Home News Exchange Seven Crypto Exchanges Using Nasdaq’s Software for Fraud Detection

Seven Crypto Exchanges Using Nasdaq’s Software for Fraud Detection

January 31, 2019 14:35

7 leading cryptocurrency exchanges in the world are using Nasdaq’s surveillance system for fraud detection, company’s head of surveillance division said recently during a media interaction. The names of exchanges, however, are not known yet.

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Running an exchange, whether it’s a securities exchange, commodities exchange or a cryptocurrency exchange, is not an easy affair. Ensuring manipulation free trading volumes on any exchange is a hectic task, and it requires both manpower as well as computing power. However, some leading exchanges of the world have mastered the art of doing it perfectly. For instance, Nasdaq is a leader when it comes to detecting fraud and manipulated trading volumes. Its cutting edge technology and software is used and praised worldwide for being the best at its job.

Now it turns out that the same software is also being used by 7 leading cryptocurrency exchanges of the world to detect manipulation on their platforms. Out of these 7 exchanges we know only about two for now: Gemini and SBI Japan Virtual Currency Exchange. Other 5 exchanges which have partnered with Nasdaq to use this software are neither known as of now, nor Nasdaq wants to reveal about them. In short, the leading crypto exchanges of the world may all be using world’s best fraud detection system made for exchanges. What this means is that volumes on major exchanges are highly unlikely to be unreliable and manipulated, which is a good thing for average trader.

Not everyone makes the cut

However, it’s not easy for exchanges to start using Nasdaq’s technology for fraud detection. It’s expensive, and most importantly it requires more than money. You may be running the richest cryptocurrency exchange in the world, but if you fail the vetting process of Nasdaq team then you can’t use the software. This was revealed during a recent media interaction by Nasdaq’s regulator surveillance team head Tony Sio. He said:

“Historically, we don’t do such a large vetting process for our clients because they are much more well-known. But as we started working with less well-known names, startups, then we realized we needed to do this check process.”

Sio also provided a detailed overview of what his team looks in crypto exchanges before onboarding them as clients. And the evaluation criteria is based on 3 factors:

  • Business Model,
  • KYC/AML practices followed by the exchange,
  • and finally the Governance & controls of exchange management.

In short, you must be a very legitimate exchange platform with proper standards and procedures in place before you can use Nasdaq’s surveillance system. And you should also have a lot of money to foot the bill. If you’ve got that, you can rely on world’s best surveillance system made for exchanges.

Nasdaq’s readiness to work with cryptocurrency companies shows its interest in the blockchain technology. Unlike its competitor NYSE it has not decided to jump directly into the ring, but it has been investing in non-crypto related applications of blockchain. Rumors have suggested in past that it’s also working on its own Bitcoin futures, which are likely to be launched around the same time when Bakkt will be launched by NYSE. Let’s see what’s done next by them!

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