Author: Shenlian Liuliu; Editor: Menren; Operation: Xiaoshitou, Fengqingyang
In 2014, Mt.Gox was hit by thunder, nearly 8.85 million bitcoins were stolen, and it finally declared bankruptcy.
As an early symbolic risk event in the cryptocurrency industry, the Mt.Gox thunderstorm made more people realize that this industry is full of opportunities but also perilous.
Also on October 1 of this year, former Kraken Exchange COO Michael Gronager and others co-founded the blockchain data tracking platform Chainalysis, and assisted the US government in tracking the whereabouts of some stolen bitcoins.
For this reason, Chainalysis has been dubbed the "FBI on the chain" by the industry.
Recently (June 24), Chainalysis completed its E-round financing of US$100 million at a valuation of US$4.2 billion.
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"9 rounds of financing, $4.2 billion valuation"
Chainalysis’ funding history dates back to 2015.
According to Crunchbase data, since its establishment, Chainalysis has completed a total of nine financings. Except for the first round of seed round financing, the amount of financing is unknown, and the remaining eight financings, Chainalysis has raised a total of 366 million US dollars.。
Among the nine fundraisings, the institutions that participated in the Chainalysis investment are of extraordinary strength, including Benchmark, which led the investment in Uber and reaped a 600-fold return, and Coatue, which successively deployed domestic well-known Internet companies such as Heytea, Didi Chuxing, and ByteDance, and Paradigm has extensively deployed in the cryptocurrency industry and invested in more than 20 startups.
Prior to the $100 million E-round financing, on March 26 this year, Chainalysis had just completed a $100 million D-round financing at a valuation of more than $2 billion.
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Chainalysis’ 9 rounds of financing, source: Crunchbase
With every financing, Chainalysis will further expand its business territory.
In 2018, after completing a $16 million Series A round of financing, Chainalysis launched a cryptocurrency compliance tool called Chainalysis KYT (Know Your Transaction), which provides transaction analysis in real time.
In 2019, after completing the B-round financing of US$36 million, it began to enter the Asia-Pacific market with great fanfare.
After completing the E-round financing of US$100 million this time, Chainalysis will openly recruit hundreds of new positions to the world at the same time, recruiting troops to expand the team size。
From a business perspective, at present, Chainalysis has formed a complete blockchain service matrix, with three core products, Chainalysis Reactor, Chainalysis KYT, and Chainalysis Kryptos, and has launched Chainalysis Data.
Among them, Chainalysis Reactor is investigative software that tracks the movement of funds on the blockchain. Through address tags, activities on the blockchain are combined with the real world to facilitate the tracking and investigation of criminal activities.
And Chainalysis KYT is an automated cryptocurrency transaction monitoring software.
Chainalysis Kryptos is an industry analysis software for institutional service providers.
Chainalysis Data can provide users with customized blockchain data demand services.
Through the continuous construction of its own product system, Chainalysis's current business scope has covered multiple directions such as data monitoring and consulting analysis. Its target customers include not only governments and commercial institutions, but also ordinary users.
In 2021, Blockchain companies such as Chainalysis, BlockFi, and Paxo, whose ecology is constantly improving and their valuations are rising, will be ranked among the 2021 Forbes FinTech 50。
And Jonathan Levin, one of the founders of Chainalysis, was also selected as the Fortune Global 40 Under 40 Financial Elite List last year.
"We always overestimate the changes that will occur in the next two years and underestimate the changes that will occur in the next ten years." This is a sentence that Jonathan Levin, the co-founder of Chainalysis, highly recommends.
The cryptocurrency market is full of changes. In Jonathan's view, it seems that compliance and regulation are inevitable in the end。
This is also the original intention of Chainalysis.
Chainalysis was established on October 1, 2014. At that time, the company's business mainly covered: governments, financial institutions, and cryptocurrency exchanges, providing bitcoin transaction analysis software to help customers comply with compliance requirements, assess risks, and identify illegal activities and other services.
Due to its outstanding performance in the theft of Mt.Gox, Chainalysis traced some of the bitcoins stolen by hackers, and thus became an officially authorized assistance agency of the US government.
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"Trusted by the government, favored by capital"
Why does capital choose Chainalysis?
“When I first talked with Chainalysis CEO Michael, I realized that Chainalysis was doing a lot bigger than I thought.”
On Quora, in a question about Chainalysis, Benchmark, the leading investor in the A round of financing, explained why he chose Chainalysis: Compliance issues must be resolved in order to achieve growth.
Today, more and more traditional institutions want to participate in the current and growing cryptocurrency ecosystem, but are afraid of regulatory uncertainty。
And this pain point is precisely the opportunity for the development of Chainalysis. By building a bridge between the free cryptocurrency world and the regulated fiat currency world, more people, wealth, and capital can safely enter the cryptocurrency field.
