Strike is a blockchain-based payment platform developed by Zap Solutions, a fintech company headquartered in Chicago. Launched in 2020, Strike leverages the Bitcoin Lightning Network to provide a fast and low-cost payment system for peer-to-peer (P2P) transactions and remittances. The platform allows users to send and receive money globally, using fiat currencies or Bitcoin, without requiring traditional intermediaries such as banks. This decentralized approach enables nearly instantaneous transactions and lower fees than conventional money transfer services.
Strike has raised significant capital, including $90 million in a Series B funding round led by Ten31, to expand its global reach and enhance its payment infrastructure. The app is currently available in over 95 countries and focuses on emerging markets like Latin America. It offers various features such as using debit cards to buy Bitcoin, sending money internationally via the Lightning Network, and even direct paycheck deposits in Bitcoin.
The platform's goal is to provide better access to Bitcoin and other digital financial services, especially for users in regions with unstable local currencies. Through partnerships likeBitrefill, Strike users can also use their digital assets to make real-world purchases, bridging the gap between crypto and everyday financial transactions.
Objective
Strike sought to establish a comprehensive Compliance and Licensing Maintenance Program across all US jurisdictions to support its global peer-to-peer crypto payment platform.
The goal was to build a compliance framework that addresses regulatory requirements for anti-money laundering (AML), fraud prevention, cybersecurity, and other critical areas.
Background
As an early-stage company pioneering a global peer-to-peer payments app with Bitcoin-native financial experience, Strike appreciated the importance of developing a sophisticated compliance program to support expanding its operations in the US.
The company's high-volume transaction model required an expert approach to mitigate the risks related to money laundering, fraud, and other financial crimes. Additionally, with diverse offerings including fiat and crypto transfers, the company needed to enhance its compliance program to navigate the complex regulatory environment.
Strike required a tailored approach to compliance, given varying federal and state regulator requirements and the crypto industry’s evolving landscape. As a newly established company, Strike recognized the need to understand industry best practices and deploy reliable crypto compliance tools. The company needed specialized expertise to design a program that would scale effectively and mitigate regulatory risks.
To address these challenges, Strike partnered with InnReg to develop a comprehensive compliance and licensing maintenance framework to support its rapid growth.
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Challenges
Strike faced multiple challenges in building a compliance program suitable for its innovative crypto payment platform:
Navigating Complex Regulatory Requirements: As a crypto exchange operating across various US jurisdictions, Strike had to comply with multiple regulators, each with distinct frameworks for areas like AML, KYC, cybersecurity, and fraud prevention. This made monitoring and reporting a complex, multi-layered task.
Developing Solutions in an Evolving Industry: Operating in a nascent industry with few established best practices and leading tools, Strike needed to create tailored compliance solutions from the ground up. This required specialized knowledge to select appropriate tools and implement effective compliance strategies.
Managing Cost and Scalability: The high volume of transactions and the complexity of compliance requirements posed significant cost and scalability challenges. Strike needed to build a scalable compliance infrastructure that could handle growing transaction volumes without compromising on regulatory adherence or operational efficiency.
InnReg's expertise was essential to overcoming these challenges, helping Strike establish a compliance program to support its US operations and continued growth.
InnReg's Solution
To help Strike develop and implement its US compliance program, the team provided support across several key areas:
Custom Compliance Program:
InnReg designed and implemented a comprehensive compliance framework that met state and federal regulatory requirements, covering areas such as AML processes, suspicious activity monitoring, vendor management, employee compliance, and license maintenance.Automation and Resource Support:
Leveraging automated tools and an outsourced compliance team, InnReg enabled Strike to efficiently manage escalations and review suspicious transactions. This approach helped Strike handle high volumes of transactions while maintaining regulatory compliance.Risk-Based Procedures: InnReg created customized procedures tailored to both business-to-business (B2B) and business-to-consumer (B2C) risk profiles, helping Strike manage risk more effectively across different customer segments.
Suspicious Activity Algorithm: A specialized algorithm was developed by InnReg to identify and flag suspicious activities. This customized solution is now a core component of Strike’s compliance operations, enhancing its ability to detect and manage potential risks.
Client Results
With InnReg’s support, Strike successfully built an internal compliance team and transitioned to managing its compliance operations independently. The custom-built compliance program developed by InnReg provided the foundation Strike needed to handle ongoing regulatory obligations across US jurisdictions.
During the engagement, InnReg collaborated closely with Strike’s internal team to transfer knowledge and ownership of the compliance program and regulatory technology management. This collaboration allowed Strike to effectively manage their licensing requirements and compliance processes, scaling operations while mitigating risks.
InnReg’s expertise also contributed to Strike’s successful launch of its global mobile payment crypto platform, which was widely recognized as one of the most significant developments in the crypto space in 2021. The compliance framework and strategic guidance provided by InnReg helped Strike navigate complex regulatory environments and positioned the company for continued growth and innovation.
