“Know your customer” involves a set of identity processes’ where a organization demonstrates to regulators that they have assessed various risks. These risks include - money laundering, terrorism financing, credit worthiness and product suitability. These checks must do this prior and throughout any business relationship with the customer.
TRACETO.io is setting out to solve the problem we see with KYC and the cryptocurrency space. This is that current “real world” framework is not amalgamating smoothly with the digital world.
Regulators just aren’t able to keep up with the advancement of technology.
Traceto is creating an inclusive KYC Network and DApp solution for cryptocurrency market participants. They aim to do this by fusing smart contracts and artificial intelligence through a Decentralised Application - built on the Ethereum Network.
“Leveraging on over 5 decades of experience in compliance amongst the founding team and advisors, TRACETO.io seeks to revolutionise the e-KYC process, bridging the gap between physical and virtual world KYC processes.”Traceto is powered by Cynopsis Solutions Have a deep look into this company
Cynopsis specialise in helping clients in the Financial Services Sector and the Professional Services Sector better comply with ever-increasing regulatory requirements – Anti-Money Laundering (AML), Know your Customer (KYC) and Counter Terrorism Financing (CTF).
Whitepaper - https://traceto.io/static/wp/traceto_io_whitepaper_0902_v1_26.pdfToken type – ERC20
Hardcap – US$30 million for 30% of token supply in crowd-sale
Conversion rate – ETH/USD lock-in TBA
Bonus structure – 5% Maximum to pre-investors
Countries excluded - TBA
ICO date - TBA
Token distribution - 25% Team, 30% Company, 30% Token Sales, 15% Marketing Ops and Admin
Operating concept
Over the last decade, AML and CTF measures have cost the banking and finance industry at least US$321billion annually since the Global Financial Crisis and the cost of compliance continues to rise.
Fuel this with the complexities brought on with the rise of digital technology and digital assets – there are some complicated inconsistencies that Traceto look to overcome for crypto-related companies and business’.
These inconsistencies are,
1. A false assumption that anonymity overrides the need to comply.
2. A low priority allocated to compliance due to its perception as being a cost centre.
3. A lack of budget and experienced compliance personnel handling this process.
Traceto’s mission is to tackle these current problems. They aim to do this by creating a digital KYC network (DApp) that not only allows the decentralised ecosystem to comply with KYC standards prescribed by the Financial Action Task Force (FATF), but is decentralised, privacy preserving and self sustaining.
The network intends on providing incentives to users to organize themselves in a symbiotic relationship with each other that guarantees privacy yet complies with regulatory requirements.
“Giving ownership, management and control of the KYC process back to the people.”
Token use case
The Traceto T2T token is used as a utility token within the ecosystem and has the following uses.
- T2T activates smart contracts on the network
- T2T payments are made by requesters in for KYC services for their customers
- T2T is staked by verifiers for rewards
- T2T can be used to incentivise prospective clients and partners
- T2T is used as a medium of exchange for participants on the network
- Each time T2T is spent to procure KYC services, a small percentage is burned
Why tokenise this?
Current KYC systems are failing with the ever-evolving tech space. With this -regulators are being left behind. The constant threat of hackers expose users to identity theft, identity fraud through false actors amongst many other compounding concerns.
The whole KYC process can be secure and distributed through the blockchain by utilizing its reach, security, anonymity and decentralisation. Traceto can create a self-governing and secure KYC system for every user.
How will these tokens provide value to the investor?
T2T tokens create the economy that keeps the network afloat. The tokens are used for fee’s, rewards, staking and are even burnt reducing the circulating supply. As the network gains users and adoption, the circulating supply will diminish as the demand grows – basic economics, supply/demand.
Users – individuals on-board with Traceto
Verifiers – trusted user auditing/staking to earn T2T
Corporate requesters – Exchange, ICO, crypto-business’
DApp – easy to use decentralised application interface
Network – Traceto network, utilises AI algorithms
Lets use an example…
A user wants to join an ICO that is utilizing the Traceto network.
Such user will be redirected to the Tracetos DApp to upload their documents. These documents are then encrypted and stored within the application.
Next a trusted verifier will conduct a background check on this user and score the data based on social profiles – these verifiers are trusted users that stake T2T. Verifiers have to undergo a vigorous check and are also gatekeepers to this data.
*I have a concern regarding this process currently – I have asked for conformation from the team regarding the “specific” role of a verifier, whether it’s just acting as a node operator or if they are trusted to check over the data. This question is still unanswered and until clarification, will bring down the operating concept score*
Once verified this data is stored in a secure and encrypted vault and can only be decrypted by the user themselves or upon quorum from the verifier and requester for KYC purposes.
