Chainalysis raised a $16 million Series A from Benchmark, an early venture fund that previously invested in , Discord, Dropbox, , Zendesk, and WeWork. The cryptocurrency compliance startup also released a new product called Know Your Transaction (KYT) which will help companies track criminals involved in financial fraud and money laundering.
Federal Interest: Chainlaysis and the Mt Gox Case
launched in 2014 and currently has 75 employees with offices in New York, Washington, and Copenhagen.
Their clientele and customers include the Federal Bureau of Investigation (, the Drug Enforcement Administration (), the Internal Revenue Service () and .
According to Chainalysis’ published on April 5, 2018, the company stated that they are “proud to announce [they] have additional firepower to help Chainalysis continue to grow and build this future. [Chainalysis has]raised a Series A of $16m from Benchmark and general partner Sarah Tavel is joining our board.”
In 2014, after the heist which resulted in 850,000 stolen bitcoins, Michael Gronager the CEO and co-founder of Chainlysis, noticed an opportunity.
to TechCrunch, Gronager discussed with Jonathan Levin, a post-graduate economist from Oxford the development of “intelligence software that could trace specific transactions on the blockchain.”
Following, Chainalysis became the primary investigator in the Mt Gox case. Despite having a small team they were able to “[crack] the case probably two months in,” said Levin, COO of Chainalysis.
“What we decided when we founded Chainalysis was that we need to solve how we can make the new world of finance work together with the old world of finance,” said Gronager in an with CoinDesk.
“Basically, how can we bridge the gap between banks and bitcoins?”
As the demand for cryptocurrencies grows, so does the need to track its users. Chainalysis’ software is currently being used by major global police operations, cryptocurrency exchanges and, to Forbes, has seen a threefold revenue increase over the last year.
Chainalysis’ new tool: Know Your Transactions
The cryptocurrency compliance software recently released their product Know Your Transactions (KYT) to better service cryptocurrency exchanges, as it will help these companies preemptively detect and prevent fraud and money laundering.
According to Chainalysis’ medium , “Anti-Money Laundering compliance is centered around understanding the purpose behind a single transaction or a collection of transactions done by the same user. Chainalysis KYT provides real-time feedback on the underlying purpose of transactions and feeds that feedback into exchanges’ transaction processing engines.“
The KYT tool has been rolled out to a small group of early customers that have a 20x improvement in the speed of account reviews. Chainalysis announced that they would open the KYT tool to exchanges and financial institutions as of April 5, 2018.
Chainalysis is, however, not the only company that sees a genuine demand in this space. , a London-based company provides similar services by running investigations related to cryptocurrencies. They’ve raised $7 million in funding from the Banco Santander bank and Octopus Ventures.
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