In addition, the team composition of Chainalysis has also demonstrated its strength in cryptocurrency and financial risk control to the outside world.
Chainalysis CEO Michael was previously the COO of the Kraken exchange, and CTO Jan Moller was previously the chief engineer of the cryptocurrency wallet Mycelium.
In addition, the technical consultant who joined the Chainalysis team in June 2019 has experience working in the U.S. Department of Justice, the U.S. Treasury Department’s Financial Crimes Enforcement Network, and the Treasury Department’s Office of Foreign Assets Control.
Jesse Spiro, the person in charge of Chainalysis's global policy, has also worked for various financial investment and risk control companies for a long time.
Team members from various fields gathered together from all over the world, and at the same time brought their respective experiences and connections to Chainalysis.
In 2015, Chainalysis signed a contract with the FBI and won its first business, with a contract amount of only $9,000.
In the ensuing five years, Chainalysis has gradually gained the trust of government agencies with several excellent investigations and tracking.。
In 2017, a Florida woman died from an overdose of fentanyl-like drugs (opioids) purchased on the dark web. This attracted the attention of the US Drug Enforcement Administration and launched an investigation into the case.
Since most of the drug dealers on the dark web use cryptocurrencies for transactions, the US authorities chose to use Chainalysis to track them down, and finally determined the real identity of the criminals and captured them.
Coincidentally, in October 2019, the U.S. Department of Justice used Chainalysis' services to finally shut down WTV, one of the world's largest child pornography websites, capturing hundreds of criminals and rescuing 23 children.
In recent years, with the rapid development of the cryptocurrency industry, the tentacles of cryptocurrencies are stretching across the world, and related illegal and criminal activities have also become more and more.
The importance of Chainalysis in combating smuggling, drug trafficking, and economic fraud with the help of cryptocurrencies is becoming more and more prominent, which makes Chainalysis more and more favored by government departments.
According to statistics, the amount of cooperation between the US government and Chainalysis exceeded US$5 million in 2019, an increase of 20% compared to 2018, but an increase of 22,558% compared to 2015.
Today, Chainalysis' U.S. government clients include not only the FBI, SEC, CFTC and other familiar departments, but also the U.S. Drug Enforcement Administration, the U.S. Transportation Security Administration, and the U.S. Air Force.
Even Reuters and Bloomberg, among the world's four major news agencies, have begun to frequently quote Chainalysis data in their reports.
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"Under the background of regulation and compliance, the development prospects of Chainalysis"
While Chainalysis is developing and growing, it is also facing criticism.
In some people's eyes, as a cryptocurrency-native enterprise, the Chainalysis business itself and its close relationship with the government are somewhat contrary to the spirit of the blockchain.
"Such companies are unethical."
On April 28 this year, Bitcoin security expert Andreas Antonopoulos publicly criticized Chainalysis for providing information on millions of citizens directly or indirectly to the worst dictators and regimes in the world.
In addition, in 2019, Chainalysis was also exposed to be suspected of sharing user personal data with Coinbase, which was accused by the encryption community.
Although Chainalysis responded in the follow-up, it only had access to the user's transaction data, and did not have access to the user's personal information.
But this explanation, at the time, was not accepted by many people.
Today is different.
In the past two years, the entire cryptocurrency field has entered the fast lane of development.
At the moment when the world is flooding and inflation is serious, many institutions and capitals have included Bitcoin in their balance sheets to diversify asset allocation and fight against inflation。
In the past, there were MicroStrategy and Tesla’s bargain hunting, and then there were Meitu and Nexon who took over at high positions. What’s more, American pension providers also invested 5% of their investment portfolios in cryptocurrencies, and even the original stock market funds, bulk stocks, etc. Investors in the field of commodities and futures crude oil entered the market one after another, joining this wave.
However, at the same time, all kinds of security incidents in the industry have increased exponentially, whether it is the frequent hacking incidents in the DeFi field, or the US East Coast oil pipeline system that caused a sensation in the world not long ago. event.
All kinds of security incidents are seriously threatening the asset security of institutions and enterprises entering cryptocurrency.
According to statistics, as of now, there have been 426 security incidents in the industry, with a loss of nearly 15 billion US dollars. In 2020 alone, there were 122 security incidents in the blockchain ecology, including 54 security incidents of smart contracts and tokens, 29 security incidents of exchanges, 12 public chain attacks, 12 wallet attacks, and other attacks. There were 15 incidents.
Add to that the tightening of global regulation.
As a blockchain analysis company that started by cooperating with the government and is committed to embracing compliance and assisting in fighting crime, Chainalysis may have more room for development when regulation and compliance become industry trends now and in the future.
