You can add Matt Mellon, descendant of the famed banking family, to the ranks of the Bitcoin believers. The 49-year-old former chairman for the New York Republican Party’s Finance Committee decided in April that he wanted to get in on the Bitcoin frenzy and called the Winklevoss twins for advice. They linked him up with Alex Waters, a former core Bitcoin developer and the then chief technology officer of Bitinstant, the currently-defunct exchange into which the twins invested $1.5 million. Waters instructed Mellon to buy a new Apple laptop, buy his Bitcoin and then put them into cold storage on USB drives kept at various locations around the States. Mellon says he got the “Bitcoin bug,” losing hours of sleep each night pondering Bitcoin’s possibilities. He and Waters started a conversation about how to make Bitcoin more legitimate in the eyes of banks and the government, so that it can take off and become the hundreds-billion market that investors such as the Winklevoss twins predict.

That conversation also involved Yifu Guo, another 20-something like Waters, who became a “Bitcoin millionaire” selling computing equipment dedicated to “Bitcoin mining” though his company Avalon. Now the unlikely trio of two technologists and a Wharton grad is launching Coin Validation, a due diligence service for Bitcoin businesses that they hope will help set regulators’ minds at ease.

It’s a tracking system for Bitcoin ownership that would theoretically weed out ‘bad actors’ – like the Dread Pirate Roberts – from the legitimate Bitcoin business world. Their plan is to compile a database of the known identities associated with Bitcoin addresses in the hope that Coin Validation will become the one-stop-identity shop for law enforcement when trying to find out who’s doing something nefarious with Bitcoin, while providing a red-flag system for businesses who have customers trying to use Bitcoin that’s associated with illicit use.

“Essentially, we’ve been working with regulators for a structured approach for Bitcoin customers to be compliant,” says Waters. “We set up an API to work with their systems and we supply reporting tools they need for their databases. Which bitcoin addresses belong to a person? That’s the problem we’re solving.”

via Sanitizing Bitcoin: This Company Wants To Track ‘Clean’ Bitcoin Accounts – Forbes.