the crypto intelligence company that helped crack the Benchmark just funded Chainalysis, Mt. Gox case
When the
virtual currency exchange Mt. Gox collapsed into bankruptcy in 2014 following
the disappearance of hundreds of thousands of bitcoins and tens of millions of
dollars, those who lost money were understandably furious.
For a small
group of people, however, the theft — likely masterminded, we now know, by a
Russian cybercrime suspect who was arrested in Greece this past
summer — would prove auspicious.
Specifically,
Michael Gronager, who was then chief operating officer of the Kraken bitcoin
exchange, spied an opportunity to team up with a new friend, Jonathan Levin, a
post-graduate economist from Oxford who’d written academic works on
crytpocurrencies. The two were already discussing intelligence software that
could trace specific transactions on the blockchain and be sold to law
enforcement. Before long, their young company, Chainalysis,
was the official investigator on the Mt. Gox case, hired by its bankruptcy
trustee to find all those missing coins.
Its small
team “cracked the case probably two months in,” Levin says now.
It was a far
bigger credit than most companies start off with, and Chainalysis smartly ran
with it, signing up customers like the Federal Bureau of Investigations, the
Drug Enforcement Administration, the Internal Revenue Service and Europol to help
them catch criminals.
But
Chainalysis — which now employs 75 people and has offices in New York,
Washington, and Copenhagen — isn’t interested in forensics alone. It has much
bigger ambitions to work with the world’s financial institutions to help them detect fraud and
prevent money laundering. Largely, it aims to do this with a new product
called KYT — for Know Your Transaction — that Levin says provides
real-time feedback on the underlying purpose of blockchain transactions and
feeds into exchanges’ transaction processing engines. Compliance personnel can
also use Chainalysis’s dashboard to generate alerts on risky customers and
export suspicious activity reports.
A small
group of early customers has already been using the product, whose cost Levin
declines to say publicly. Starting today, it says its opening up the product to
any financial institution wanting to use it.
For its law
enforcement and government customers, Chainalysis is also launching
investigation tools around 10 more currencies, in addition to Bitcoin. The
first of these: Bitcoin Cash, a fork of Bitcoin that was launched last summer
following a longstanding disagreement in the crypto community about how to
scale Bitcoin.
The other
cryptocurrencies are to be determined, says Levin, adding that as far as
Chainalysis is concerned, “The different blockchains that power different
cryptocurrencies are all part of the same machine.”
Chainalysis
has competitors, including Elliptic, a London-based rival that similarly
runs investigations related to cryptocurrency and has raised $7 million in
funding to date, including from the bank Banco Santander and Octopus Ventures.
It may be
harder than ever to catch Chainalysis, however. To wit, in addition to
announcing its new product for financial institutions and it plans to support
more cryptocurrencies, the company is today announcing that it has landed $16
million in Series A funding from Benchmark, one
of the best venture firms in the business.
The bet is
going to mean something to industry watchers, given that Benchmark hasn’t made
a crypto related investment in several years. One of its only bets, in fact,
was to invest in 2014 in Pantera Capital, the hedge fund
operator that buys and sells virtual currencies.
That may
well change with Benchmark’s newest general partner, Sarah Tavel, who led the
deal in Chainalysis and has joined its board. Tavel has been tracking the
industry for several years, including as a VC at her prior firm, Greylock, and
it’s a “space I continue to spend time in. “There will be some short-term noise
and pain, but I long term believe in it,” she says.
1.How to Enable Bitlocker in windows 10 2.How to create folder without Icon 3.How to take driver backup in Windows 4.How to download Youtube video Pc or Mobile without any software
As for
Benchmark’s interest in Chainalysis in particular, Tavel suggested that it was
a no brainer. It’s a “meat and potatoes company,” she says. “All these
regulated institutions want to participate [in cryptocurrency transactions] but
they need to understand with whom they are transacting and where their funds
are originating. We’d solved these traditional compliance requirements in the
fiat world.” With Benchmark’s newest portfolio company, suggests Tavel, the
cryptocurrency world has its solution now, too
the crypto intelligence company that helped crack the Benchmark just funded Chainalysis, Mt. Gox case
Reviewed by Anand Yadav
on
April 05, 2018
Rating:
No comments: