Global cryptocurrency finance company Circle has announced a partnership with financial watchdog NICE Actimize in a bid to improve its market surveillance and protection strategies.
In a press release dated Feb 27, 2019, NICE Actimize said that it will use its Cloud Markets Surveillance solution across Circle’s offerings. This will, in turn, enable the exchange to detect advanced types of market manipulation techniques.
Circle Trade has an average monthly trading volume of $2 billion, with small retail investors forming a significant percentage of its overall user base. These investors are most vulnerable to malicious price movement and could stand to lose their entire life savings.
Ponzi, pump-and-dump, and other fraudulent schemes are some of the most common and widely used price manipulation strategies. A trader or a group of traders may, for example, acquire tokens at low rates and then spread rumors in the market which imply positive developments for the future of the token. This results in a short term buying spree by unknown investors which sends the price higher. At this point, the trading group sells their tokens and exits the investment — having made a significant profit.
Cryptocurrency exchanges have already been under the watchful eyes of financial regulators across the globe. The industry is in a nascent stage and lacks clear laws and a regulatory body to take action against illegal activities. Circle’s engaging with NICE Actimize to guard its exchange against price manipulation, pump and dump schemes, layering, and insider trading may come as a welcome step towards the legitimization of the market.
According to the release, NICE’s Markets Surveillance solution provides completely automated surveillance and automated workflow management, alongside end-to-end investigation and audit capabilities.
Meanwhile, Coinbase — a partner with Circle via their USDC stablecoin — recently announced its acquisition of blockchain surveillance firm Neutrino on Feb 19, 2019. It said that Neutrino will operate as a standalone independent business from its London office, while the company’s blockchain and security experts will join the engineering team at Coinbase.
The move has not gone over well with the community of cryptocurrency insiders. Recently, #DeleteCoinbase has been trending on Crypto Twitter, which has prompted many to delete their Coinbase accounts altogether after the news broke that Neutrino is partly comprised of hackers who allegedly used to work for various dictators.
It remains to be seen how Circle’s latest partnership will go over with the wider cryptocurrency community. Given that Circle is primarily focused on institutional investors, there probably won’t be much of an uproar.
Do you think other exchanges should also consider taking preventative measures to prevent price manipulation on their respective platforms? Or do you think hiring blockchain surveillance teams is a privacy concern? Let us know your thoughts in the comments below!
