“Chainalysis address screening is an important component of our multifaceted operations and significantly improves our ability to monitor and mitigate cryptocurrency trading risks in real time.” – WEI FEN ONG MATRIXPORT Compliance Manager.

Matrixport is a one-stop crypto asset financial services platform headquartered in Singapore. It is the world's largest and most trusted digital asset ecosystem. Its mission is to meet investors' emerging investment needs and lower the entry barrier for investing in crypto assets. Matrixport's customer base is very 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 companies.

The company also helps more innovators develop, grow and scale through strategic partnerships with web3 startups. Matrixport's services include Cactus Custody™, spot OTC, prime brokerage services, asset management, and tokenization of real-world assets. Its digital prime brokerage business Matrixport Institutional serves more than 800 institutions in the United States, Europe, Asia and other regions, building a widely trusted bridge between traditional finance and crypto asset markets.

Challenge: Closely monitor suspicious on-chain activities

As a crypto asset company covering several business lines, Matrixport is busy with a compliance team of nearly 25 professionals and firmly believes that a strong regulatory framework is a key factor for success. Matrixport has created a crypto asset compliance solution, but is also aware of some problems, such as frequent false positives in the product and the lack of Chinese language support for solution providers to communicate with Matrixport's development team. The compliance team needs better on-chain customer behavior monitoring tools and more comprehensive blockchain and token coverage. The ability to quickly obtain accurate data is also a top priority.

Wei Fen Ong, Compliance Manager at Matrixport, leads the Monitoring & Investigation (M&I) team, which consists of analysts dedicated to identifying potentially suspicious transactions in on-chain activities and conducting market supervision on customer transactions. She said, "In addition to managing our own risks, we are also committed to helping our customers. We need to closely monitor suspicious behavior and better understand our risk profile so that we can alert our customers in a timely manner."

Matrixport was looking for a reliable partner with a proven track record to build a new compliance solution that would be easy to use and integrate seamlessly 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 capabilities, including the granularity of transaction details alerted and the accuracy of the data provided.

Ong was impressed by the scope of Chainalysis’ attribution analysis, which combines off-chain research with on-chain data. During the evaluation, Chainalysis was able to flag a sanctioned address that other services did not. Ong learned that Chainalysis’ forensic experts found the sanctioned address through a YouTube video.

During the evaluation process, Matrixport learned that Chainalysis not only had a smooth product interface, but also performed well in various tests. Access, training, deployment and after-sales support were all key decision-making factors in this purchase, and Chainalysis stood out for its excellent product training and the continued high-quality service provided by its customer success managers.

After deciding to choose Chainalysis, Matrixport's M&I team began using the compliance solution on a daily basis to strengthen its end-to-end compliance architecture. The team's analysts also passed the Chainalysis product training certification to maximize their skills. Using Chainalysis in KYT monitoring has greatly improved 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 behavior. If there is a sanction risk or a fund flow is related to a sanctioned address, the compliance team will block the transaction and conduct a review.

“Chainalysis gives us more information and now we can actually take action,” said Christopher Liu, chief compliance officer at Matrixport.

Cactus Custody™, a qualified institutional-grade custodian under Matrixport, provides digital asset protection services to more than 300 institutional clients on more than 30 blockchains. The ability to quickly identify and deal with high-risk activities brings important value to Cactus Custody.

“It all comes down to balancing your own risk management with your clients’ expectations,” Ong said.

Smooth integration and access experience

Matrixport’s internal development team found the Chainalysis integration process to be very smooth and well-supported. The team received detailed information and guidance, which significantly reduced the workload of developers and made the onboarding process easier. Liu appreciated that Chainalysis provided Chinese language support, which enabled Matrixport engineers to receive effective guidance throughout the integration process.

Chainalysis data can be seamlessly integrated with the company's existing systems, improving efficiency and the effectiveness of the compliance process. As an important part of the Matrixport technology stack, the platform provides the ability to monitor transactions and address-related risks in real time. In addition, it enables compliance teams to make more informed decisions.

“Chainalysis provides strong support for us in addressing the evolving compliance landscape for crypto assets and ensuring the safety of our operations.”

– WEI FEN ONG

MATRIXPORT Compliance Manager

The result: data accuracy, continuous monitoring, and response support drive regulatory compliance

Since its deployment, the Chainalysis system has helped Matrixport identify different levels of potential illegal behavior through granular categories and classifications based on the regulatory characteristics of different regions. For example, behaviors that are defined as "gambling" in some regions are not necessarily illegal in other regions, and this ability to identify strengthens the team's compliance measures. Such localized measures ensure that Matrixport's risk management can adapt to the regulatory environment in different operating regions.

Chainalysis also helped Matrixport reduce its response time from initial alerts to follow-up investigations and reporting, enabling the team to make faster and more informed decisions. The breadth and depth of Chainalysis data also enabled Matrixport to generate higher quality suspicious activity reports (SARs), and Chainalysis charts were often used by the team in SAR reports.

Ong said, "Chainalysis address screening is an important component of our multi-faceted operations and has significantly improved our ability to monitor and reduce the risk of cryptocurrency transactions in real time. Our customers have more confidence when using our platform because They know that we are actively strengthening our institutional risk management protocols to protect their transactions and assets, and providing more protection for our customers is consistent with our original intention of providing a safe and trustworthy environment for all customers.”

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

Liu also shared how Chainalysis has reduced the workload for the team. He said, "Chainalysis meets our core needs, and its output is measurable, including dashboards, replay reports, etc., which allow us to quantify the ease of investigation and use. Now Wei Fen's team no longer has to log into two systems. When an alert appears, they can immediately move from one part of the product to another, start drawing charts immediately, and report to me on urgent matters. Or when I receive a law enforcement request, I can quickly search and start planning follow-up matters."

Many people see compliance as an obstacle to business development, but Matrixport’s compliance team brings business. Liu said, “We believe that building a strong compliance culture can bring business opportunities because compliance brings us licenses, customer trust, and people are willing to work with us because we are doing the right thing. This is a huge selling point for us.”

The importance of customization, high touch and collaboration

The partnership between Matrixport and Chainalysis stems from a commitment to innovation and responsiveness to customer feedback, and the role of the Customer Success Manager is indispensable. The Matrixport IT team is able to communicate with Chainalysis in Chinese, and the support they receive is also very valuable. The company actively participates in feedback sessions and makes suggestions on product features, and their suggestions are also taken seriously. Among them, Chainalysis fully supports the launch of BNB Smart Chain, which is loved by Matrixport users, which is a good example.

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

Investing in successful, long-term partnerships

Looking ahead, Matrixport and Chainalysis’ partnership will continue to deepen as the digital asset ecosystem continues to expand and compliance requirements continue to evolve. “Chainalysis provides strong support for us to meet this challenge and safeguard our operations as compliance trends continue to evolve,” said Ong.

Liu believes Chainalysis will help Matrixport grow in the right way and give investors and customers peace of mind. Liu said that every time he mentioned to investors that the company was using Chainalysis, they knew it was a top-notch solution. One institutional client asked for confirmation that Matrixport was using Chainalysis before signing. Providing a service confirmation letter highlights the company's commitment to compliance and boosts customer confidence. Such a request from the client also highlights the importance it places on the transparency and credibility of the compliance solutions used by the company.

“By partnering with Chainalysis, we are able to leverage best-in-class security and compliance tools to enhance our services, help clients adapt to changing compliance reporting standards, and achieve sustainable growth,” said Liu.