Lance Morginn: Blockchain Intelligence Group gives ‘clarity to this pseudo anonymous environment’

CoinGeek had the chance to talk to Lance Morginn, president of Blockchain Intelligence Group (CNSX: BIGG|OTC: BBKCF| WKN: A2JSKG), shortly after his presentation at the recently held CoinGeek Live conference on “Blockchain Intelligence: Analytics, Forensics & Compliance Tools for Bitcoin SV.”

Through our conversation with Morginn, we learned what it’s like to be a blockchain analytics service provider, why hacks and breaches happen in the blockchain and digital currency space, what the future of the blockchain analytics sector looks like, and much more.

Here is what we learned from our conversation with Morginn.

For those who don’t know what is Blockchain Intelligence Group?

We are an analytics company at heart, we have been around for five and a half years, and we are headquartered in Vancouver, Canada—although, we do have sales people and account executives in Europe and Asia, so we are able to handle our global client base.

When we first started providing visibility into crypto we developed a product called QLUE.

That allows for somebody to visually follow the money path. We give clarity to this pseudo anonymous environment by providing attributes to entities, types of activities, and darknet marketplaces, that allows someone to understand the flow of funds and where money is going to—is it going to Huobi? Is it going to Binance? Is it going to BitMEX? Are they going to a mixer? Are they going to gambling websites?

And then we realized we had the data to deliver a financial product, BitRank verified, it’s a risk scoring of addresses and transactions, that allow compliance officers to quickly ascertain if they want to do business with that person, or if it needs further review. Or, if the score is too low, to just not interact with them whatsoever. 

Some of our clients implement the API to check things before they show a deposit address to a client and others will just review the transaction. If they are checking before they show a deposit address they also need to review a transaction just to make sure someone else didn’t include additional addresses that might be outside of their AML tolerance levels. We also do enhanced reporting, so if they need to escalate something to a suspicious activities report or an STR, we designed the report so that it can be copy and pasted so that they can save time.

We also have training, we realized after traveling the world for the last four years that the industries still really need to be brought up to speed regarding how cryptocurrencies are being used, what ultra-private wallets look like, how the dark web works, how do criminals use crypto to their advantage, and how to perform an investigation, we provided all of that in our online training. We also do onsite training—when COVID wasn’t here—and we also do webinars that are tailor-made to the type of organization. So we have specific information that we would convey to law enforcement, it’s just not needed to compliance officers, and then we have ones that are just for compliance and that whole world, and then some that are just for regulators, we train quite a few regulators globally.

And then we have a forensics division that works some of the larger cases, some of the pretty big names that we all know, and help individuals that have had thefts or have made investments that have been stolen or their computer has ransomware and a person took control and sent funds out of their coinbase account. So we work a number of different vectors within that. 

And lastly, we have a portal called the crypto-fusion center, which is our social responsibility component of giving back to the industry, and this is a free service that unites law enforcement and the financial world to allow real time notification of any submission; so ransomware addresses, blacklisted addresses, and trying to catch these actors as early as possible to freeze funds and thwart their activities, so that’s something that we are proud to give back to the community, and collectively, what we can see, we are the most comprehensive suite of services out there.

What inspired you to enter this field?

I’ve been in technology since 1994, I’ve been on the bleeding edge a number of times, first fiber optically connected B2C ISP in Canada down to the US, and one of the largest, dot com incubators back in 1999.

One of my business associates was really looking at crypto and Bitcoin quite a bit and came to me in 2014 and said, “Listen, this whole space is growing, and when you have a growing database, search and analytics are going to be a necessity, can you help me put this company together?” and we partnered up. My passion has been technology all along and also being part of something that can shape sort of a new financial systems, also being involved in providing tools that can save lives really. If you have an opioid problem, you most likely have a cryptocurrency problem, as the old saying says, “follow the money.” I’m not in law enforcement, I’m not a doctor, so to be part of an industry where indirectly my tools can help save lives is really exciting to me.

How many coins and tokens does BIGG monitor?

When it comes to cryptos that we cover, Bitcoin SV, BCH, BTC, Litecoin, all the ERC-20’s, and Ethereum, and in our financial product we have XRP and XLM, and we are currently adding other tokens.

We are always adding, we look at things like, what’s our client demand, what’s the top 20 by market cap, and making sure what we bring in is something we can support. Because every crypto that you bring in, you have to have your research team always be looking for those addresses on the dark web and the surface web. We do have teams on two continents so we’re always scraping looking for that information and attribution 16 hours a day.

