FB Pixel no scriptDigital detectives: Southeast Asian startups tackling Web3 crimes | KrASIA

Digital detectives: Southeast Asian startups tackling Web3 crimes

Written by Degen Hill Published on   4 mins read

Southeast Asian startups are harnessing cutting-edge technological capabilities to revolutionize digital crime detection and prevention.

Web3, blockchain technology, and cryptocurrencies have transformed our lives and economies, reshaping how we transact, interact, and perceive value. Alongside this transformation, however, a sinister shift is also taking place—new forms of criminal activity are infiltrating our digital platforms, eluding traditional crime detection and prevention mechanisms.

To counter this emerging threat, tech startups in Southeast Asia are stepping up by harnessing their technological capabilities to counteract this trend and reshape security in this new age.

New digital crimes need new solutions

Evidenced by high-profile incidents like the 2020 KuCoin hack and Twitter Bitcoin scam, decentralized tech has inherent vulnerabilities. Southeast Asian tech startups are employing blockchain analyses, predictive technologies, and artificial intelligence to develop tools that can combat these emerging threats, including decentralized finance (DeFi) scams and non-fungible token (NFT) fraud. They aim to build a future where technology can be freely leveraged without the looming shadow of criminal exploitation.

Money laundering in Web3

Money laundering extends to the world of blockchain and DeFi. By utilizing decentralized exchanges, privacy coins, and cryptographic mixing services, money launderers can obscure the origins and flow of illicit funds through a network of transactions that defy traditional monitoring.

Smart contracts automate these processes, often without intermediaries, creating intricate layers of financial activity that are hard to trace. Decentralization makes regulation and oversight more difficult, compounding the problem and providing opportunities for criminals to exploit the system. Therefore, there is a critical need for solutions that can detect and prevent these clandestine financial maneuvers.

Chainalysis’ approach

Enter Chainalysis, a blockchain data platform that is addressing the menace of money laundering in the crypto world. At the core of Chainalysis is its Know Your Transaction (KYT) software, which can detect potential high-risk activities and map millions of addresses to real-world entities. The software forms part of a comprehensive initiative to provide transparency, compliance, and security in Web3.

Chainalysis’ KYT software enables users to investigate suspicious activities, uphold regulatory standards, and foster customer trust. Hence, it plays a pivotal role in detecting and preventing money laundering.

“Our solutions automatically detect and alert patterns of potential high-risk activity, from sanctioned addresses and darknet markets, to scams and anomalous transactions,” said Joshua Foo, the regional director of Chainalysis for ASEAN and Central Asia.

Mystic Stealer and new cyber threats in Web3

The decentralized nature of Web3 has led to the emergence of new cyber threats like the Mystic Stealer malware. This malicious software is specifically engineered to target individuals involved in crypto transactions. By stealing wallets, private keys, or login credentials, Mystic Stealer enables unauthorized access to crypto accounts, potentially leading to significant financial loss.

Alongside traditional cyberattacks such as the SolarWinds and Colonial Pipeline ransomware breaches, this new breed of malware underscores the need for robust, real-time security measures in the intricate Web3 domain.

CYFIRMA’s solution

In response to new cyber threats, CYFIRMA, a Singapore-based cybersecurity firm, has developed a generative AI capability built on a proprietary large language model (LLM). Trained on dark web data, this model has been integrated into CYFIRMA’s DeTCT platform and flagship SaaS product, DeCYFIR. These solutions can comprehend the specific language, tactics, techniques, and procedures of threat actors, allowing it to predict, monitor, and mitigate cyber threats in Web3.

“By training our LLM on our vast data lake sourced from the dark web, we’re able to anticipate, and counter, cyber threats more effectively than ever before. This enables us to help our customers stay steps ahead of threat actors,” said Mike Henry, CTO of CYFIRMA.

Identity theft in Web3

Digital identity theft, especially on blockchains, is a growing concern in the Web3 landscape. This problem was exemplified by the 2019 Binance hack, where fraudsters stole user information and bypassed security checks, causing a loss of over USD 40 million. Such events underscore the need for advanced security solutions to guard against identity theft, a crime that affects both individuals and organizations, disrupting financial stability and eroding trust in digital platforms.

Sixscape Communications’ solution

Singapore-based Sixscape Communications is addressing this issue with its Secure Authentication Suite, a solution that combines digital certificates with biometric authentication. Each user’s device becomes a unique authentication token, requiring both a private key and a fingerprint for access. This approach aims to eliminate the age-old problem of password vulnerabilities, simultaneously enhancing the security of digital identities on blockchains.

Using Sixscape’s technology, platforms like Binance could enhance defenses against breaches, securing digital identities of their users.

Merkle Science’s proactive approach to Web3 security

While such advances in Web3 crime detection methods appear fruitful, they are often reactive and may not be sufficient to recoup all losses incurred. In this context, Singapore-founded Merkle Science is leading the charge by coming up with preventative measures.

By deploying a mix of blockchain technology, predictive analyses, and AI, the company actively seeks to minimize the risks of cybercrimes within the Web3 space.

“Our focus is always on helping our clients, including financial institutions, crypto businesses, and DeFi participants, to navigate today’s rapidly evolving regulatory landscape,” said Mriganka Pattnaik, co-founder and CEO of Merkle Science.

Embracing innovation, ensuring security

Solutions like Chainalysis’ KYT software are already contributing to a more secure digital world by aiding efforts like the FBI’s takedown of the “Welcome to Video” site, and strengthening national cybersecurity frameworks.

Southeast Asian startups like Chainalysis, Merkle Science, CYFIRMA, and Sixscape Communications are steering the future of digital security, countering new forms of digital crime with their cutting-edge solutions. As technology continues to evolve, their presence is ushering in a resilient, adaptable era of digital security, encouraging the embrace of innovation while remaining vigilant in a world where the full potential of technology awaits realization.


Auto loading next article...