Coinbase Landed Patent for a New Compliance System to Root Out Non-Compliant Accounts

US cryptocurrency exchange Coinbase has been awarded a new patent from the US Patent and Trademark Office for an automated system to flag and remove non-compliant user accounts.  

The filing was published on Nov. 19, detailing a new system with a model that “determines a compliance score for each one of the accounts based on the respective factors associated with the respective account.” 

According to the patent, the automated system will be accompanied by a scoring mechanism that would be ruling out non-compliant user accounts, ones that are suspected of trafficking in illegal activity in particular. The scoring system consists of user-inputted or executed data points, including the user’s age, account balance, transaction volume, location, verification history and the number of devices with access. 

The accounts that are suspected of illegal activities would be suspended and referred to law enforcement authorities if the transaction involves more than $2,000. On the other hand, good accounts are allowed to pass through the system untouched.  

The filing read: “An investigator may be able to determine whether an account is being used for illicit activities by doing research on the parties of the transaction who receive or send payment and determining whether such parties are regularly involved in illicit activities. It may, for example, be relatively easy to determine that a party sending or receiving payment is in the business of conducting online services that may be illegal.” 

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