Paxful has become the first peer-to-peer exchange to partner up with blockchain analysis firm Chainalysis and deploy its crypto investigations and transaction tools, the companies said in a press release on 23 March.

According to the announcement, Paxful will make use of Chainalysis’ Reactor and Know-Your-Transactions (KYT) tools in an attempt to protect its users from fraudulent actors. As the first P2P exchange to partner up with Chainalysis, Paxful is setting a new standard for compliance when it comes to peer-to-peer exchanges.

John Dempsey, VP Product at Chainalysis, said in a statement:


“Compliance is the key factor for establishing trust in cryptocurrency exchanges. By adopting a case-by-case approach to evaluating P2P venues, we are helping to broaden trust and transparency across the cryptocurrency ecosystem.”

Thanks to the new partnership, Paxful will now be able to develop new controls for customer protection, such as blocking outgoing transactions to high-risk addresses, sanctioned addresses, child abuse websites, and stolen credit card platforms.

By using the KYT tool, the exchange will be able to monitor large volumes of crypto activity, as well as identify high risk transactions. Chainalysis Reactor, on the other hand, will help the exchange to investigate suspicious transactions, and provide more detailed reports to regulators and law enforcement. Lana Schwartzman, Chief Compliance Officer at Paxful, said in a statement:

“At Paxful, compliance and security are top-of-mind as we work to keep the marketplace free from fraud and scammers. Partnering with Chainalysis was a great choice as we work to protect our users and instill in them the importance of regulation and compliance on P2P marketplaces like ours.”

Prior to the new partnership, Chainalysis saw P2P businesses as too risky to conduct business with, seeing how parties move cryptocurrency directly between their wallets, and the lack of required user data from the exchanges. Some P2P exchanges allow their users to conduct business even without creating an account, not to mention the identification required by law.