The year 2021 was a year of crypto boom.
It seemed every other headline was about the birth of another newly minted billionaire who made a windfall by betting on cryptocurrency. The emergence of crypto enthusiasts also stoked a steep rise in suspicion about digital assets.
That’s where XREX comes in. We help cut through the noise and empower our users to make informed decisions. In October 2021, XREX became one of the first Asia-based virtual asset firms to participate in the open-source program Travel Rule Information Sharing Alliance (TRISA). This could not have been achieved without implementing tools and solutions by globally leading cryptocurrency intelligence service providers, including Mastercard’s CipherTrace and TRM Labs.
Earlier, XREX Co-founder and CEO Wayne Huang published a CEO letter to announce that XREX is Financial Action Task Force (FATF) compliant. In this blog post, we caught up with our colleagues at XREX to have them share a little more about XREX’s determination and efforts on security, as well as what this means to us and the industry at large.
Security is XREX’s DNA
Security and compliance are of tantamount importance to us at XREX. It is by no coincidence that our co-founder Wayne Huang is an internationally recognized cybersecurity expert who co-founded Armorize Technologies, which was later acquired by Proofpoint. Wayne then served as a VP of Engineering at Proofpoint, where he worked with Stephen Ryan and David Jevans, co-founders of CipherTrace.
“It’s been exciting and humbling watching David and Stephen build one of the most critical services for the global crypto industry from scratch,” Wayne said. He believes that the mutual trust and chemistry between XREX and CipherTrace will create a high level of synergy to propel both firms to new heights.
Based on CipherTrace’s technology, XREX also developed its unique product feature called Risk Level Detector to gauge the risk level of each wallet address. One of the key personnel behind this initiative is Sun Huang, XREX’s Chief Security Officer. Sun is a pentester with more than 16 years of experience, being on the bug bounty hall of fame for companies such as Facebook, Apple, AWS, Adobe, AT&T, and PayPal, just to name a few.
Sun has worked with Wayne for over a decade, from Armorize Proofpoint and now to XREX. With his expertise in threat intelligence, malware analysis, mobile security, vulnerability analysis, blockchain security, and anti-money laundering, he leads the team in daily detection and protection against threats to systems, as well as preventing scams that might occur in our ecosystem.
Virtual threats can bring real harm
“There was a recent incident where we detected a suspicious wallet address in a user’s transaction,” Sun said. “The withdrawal triggered our risk detection system, and our team launched an investigation. Based on our analysis using CipherTrace, we identified that the receiving wallet had a high-risk profile — and the transaction was halted in time.”
A high-risk level could have meant that the wallet belonged to a scammer or it has previously shown up in illicit transactions.
The customer was contacted and the transaction was canceled, protecting the customer’s assets against a transaction that might have been illicit.
This was also made possible as XREX is part of TRISA, a coalition of top crypto companies, to combat money laundering, scams, and illicit actors in the crypto industry. Its introduction of a Virtual Asset Service Provider (VASP) directory and a Certificate Authority model enables VASPs to achieve compliance with the FATF Travel Rule while retaining user security and privacy. If any malicious activity is detected, the TRISA community can immediately track and monitor the flow of funds and present it as legal evidence.
Further regulation and compliance are inevitable
“We’ve heard a lot about crypto fraud and scams,” Wayne said. “However, we strongly believe that crypto and blockchain are for good. This is the major reason that security is the top priority for us. Though XREX is a young startup, we have spent significant resources to bolster our security and meet the highest international standards. Compliance and security can help the crypto industry gain regulators’ trust and also protect our users.”
FATF modified its standard for the Travel Rule in 2019 to extend anti-money laundering/counter-financing of terrorism (AML/CFT) to cryptocurrency valued at US$1,000 or more.
“We are happy FATF is establishing reasonable and clear standards, because this can build a stable and sustainable environment for the crypto industry to grow and innovate,” Wayne added.
The year 2021 brought about a tremendous number of new technologies and applications to the blockchain and specifically, the DeFi industry. As the circle expands rapidly, involving more individuals, institutions, and governments, the world is watching what the future holds for the relationship between traditional finance and cryptocurrency.
XREX believes that further regulation and compliance are inevitable. There are more and more new solutions and advanced technologies for self-monitoring, risk controlling, and transaction tracking. CipherTrace, TRM Labs, and TRISA are all pioneers in this field; XREX is honored to build long-term and comprehensive partnerships with all of them. Instead of allowing free rein as the world comes to greater adoption of cryptocurrencies, regulators will look at how they can bring this new technology, innovation, and business activity within their regulatory perimeters; as a result, new regulatory rules, standards, and approaches will emerge. XREX will continue to maintain the highest globally-agreed standards and protocols to date.
XREX is a neo fintech leveling the playing field by partnering with banks, regulators, and verified individuals to redefine banking together. Our blockchain-driven solutions create a collective financial system that empowers all to participate and contribute to the global economy. Founded in 2018 and headquartered in Taipei, XREX comprises a team of world-leading experts in cybersecurity, fintech, compliance, and cryptocurrency to offer a full suite of innovative products such as BitCheck, XREX Circles, Risk Level to solve dollar-liquidity shortage issues faced by cross-border merchants in emerging economies. Follow XREX on Discord, Twitter, Facebook, Blog, and LinkedIn.