AMLBot and PureFi are well-known organizations in the crypto sphere that specialize in crypto AML/KYC compliance and security. In this exclusive Coin Edition interview, Slava Demchuk, the co-founder of AMLBot and CEO of PureFi shares his insights about the latest happening in the field and what investors need to be on the lookout for.
Q: To begin with, can you tell us how you started AMLBot and PureFi?
We started back in 2018. The crypto sphere was quite popular then but had yet to reach today’s popularity. A friend of mine (currently a partner at AMLBot) was running an OTC business, meaning he exchanged crypto for fiat and vice versa. Once, he had a problem with dirty crypto, where one of his accounts got locked with a significant amount of US dollars on it.
It was then that we realized that it is a common and pressing issue and made it our goal to find a technical solution. First, we created AMLBot as a chatbot in Telegram, then expanded the web version to the API version and proposed it to some of our friends in the community. After testing the solution, we established the company and started serving clients and growing.
Two years ago, when DeFi became popular, we created PureFi, essentially the same product built for decentralized finance, Dapps, GameFi, etc.
Q: So do both these businesses focus on regulations?
Yes, our solutions primarily focus on compliance rather than cybersecurity. (To some extent, compliance is a part of cybersecurity.) Our services include an anti-money laundering solution, essential for businesses to prevent connections to illicit clusters and bad actors in the crypto space.
“Know your transaction” and “Know your customer” are two pillars of our services. Our KYC solution has become quite popular among centralized exchanges. This way, the regulator can control money flow between centralized exchanges and, perhaps, decentralized in the future.
Q: How does AMLBot differentiate itself from other security companies?
First, we provide a one-stop solution for AML checks, KYC, and crypto payment processing. Additionally, we offer help with the paperwork to those establishing a company or getting a license.
If a company’s money gets stolen, we can help investigate the case. That’s our second focus. We get our data from different sources; we’ve partnered with the major providers, so we probably have the most comprehensive database in the market and provide the most accurate risk score.
Q: Can you share your opinion on what is happening with the crypto industry right now regarding compliance and regulation?
We are witnessing massive turbulence in the entire industry, touching the whole regulatory framework. It was likely caused by a number of hacks that have happened recently and a lot of losses by the investors. My guess is, they went to the authorities and asked for their help.
The space is rather fragmented and not well-established: unlike what we have in traditional finance. Then, again, we see what has happened with the classical banks that worked with fiat currency: the traditional framework didn’t help them either. At the same time, regulators try to apply the same regulatory norms and factors to the crypto space. Maybe, it’s not the example the blockchain industry should follow.
Q: Let’s move on to the European markets. How do you feel about the recent regulation of MiCA, and how would it reflect on American and global markets?
Right now, the only thing we have is the EU’s 5th anti-money laundering Directive. Countries are implementing it differently: some have adopted very soft regulations, others, super strict ones. There isn’t a single long-read document on how to do it properly.
MiCA is changing it right now, creating an advantage for us, in a way, as the demand for our services increases: for PureFi in particular.
Q: From 2018 to now, what challenges have you faced in running AMLBot and how did you overcome them?
First, there was the general unawareness of the problem. In 2019, we would come to businesses and say, “You need to be compliant; we have perfect analytics for you.” They would ask: “What is compliance?”. To reach our customers back then, we had to explain the necessity of being compliant or following regulations first.
There were a few companies like Chainalysis, Crystal, and probably CipherTrace providing education for the market. Regulators did the same, much more efficiently, even if in a much rougher way.
Right now, we are encountering the same challenge in PureFi, as the DeFi space is around the same stage as centralized, traditional crypto was in 2019. Still, the industry is growing super quickly, and we have more and more requests each month.
Q: You’ve mentioned “dirty crypto.” Would you please explain what it means and the exact measures AMLBot and PureFi have taken to eradicate that?
The term “dirty crypto” means your wallet has transactions with wallets that have a connection (even if a distant one) to the dark market, drug dealers, stolen coins, money laundering, etc. We have had cases that were reported and stored in our database.
You are in the no-risk zone if you have received your Bitcoin or Ethereum only from certified centralized exchanges and never bought coins from an unknown person. Still, if you are a business and our solution is aimed at businesses the risk is much higher, as there are a lot of bad actors in the space.
We protect them by assessing specific transactions or a specific wallet. We assign the risk score to them, and the business can accept or reject the transaction. We provide analytics only, so it’s always their decision.
The risk levels may differ. For example, gambling: is it risky or not? It depends on the country you’re operating in. In some, it’s safe to interact with gambling clusters. In some countries, you’d have to reject the transaction to avoid problems.
Q: You said the crypto market is constantly changing. How do you keep up-to-date with these changes?
It’s probably the most challenging part of our business, you always have to be on the lookout for new information. We have to update our database with new cases, constantly monitor news, Twitter, Reddit, and others to keep the information about our partners up-to-date. Also, we must keep track of the latest regulations, as we are responsible to the businesses we provide services to.
Q: Finally, what are your plans for AMLBot and PureFi, and what is the current activity that is in the pipeline?
For AMLBot, we have a huge backlog of technical tasks we need to implement just to catch up with the constantly changing environment. The same goes for PureFi: there is an even bigger issue there, as we need to be deployed on as many blockchains as possible, with new networks appearing every month.
We are also preparing to launch SafeTransact: a solution designed to notify users about suspicious activity. Using sophisticated risk assessment techniques, we help them avoid malicious contracts, phishing schemes, and other potential dangers that could result in substantial losses.
All in all, we aim to equip the mass user with a safety net, so they can transact with peace of mind, knowing their hard-earned assets are safe. As SafeTransact can be seamlessly integrated with different wallets, I believe it will promote a more active crypto adoption.