Why do you think so many hacks and breaches take place in the blockchain and digital currency industry?

Well, I think the usual case for these hacks is internal, or somebody slips up on bringing a USB key in, or sends the private key across an unencrypted environment such as Slack. So it’s just security protocols are not as stringent as they could be which would limit what we are seeing and what is taking place in the market, and when it comes to the overall industry, being pseudo-anonymous. 

I mean, look at the amount of funds that they are able to move in a single action once they get past that single firewall or whatever mechanism they might have and be able to move it through things like DeFi or through CoinJoin transactions, atomic swaps, these kind of things that try to further obfuscate the path, and you can’t do that in the traditional finance world. You certainly can’t walk in and rob a bank without getting arrested, so it’s a lot easier for guys to be able to sit in their bedroom, through VPN and TOR and these kind of things and really try to make it difficult for law enforcement to track them by traditional means and then you couple in what blockchain offers and the ability to swap out through DeFi and Uniswap and move these funds, it really is moving faster than even companies like ourselves can somewhat keep up with, its picking our battles and making sure we realize this is the next level of criminal usage and hiding tracks.

Do you think blockchain analytics services will be a standard that will be mandatory for any exchange or service provider to use in the future?

For sure. From a regulatory standpoint, just like the traditional banking world has faced, I see that these tools will become a requirement as further regulation is implemented. When it comes to helping thwart the hacks and those kind of things, it’s really just traditional policies that need to be met, and not so much what we can provide as services, or advice of what we have seen and how other breaches have occurred, which we could read online. 

But we can definitely advise corporations on what we see as things that they really need to make sure they have in place to avoid those types of issues but it’s going to come down to them, following those requests and recommendations, but when it comes to services like ours, I mean definitely. Look at FATF and the travel rule, and the level of oversight that they are looking for, and now even looking to apply that to non-custodial wallets. Regulation will continue as regulators themselves further understand how the mechanics of the space works and it’s up to us to continue to help provide regulators, law enforcement, and financial organizations the ability to meet their needs.

What’s next for Blockchain Intelligence Group?

We are working on a few things that I can’t totally discuss—it’s tricky being public and saying what we do vs. trying to keep it close to our chest so our competitors don’t jump on it as well. But we do see things around exchanges and giving them ratings relevant to what licenses they have, if there is any regulatory news, have any of the directors been involved in any kind of fraud history, all of these things that would overall create a kind of risk rating for exchanges, is something we have already built out and are now putting into our platform that would give further ability to banks, which are coming online, to be able to whitelist the different exchanges that they want to do business with.

On the other side, it’s more looking at some of these other chains, Binance Chain is interesting to us, there’s already 18 [projects] within it and just making sure that we are able to meet where the greatest demand is. Other things are that we are expanding our educational platform, in the next 30 days we should have advanced analytics which gets into CoinJoin transactions, atomic swaps, some really technical information that people who have not been through our previous courses and are not in the space and don’t have that knowledge, it’s going to be over their head. But this is coming out based on great demand and then we have a few other ones coming out after that, advanced Ethereum, DEX and DeFi, a course on the biggest hacks and we’ll actually walk through the hacks and show how the hacks took place.

[A lot of exciting things are in the pipeline so] keep an eye on us.

One of the other divisions that we have is NetCoins, Netcoins.CA, we are an over the counter transaction business. We just applied for our broker dealer license so we will be the first regulated broker dealer over here in Canada, and we are being recognized as sort of the Coinbase of Canada based on the usability of the system. 

Our rates are some of the best out there that we’ve seen and that’s allowed us to get to this point, the president on that side has been involved in the crypto space for 6-7 years now, maybe 8, he was the gentleman who launched the very first crypto ATM on the planet so he’s got some really strong connections that allows us to get some really great rates and pass it on to our end customers.

So if you are looking for a trading place, especially since we’ve had a couple of follies in the crypto world up here from Quadriga to Einstein, and more recently, Coinsquare, anyone around in Canada, please check that out.

I’m really excited to be part of this interview and the CoinGeek conference and to support the BSV community, and if anyone has anything please reach out to me at blockchaingroup.io.

Watch Lance Morginn’s presentation at CoinGeek Live, Blockchain Intelligence: Analytics, Forensics & Compliance Tools for Bitcoin SV.

New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.