The risks associated with holding and managing crypto assets are constantly evolving. Sumsub cooperates with the top blockchain analytics services to mitigate these and evaluate the security and reliability of cryptocurrency wallets.

Why you need wallet risk scoring?

A transparent and reliable risk scoring system not only helps protect your and your clients' assets, but also promotes a more secure and informed crypto community.

Wallet address risk scoring is used to evaluate both hosted and unhosted wallets:

• Mitigate risky transactions. Evaluate crypto wallets before approving any transactions. Streamline compliance checks with in-depth insights on wallet risks.
• Confidently onboard new customers. Efficiently assess the source of funds in potential customers' wallets. Tailor your in-platform alerts to align with your risk tolerance, minimizing false positives and enhancing user experience.
• Prevent fraud. Safeguard your business against fraud-related losses. Identify account takeovers and thwart theft by blocking transactions to wallets associated with illicit activities.
• Ensure compliance with the Travel Rule. Facilitate adherence to the Travel Rule by pinpointing crypto addresses linked to Virtual Asset Service Providers (VASPs).

How wallet address risk scoring works?

The wallet risk scoring solution is part of the Sumsub Crypto Monitoring solution. We offer a number of providers for conducting the checks:

• Scoring via the Crystal provider (default) — our established partner that provides the information for estimating the risks of wallet addresses. All of the settings and results are available on our Dashboard.
• Scoring via Chainalysis. Results are visible via the Sumsub dashboard, however investigations have to be done on the provider dashboard.
• Scoring via Elliptic. Results are visible via the Sumsub dashboard, however investigations have to be done on the provider dashboard.

Once a crypto transaction is initiated, Sumsub extracts the wallet address, checks it via its partners, and generates a report containing detailed information, including the destination address connections and the risks associated with the involved wallet addresses.

Destination address connections

Destination address connections are displayed as the percentage of transactions/exchanges with particular connections. There are signals indicating the source of funds of a particular transaction.

For details illustrating the response types and explaining each signal, refer to this article.

For each signal, you can set up a custom rule that will be triggered accordingly.

Wallet address risk level

The Risk level and Risk score values are shown as follows:

• A score from 0 to 0.25 indicates a Low value in the Risk level field.
• A score from 0.25 to 0.6 indicates the Medium value in the Risk level field.
• A score from 0.6 indicates a High value in the Risk level field.

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Note

Risk score values are an illustrative example from Crystal Intelligence. Different blockchain analytics providers represent risk scores differently.

Get started with wallet address risk scoring

If you have never used Sumsub, visit our website and click Get started to begin your journey or contact our sales department.

If you are already a Sumsub customer:

1. In the Dashboard, open the Rules Library and enable the Crypto Monitoring - Crystal Intelligence, Crypto Monitoring - Elliptic, or Crypto Monitoring - Chainalysis rule bundles.
2. Create the rules you need.
3. Set rule conditions for different signals. For example, to treat wallet addresses with exposures to sanctions differently (the condition described in the example can be modified based on your internal risk policies):
   1. Add a condition with the following Field expression: preScoringContext.cryptoTxnInfo.signals.sanctions.
   2. Add a value and determine its relation. For instance, the value of the sanctions signal equals 0.01.
4. Specify the rule action, and choose to add tags to the transaction if needed.
5. You can also choose to add transactions that are affected by your rule to a Case or assign them to a specific compliance officer.
6. Save your changes.
7. Test your setup to double-check if the rules work as expected.

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Note

For illustrative purposes, we have used a sanctions signal. When activated, the rule from the example will be triggered if there is a 1 % exposure associated with wallet addresses that have been sanctioned or are related to Sanctioned entities.

For scoring via Chaninalysis or Elliptic, you can also link your Chainalysis credentials, or your Elliptic credentials so the risk estimation process could include the alerts from this provider.

Score wallets

To score wallet addresses:

1. Submit transactions using any of the following methods:
   • Submit transactions individually.
   • Submit transactions for non-existing applicants.
   • Import transactions in bulk.
   • Create transactions manually using the Dashboard wizard.
2. Handle monitoring results via webhooks or in the Dashboard.