Scorechain Raises $570k for European Bitcoin Compliance Solution

Bitcoin compliance solutions provider Scorechain has raised €500,000 ($570,000) in seed funding from an undisclosed group of angel investors.

The Luxembourg-based startup is seeking to target both bitcoin companies and traditional financial institutions with a suite of services that help clients meet regulatory and compliance requirements, through business intelligence and risk analysis tools that illuminate transaction histories on the blockchain.

CEO Pierre Gerard suggested Scorechain will attempt to appeal to bitcoin startups that are beginning to implement more stringent know-your-customer and anti-money laundering policies by offering a web interface as well as an API.

However, Gerard also sees the service being useful for a market that is increasingly interested in the digital currency industry – major financial institutions.

Gerard told CoinDesk:

"Banks are learning more about customers using bitcoin. If someone is coming with €100,000 in cash, pretending it's coming from bitcoin, we can allow a compliance officer from a bank to check if the person is telling the truth. All the banks today need to check where the money is coming from, if it's from bitcoin, we provide this."

Gerard said Scorechain's solution is optimized for the European market, and that its service is able to build custom reports for companies in different nations, with the information it collects varying depending on local regulatory needs.

The startup's emphasis on Europe, he said, will also be beneficial, given there is less competition among compliance providers than in the US, which is home to startups such as IdentityMind.

Today, Scorechain has four full-time employees, according to its CEO, with funding being used to expand the team to six. The service is currently operating in free beta, though Gerard said the company is now exploring pricing models.

Blockchain analysis

Users of the service who want to obtain more information about a bitcoin transaction or wallet address are able to leverage its "Lookup" tool to see details, such as how much bitcoin was sent and the fees that were paid to include the transaction on the blockchain.

Both metrics are provided in a colorful screen layout alongside the date on which the transaction was confirmed and a chart that connects that transaction ID or wallet address to past and future blockchain movements using cluster detection and address identification.

The following example shows the Scorechain analysis for one transaction where funds had previously moved through the online black market Agora.

Gerard said there are some limitations to the service, as it currently relies on public information from sources such as Reddit and Pastebin to link bitcoin addresses to specific entities.

The CEO said Scorechain may work to obtain information from other companies in the industry, like bitcoin exchanges, but suggested it still needs to determine how such potentially sensitive customer information would need to be managed.

Images via Scorechain