"When a big federal investigation broke up a massive child porn ring earlier this year, data sleuthing outfit Chainanalysis tracked pedos directly back to the wallets. It was not the only headline-grabbing intervention by the NYC firm, led by Michael Gronager, has been involved with. Over the last five years, Chainalysis has taken in more than $10 million in contracted work for various U.S. government departments, dwarfing its competitors in the blockchain surveillance industry, while helping to track countless unscrupulous individuals. The company, which sells anti-money laundering software to bitcoin businesses, also reportedly helped suss out the Hermit Kingdom’s vast crypto trove. “What we found is that the different types of crime and illicit activity that these agencies need to be able to prevent means that our appeal has become much broader, and our role expanded,” Jonathan Levin, co-founder of Chainalysis, has said."
"While Bitcoin is pseudo-anonymous by nature, many details surrounding the transactions on the ledger are completely public. Information such as the sending address, receiving address, amount sent and anything in the memo field is viewable to anyone. This information ultimately leaves digital crumbs for anyone to find every time you interact with the network.
If you’re like most people, you’ve used centralized exchanges as fiat on and off-ramps. With this, you’ve likely had to verify your identity with the exchange by uploading your name, birthday, address, and sometimes even your social security number. This in combination with the open nature of public blockchains means that every transaction you’ve ever sent has likely been recompiled and stored into an institutional database linked to your real world identity.
Blockchain analysis tools such as Chainalysis makes analyzing this data easy for institutions. It allows major financial institutions, exchanges and governments to detect and investigate money laundering, fraud, or compliance violations by putting meaning behind every transaction. The company has recently entered purchase agreements with major government agencies including the IRS, ICE, and the FBI. Governments are beginning to understand and prosecute against crypto asset users. Over the next few years, we suspect this theme will exasperate as governments defend their control over money and suppress the proliferation of decentralized money."
One company whose name is synonymous with the rise of Know Your Transaction is Chainalysis. The firm, who specialize in following the money trail through the blockchain, are a controversial company to say the least. On the one hand, their software has helped trace the movements of Mt Gox’ stolen bitcoins. But on the other hand, cryptocurrency users don’t like to think of their every transaction being recorded and associated with their real world identity in perpetuity. And having recently raised $16 million, Chainalysis’ snooping tools are coming soon to a blockchain near you."
- "Tether is using (12-2-2020) Chainalysis' "Know Your Transaction" tool to create risk profiles for USDT users and monitor potentially suspicious activity."
Team, Funding, partners
- Michael Gronager; CEO, former COO of Kraken.
- Jonathan Levin; co-founder
- Sigal Mandelker; U.S. Treasury’s former key undersecretary under Trump, has joined the board of advisors.
"The blockchain analysis firm had a longstanding relationship with FTX, going back to at least 2019, when the two joined forces to revamp the exchange’s anti-money laundering (AML) and know-your-customer (KYC) systems. Analytics firm Chainalysis has announced that it is owed money in the bankruptcy proceedings for collapsed exchange FTX. Yesterday’s filings do not specify how much money Chainalysis may be owed. A representative for Chainalysis declined to comment when contacted by Decrypt."
- Raised $100M in a series D from Paradigm, Ribbit and others (27-6-2021).
- From CoinDesk (20-11-2020):
"Chainalysis expects to raise $100 million venture capital at a $1 billion valuation as early as next week, the company told Forbes. The Series C is being led by VC newcomer Addition with participation expected from Accel, Benchmark and Ribbit, Forbes reported. Those three firms have all invested in earlier Chainalysis rounds."
- Is deep in bed (10-2-2020) with the government of the USA:
"It started with a $9,000 data software contract for the FBI in 2015. But just five years later, Chainalysis is now the cryptocurrency-tracing equivalent of Palantir, the data analytics company flush with lucrative government software contracts. Chainalysis is, right now, doing millions of dollars worth of business each year with the U.S. government, dwarfing its competitors in the young industry of blockchain surveillance.
Federal agencies have spent at least $10 million ($10,690,706 to be precise) in American tax dollars on Chainalysis’ tools, services and training since 2015, when Chainalysis was founded, according to 82 records of federal procurement contracts reviewed by CoinDesk. Counting contracts with possible extensions, the company stands to take in more than $14 million."