This brings about Traceto and AI.
Traceto A.I uses existing algorithms determining facial recognition and similarities. They plan on improving and developing more algorithms through “open sourcing” development.
“We attempt to open source as many of these algorithms as possible, allowing the comminty to audit and improve on the A.I tools involved in solving the KYC Problem.”
Traceto plan to use A.I as a complement to the community and not an invasive tool.
The solution Traceto propose is one that;
- upgrades an out of date service
- is self governing
- utilizes blockchain technology
- has a token economy
- is decentralised
- is scalable
- has large business connections for adoption
Roadmap
Initially, Traceto will focus on AML and CTF problems but plan to expand their scope to address questions related to Product Sustainability and Credit Worthiness.
Partners
Powered by Cynopsis
Cynopsis’ partnerships include
Dow Jones, Amazon Web Service, RHT and more.
Cynopsis’ cryptocurrency clients include
Icon, Kyber Network, Request Network, TenX, GBX, Quantstamp, Olympus Labs, Gifto and more.
Team
CEO, Co-foudner – Chionh Chye Kit
Managing director and Co-Founder of Cynopsis Solutions
Director of CCK Solutions
Advisor to Kyber.Network
Advisor to RegPac Revolution
Software Engineer at Cynopsis Solutions
Machine Learning specialist
CMO, Co-founder- Dan Poh
Director of sales at Cynopsis Solutions
Advisor at FintruX
Advisor at FidentiaX
Compliance, regulatory and FICC
Co-founder – Robin Lee
CXO at Inzsure
GRC Tech (Board)
Silicon Valley exp
Wall Street exp
Compliance/RegTech
Advisors
Technical Advisor - Prof. Ooi Beng Chin
Chair Professor, NUS SOC
Technical Advisor – Dr. Loi Luu
CEO of Kyber
Regulatory Advisor - Nizam Ismail
Partner at RHT Law
Business Advisor -Wont Lee Hong
Executive Advisor to Kyber
Business Advisor – Simon Kim
CEO of Hashed
Pros
- KYC and identity is a real issue
- there is a token economy
- if adopted by ICO’s and Exchanges consumption will drive the demand for tokens
- Cynopsis Solutions and their large umbrella of partnerships and clients
- strong team
- strong advisors
Concerns
- no testnet until Q3 2018
- network launch is scheduled Q1 2019
- already competitors in the market with working product
- no Github
- US$30million raise for 30% of total supply
- specific role of verifier is not clear at this stage
Conclusion
A quick glance into Traceto would seem like they’ve got a big uphill battle to face, competing with the likes of CVC and Self-Key.
This is why due diligence is very important in this space.
After a deeper dig into Cynopsis – Traceto seems to be very strategically placed to take market-share. The potential for huge partnerships and inroads quickly seems very probable. IF Traceto can stay on track with their development of product. Cynopsis was formed in 2014, has partners including Dow Jones and holds a crypto-client list including ICON among many others.
Some could argue that this places Cynopsis at a “first mover advantage in this space,” over the current competition.
Traceto’s CEO Chionh Chye Kit is the co-founder of Cynopsis – let that sink in. This matched with the very clear connection with Kyber.Network among other high value crypto-connections and Simon Kim (CEO of the Hashed Fund) as Business Advisor.
I have heard from the team that there’s already an internal working product, as development seems to be the only thing standing in their way. Personally - I would like to see an active Github.
My concerns are they value their company at US$100, with the US$30million raise for only 30% of tokens. I understand there’s a lot of development ahead for them but this token metric seems a tad high for a DApp and network.
A second concern is the grey area regarding verifiers.
“In our current design, the verifiers will only have access to a users publicly available information. They will not be operating nodes and will never see the information of the user.” – from team.
After reaching out and the response above, I’m still a little unclear as to what their role is and how they fit into the system in conjunction to AI.
I respect the projects timeline understand they will need to fund the development in this. I like projects that are understated rather than hyped and rushed.
Partnerships are a major hurdle and it seems that Traceto could have these locked down with the development to come – if they can nail this, I’m quite confident that Traceto is in poised for large partnerships and very good long-term action.
Note, once some questions are cleared up - scores will be adjusted
Operating concept – Medium
Token use case – Medium
Fundamentals – Medium (until some clarification)
Partners – Strong
Team – Strong
Advisors – Strong
Short term – Medium
Long term – Strong
Great article - thanks for providing valuable insight
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