Predictive AI-based Crypto Fraud Detector Launched!

SmartCredit.io

Published in

SmartCredit.io & ChainAware.ai

5 min readFeb 4, 2023

SmartCredit.io is excited to announce the launch of a free Predictive AI-based Crypto Fraud Detector!

SmartCredit.io has implemented many innovative technologies and business concepts:

Fixed-term, fixed-interest-rate for the Borrowers
Personal Fixed Income Funds for the Lenders
Positions Monitoring System for enabling effective collateral usage
Asset-Liability-Maturity Mapping
And other business concepts of self-custodial banking

We decided to offer one of additional technologies — the Artificial Intelligence based Crypto Fraud Detector as a free service to all crypto communities.

Our current backtesting results indicate 98% fraud addresses recognition.

The only info what we use is the blockchain address and the interaction patterns with the other addresses. Our AI analyses these traces real-time when you submit the fraud check queries.

We continuously work to improve the algorithm to achieve 99% predictive power (3 sigma).

This article looks in detail on:

How to use Predictive Crypto Fraud Detector?
How can we predict the future?
Forensic Analytics versus Predictive AI Analytics
Compliance requirements
Why is it free for the Crypto Community?

Free Predictive Crypto Fraud Detector

AI-based predictive Crypto Fraud Detector service is available via https://chainaware.ai.

This service is free to use for anyone on Ethereum, Binance Smart Chain, and Polygon.

You can use user interface for:

Calculating Crypto Fraud Score for any address
Calculating your own Crypto Fraud Score and sharing this to your partners

For example, you could calculate the Crypto Fraud Detector of any address before submitting transactions on the blockchain. If the Crypto Fraud Detector returns a negative result, you should not interact with the respective counterparty.

If the address is new, i.e., there are too few interaction patterns, then the Crypto Fraud Score cannot calculate the probabilities. In this case, you should ask for another address with more transaction history from your counterparty, especially if your counterparty claims to participate longer in the blockchain economy.

Additionally, you can calculate your Crypto Fraud Detector and share this with your partners. Your partners can click on the link and see your predictive Crypto Fraud Score. You can share only your own score; you cannot share the score of other addresses.

Free Predictive Fraud Check for Ethereum, BSC, and Polygon

Free to use API

We offer Crypto Fraud Detector service over an API too. Please access https://swagger.chainaware.ai/

If you do API-based verifications, then please don’t do more than 100 API calls per day — there are many calculations in the backend, and we have to pay for the required computing power.

If you want to use this API extensively —please get in touch with us, and let’s discuss how we can do this together.

How can we predict the future?

Crypto has many scammers trying to scam the non-suspecting public. And many hackers are looking for easy money. All of them will leave traces in the blockchain transaction history.

Every scam is different, and there are unlimited potential scams. But scammers use specific interaction patterns and leave their transactions history in the blockchain. The amount of these interaction patterns is limited, while the number of potential scams is unlimited.

Our artificial intelligence modules identifies fraud interaction patterns and forecasts the future behaviors of the addresses based on past interaction patterns.

Our current predictive power is 98%. How can we say that we have 98% forecasting power?

That’s how — there is a public database — https://cryptoscamdb.org/. It’s what we call a forensics database, where the scam and fraud addresses are stored. For example, https://etherscan.io and https://app.mycrypto.com wallet us this forensics database to identify the scams.

Our algorithm is does not use the addresses listed in https://cryptoscamdb.org/ for the algorithm training. However, our AI algorithm recognize 98% of the addresses in the CryptoScamDB database as fraud addresses.

Forensic Analytics versus Predictive AI Analytics

There are many tools available for forensic analytics to tell whether an address was involved in a scam. These often costly tools analyze the past and create databases of the so-called “bad addresses”.

But the issue here is that the scammers or hackers are not using the old addresses — they use the new ones, which are not yet recorded in the forensic databases. Hence it’s called forensic analytics — it can only state the facts after the event …

Therefore we need predictive analytics — it’s about analyzing the interaction patterns and predicting the possibility that these interaction patterns will result in the scam in the future.

Compliance requirements

Virtual Asset Service Provider regulations mandate the providers to:

do the AML
do the Transactions Monitoring

While many tools are available for the AML, only minimal and very costly tools are available for monitoring transactions.

So, most of the CeFi service providers focus mainly on the AML by saying — we verify all participants in the transactions, and hence the transaction monitoring requirements are fulfilled too.

However, transaction monitoring is more than AML checks. It requires identifying fraudulent transactions before executing the transactions.

That’s what we offer with the Crypto Fraud Score — if your counterparty wallets do not have a good score, you should better not transact with them.

Free Service to Crypto Community

Because:

Forensic analysis tools are more for the detective work
Forensic analysis tools are very costly tools
The compliance requirements for the transactions monitoring

We decided to offer predictive analytics for free.

But why did we decided this?

Because it’s about the blockchain economy — the economy is based on contracts between the parties and contract parties trusting each other. But how can one trust the economy if there are no free means to validate the trust of your counterparties?

That’s why we launched Crypto Fraud Detector.

For free.