On 23 November 2020, New York-based blockchain analysis firm Chainalysis announced it raised $100 million in its Series C financing round, led by venture capital firm Addition. Other investors included Accel, Benchmark, and Ribbit, which participated in previous rounds. Chainalysis’ total value is now over $1 billion, gaining unicorn status.
The firm plans to use the extra capital to promote the global expansion of its network comprising various government agencies, financial institutions, and private businesses. In some ways, Chainalysis is like a new age audit firm where its reviews focus on cryptocurrency transactions and markets. The firm wishes to expand its presence in Australia and South Korea addintg to its recently opened Singapore and Tokyo offices.
“The firm’s data, technology, and network are foundational to the blockchain ecosystem,” said Lee Fixel, founder of Addition. “With impressive growth to date, the opportunity for continued global expansion as the preferred partners to governments and businesses seeking compliance and investigative insights is massive.”
Chainalysis government agency customers include the United Nations Office on Drugs and Crime (UNODC) and EUROPOL, but the company is particularly influential in the U.S. According to a Bitcoin.com report, a rogue employee revealed contracts with Homeland Security, the FBI, IRS, ATF, DEA, SEC, Secret Service, CIA (through In Q Tel), NYPD and other large police departments.
In August 2020, Chainalysis assisted the Department of Justice (DOJ) dismantle two terrorism financing campaigns that used cryptocurrency donations. Over $1 million worth of cryptocurrencies were recovered. Shortly after that, the DOJ demanded the forfeiture of 280 cryptocurrency addresses affiliated with North Korean exchange hackers, the Lazarus group. About $28.7 million worth of cryptocurrency was expected to have been stolen. Chainalysis aided the DOJ by providing investigative and transaction monitoring tools.
“Government agencies and the private sector need the right data, tools, and insights to responsibly oversee and participate in the cryptocurrency economy,” said Chainalysis CEO and Co-Founder, Michael Gronager. About the firms’ global influence, he added, “We have established a network of government agencies in over 30 countries and more than 250 of the most important businesses around the world who are making it safer and easier for consumers and businesses to transact, fundamentally changing the way money works.” Chainalysis is currently present in over 45 countries with 350 customers.
The startup raised $16 million in its Series A financing round in April 2018, led by Benchmark. In February 2019, its Series B round secured $36 million and was expanded to $49 million in July. Japanese firms MUFG Innovation Partners (MUIP), a wholly-owned subsidiary of MUFG, and Sozo Ventures were lead investors in that round.
Meanwhile, Addition, the lead investor for the current round, is a new tech-focused fund launched this year that was close to raising $1.3 billion in June, according to the Financial Times. Founder Lee Fixel was formerly a top investor at Tiger Global Management where he spent more than 13 years.
