SEC eyes crypto tracing software that tracks Binance Chain

The US Securities and Exchange Commission wants to give blockchain analytics firm CipherTrace a contract that would help it trace transactions on Binance Chain, the blockchain that hosts BNB and underlies Binance DEX, the decentralized exchange built by the market’s largest crypto exchange by volume, Binance. 

As first reported by Coindesk, the SEC wrote in its notice, published yesterday, that it has determined that CipherTrace’s products are “the only known blockchain forensics and risk intelligence tool that can support the Binance coin (BNB) and all tokens on the Binance network.” 

The SEC said in its notice that it intends to give CipherTrace the contract by tomorrow.

Why would the SEC give CipherTrace a contract? Though all of the transactions of Binance Chain are public, online blockchain explorers are far too cumbersome for regulators. 

CipherTrace, founded in 2015 and initially funded by DARPA and the US Department of Homeland Security, makes products that help blockchain forensic analysts trace transactions; for regulators, these tools are useful when checking whether crypto exchanges are compliant with local anti-money laundering regulations or tracking the flow of fraudulent transactions. 

And tracking Binance is important—it’s one of the largest crypto exchanges in the world and its coin, BNB, is the tenth-largest by market cap. 

CipherTrace, which supports hundreds of digital assets, partnered with Binance in November 2019. It provides Binance with anti-money laundering controls and blockchain tracing tools. 

Binance wrote at the time that the technology would “enable developers, investors and regulators to browse the Binance Chain blockchain, identify high-risk addresses and set controls to protect decentralized applications (DApps), exchanges or other cryptocurrency-based applications.”