regulations through automated processes.
Collaborative Tools: Provides tools for collaboration and information sharing during investigations.

8. Elliptic

Elliptic provides comprehensive risk management and AML compliance solutions for crypto assets. It offers advanced blockchain analytics to identify and investigate fraudulent activities and provides automated regulatory reporting to simplify compliance efforts.

Risk Management and AML Compliance: Provides comprehensive risk management and AML compliance solutions for crypto assets.
Blockchain Analytics: Offers advanced blockchain analytics to identify and investigate fraudulent activities.
Transaction Monitoring: Monitors transactions in real-time to detect and prevent fraud.
Counterparty Identification: Identifies and verifies counterparties to reduce the risk of engaging with fraudulent entities.
Regulatory Reporting: Provides automated regulatory reporting to simplify compliance efforts.

Conclusion

By using advanced technologies like transaction monitoring, blockchain analytics, and KYC/AML compliance, crypto businesses and investors can mitigate the risks associated with digital currencies and operate with greater confidence. The tools highlighted in this article offer a range of features to address the unique challenges of the crypto space, making them invaluable assets for anyone involved in cryptocurrency transactions and investments.