Dapper Labs, one of the most successful companies in the NFT space, has partnered with Chainalysis, a blockchain intelligence company, to increase its compliance profile in the NFT business. The company will use information from Chainalysis to better understand each of the transactions that users make with their products and the purpose of each transaction. This will help them detect money laundering instances and market manipulation attempts.
Dapper Labs will use Chainalysis solutions to increase surveillance
Dapper Labs, creators of notable projects like Cryptokitties and NBA Top Shots, have partnered with Chainalysis, one of the leading blockchain intelligence companies, to increase oversight of transactions involving its products. The company is seeking to have a better understanding of what users are doing with its creations, and if these are indeed being leveraged by bad actors for illicit purposes.
NFTs have a bad reputation, with some in the cryptocurrency community making claims that they are being used to launder money due to the outrageous prices of some of these NFTs. Dapper Labs acknowledges the need for more awareness to make their products safer for anyone wishing to enjoy NFT markets. Naeem Bawla, associate director of compliance at Dapper Labs, stated:
NFTs are one of the most exciting spaces in cryptocurrency, but they will only be successful in the long run if we can ensure a safe environment for our customers.
NFT Boom and Chainalysis Weapons
While NFTs had been largely ignored due to their low trading volumes, this year all that changed, with NFT projects reaching more than $1 billion traded. This has heightened concerns about the legitimacy of funds being moved into these markets, with companies like Dapper Labs increasingly worrying about the effectiveness of compliance measures being taken.
Dapper Labs will apply two different Chainalysis tools. The first one is called Chainalysis KYT (Know Your Transaction), which the company claims can flag illicit and risky transactions in real-time, alerting Dapper Labs of any wrongdoing when it is happening. The other tool the company will use is the Chainalysis Reactor, which will allow the company to learn and investigate any transactions at a later date. These tools form part of the Chainalysis arsenal to combat irregularities via this new use case that is NFT-based compliance.
