Mastercard Partners with Feedzai to Fight Crypto Fraud

Mastercard has partnered with Feedzai, a regulatory technology platform, to improve the detection and blocking of fraud in cryptocurrency transactions. The partnership will see Feedzai integrate with Mastercard’s CipherTrace Armada platform, which is used to monitor transactions from over 6,000 crypto exchanges for fraud and other suspicious activities.

Doubling Down on Crypto Fraud Detection

Mastercard aims to strengthen its efforts to detect and prevent fraud routed through cryptocurrency exchanges. Feedzai’s technology, coupled with artificial intelligence, will be embedded directly into CipherTrace Armada rather than accessed via an API. This integration will enable real-time alerts about suspicious crypto transactions.

Feedzai CEO Nuno Sebastio stated that the collaboration will not only increase consumer protection against fraud, but also detect potential money laundering activities and mule accounts. According to Feedzai data, currently about 40% of scam transactions move directly from a bank account to a crypto exchange.

Utilizing Feedzai’s AI for Fraud Detection

Feedzai’s artificial intelligence capabilities will be leveraged by Mastercard to identify and block suspicious transactions within nanoseconds. The firm’s RiskOps platform analyzes transactions worth over $1.7 trillion annually. Sebastio noted that many banks which think they are preventing illegitimate cryptocurrency transactions are only blocking those involving recognized and regulated entities, overlooking the rest.

Mastercard’s Push into Crypto

Mastercard’s move represents a significant push into legitimizing cryptocurrency as a mainstream financial asset. Despite the increase in banks and large financial institutions experimenting with crypto in their products and services, the deployment of commercially available crypto products as part of their core offerings has been a challenge due to the lack of comprehensive regulations and the risk of fraud and scams.

Crypto-Related Losses on the Rise

According to data from blockchain analysis firm Chainalysis, theft and scams led to a 79% global increase in crypto-related losses from the previous year. Illicit addresses received $14 billion in 2022, nearly double the amount received in 2020.

Ajay Bhalla, president of cyber and intelligence solutions for Mastercard, stated that fraud on transactions involving cryptocurrency is five times higher than regular fiat transactions. He indicated that the partnership with Feedzai will enable financial institutions to distinguish between good and bad transactions.

This partnership follows Mastercard’s acquisition of U.S. blockchain investigation firm CipherTrace in 2021. Mastercard launched its CryptoSecure product in 2022 to analyze and block transactions from fraud-prone crypto exchanges.