Chainalsysis, a top firm aiding both public and private entities monitor and track crypto transactions, is expected to raise $100 million at a $1 billion valuation according to a report by Forbes. The new funding is said to be led Lee Fixel’s VC firm, Addition, along with prior investors. This past summer, Chainalysis expanded a Series B round backed by prominent VC firms.
Founded in 2014, Chainalysis offers compliance services to regulators and law enforcement as well as businesses. The company has emerged as a leader in the blockchain industry when it comes to forensic analysis for digital asset transactions. The report indicated that Chainalysis currently has around 350 customers – including the US government.
In fact, earlier this month Chainalysis aided the US government in tracking down $1 billion in crypto that was tied to the Silk Road darknet market. IRS-CI agents used Chainalysis to analyze Bitcoin transactions executed by Silk Road. The company subsequently identified 54 previously undetected Bitcoin transactions that were said to represent the proceeds of unlawful activity. Chainalysis also found a hacker who stole those funds from Silk Road.
Last August, Chainalysis provided the tool kit to allow the US Department of Justice to hunt down 280 crypto wallets affiliated with North Korea and stolen digital goods. The group of hackers known as the Lazurus Group attempted to launder the funds but the efforts were for naught as the crypto-sleuths at Chainalysis were able to track them down.
Cryptocurrency transactions are unique in that the trail of transactions is “immutable” and thus exist in perpetuity. Moving crypto is more like sending a postcard in the mail where anyone may read it. With the correct skills and computing power, a sophisticated organization may trace transactions and wallets where the crypto is held. The emergence of Chainalysis and similar firms may doom the days of illicit transactions taking place via cryptocurrency.
Due to the rise in government services, Chainalysis announced a new office in Washington, DC last month. Michael Gronager, co-founder and CEO, Chainalysis, stated at that time:
“Chainalysis builds trust and brings legitimacy to the future of finance. When law enforcement and regulators become comfortable with digital assets, exchanges are able to grow and financial institutions can enter the ecosystem to safely and responsibly capitalize on this growing asset class. I’m excited about the top talent we are bringing on to prepare the company for the next wave of cryptocurrency adoption.”