The United States SEC will work with CipherTrace to trace transactions that occur on Binance Chain. The reason why the SEC chose CipherTrace is that they are the only company that supports Binance Chain. CipherTrace added Binance Chain support in 2019.
The Goal of the Partnership
CipherTrace is a blockchain analytics firm. The SEC wants to work with them to help in the tracing of transactions that take place via Binance Chain. Binance Chain is the blockchain on which the BNB toke runs as well as the blockchain that powers the Binance DEX, a decentralized exchange created by Binance, the largest crypto exchange by trading volume.
According to a notice published by the SEC, CipherTrace is the only company with a forensics and risk intelligence tool that supports the BNB coin and the Binance Chain blockchain. As a result, they decided to give the company the contract to analyze transactions done via the blockchain.
Why a Special Contract?
All Binance Chain transactions are public. However, existing blockchain explorers are complex and difficult for most regulators to use. CipherTrace was created in 2015 via funding by DARPA and the Us Department of Homeland Security. The company creates products that help forensic analysts track down transactions and generate usable data for regulators. The tools created by CipjerTrace are useful for helping to confirm that crypto exchanges comply with AML rules as well as tracing fraudulent funds transfers.
Why Tracking Binance Matters
Binance is the largest crypto exchange by trading volumes. Besides that, the native BNB coin is the tenth largest by market cap. In 2019, CipherTrace collaborated with Binance to help the exchange remain compliant with AML requirements.
At the time, Binance said that the deal with CipherTrace would help regulators, developers, and investors, examine the Binance Chain and identify high-risk addresses. With the information, it would allow them to establish controls that help protect DApps, crypto exchanges, and other crypto-based applications. It would appear that the SEC has been keeping a close watch over developments in the crypto sector and that is why they decided to incorporate CipherTrace into the regulatory efforts.