SEC Awards Monitoring Contract to AnChain.AI as Regulators Tighten Grip on DeFi

The Securities and Exchange Commission (SEC) appears to be gearing up for a closer look at decentralized finance (DeFi) industry. The US top regulator disclosed Friday that it awarded AnChain.AI a $125,000-per-year contract on the grounds that the blockchain analytics firm is capable of tracing DeFi transactions.

According to AnChain.AI CEO and co-founder Victor Fang, the period of performance for the contract is one year with options to extend it for additional four years at a total value of $625,000. Some of AnChain.AI’s core services also include anti money laundering measures, crypto intelligence, and financial investigations.

“The SEC is very keen on understanding what is happening in the world of smart contract-based digital assets…so we are providing them with technology to analyze and trace smart contracts,” Fang explains.

AnChain.AI utilizes the behavior-based machine learning of its Blockchain Ecosystem Intelligence (BEI) to enable law enforcement agencies to trace the flow of criminally implicated funds, investigate suspicious activity, and track down suspects.

The San Jose-based firm says its technology is able to follow crypto criminals’ transaction trail, identify associated wallets, and even pinpoint their geolocations.

The new contract with the US watchdog comes hot on heels of AnChain.AI announcing a fresh growth funding round. Led by Susquehanna Group and SIG Asia Investments LLP, among others, the company raised a $10 million Series A funding at an undisclosed valuation.

 “AnChain.AI has made great progress in developing its market-leading crypto security technology to meet its customers’ broad demand in regulatory compliance and transaction intelligence,” said Ye Li, Investment Manager at SIG.

Recently, the SEC has taken its first enforcement action involving a decentralized finance project. The commission charged two Florida men and their Cayman Islands company for unregistered securities sales of more than $30 million.

SEC’s chief Gary Gensler also said he’s setting his sights on stricter regulation for cryptocurrency, which could become mainstream only if regulators laid out clear rules.

In an interview with Bloomberg, SEC’s top cop said he believes investors need more protection against fraud. For this purpose, the SEC was looking at seven areas of the crypto market, including DeFi, ICOs, crypto exchanges, exchange-traded funds and stablecoins.

The former Goldman Sachs partner added that DeFi could come under greater oversight as it offers yield-generating products.