Chainalysis Secures $100 Million in Series D Funding

Chainalysis, a leading firm specializing in blockchain analytics, revealed on Friday the successful completion of a $100 million Series D funding round. This investment has resulted in a doubling of the company’s valuation, now exceeding $2 billion.

Recent Funding and Investment Details

This latest funding event occurred only four months following the securing of a $100 million Series C round, which valued the company at $1 billion. Paradigm spearheaded the current funding initiative, with existing investors Addition and Ribbit increasing their stakes in the company. TIME Ventures, the investment arm of Marc Benioff, also contributed to this financing, bringing Chainalysis’ total funding to $265 million.

This round represents Chainalysis’ fourth capital raise in under two years. Accel and Benchmark are also among the company’s previous investors.

Company Origins and Current Services

Founded in 2014, Chainalysis initially served as the primary investigators during the significant hack of Mt. Gox, formerly the largest cryptocurrency exchange globally. Currently, the New York-based organization delivers data, software solutions, services, and research to a diverse clientele.

These clients include government agencies, cryptocurrency exchanges, financial institutions, and companies focused on insurance and cybersecurity, spanning over 60 nations. Notable customers include fintech companies like Square, financial institutions such as Barclays, and cryptocurrency businesses including Gemini, Bitstamp, and BitPay.

Mission and Impact

Chainalysis defines its core mission as “building trust in blockchains to promote greater financial freedom with reduced risk.”

The company asserts that its data platform supports tools for investigation, compliance, and risk management. These tools have reportedly been instrumental in resolving complex cybercrime cases and facilitating safer access to cryptocurrency for consumers.

Future Outlook and Blockchain Adoption

According to co-founder and CEO Michael Gronager, Chainalysis anticipates a future where blockchain technology is integrated into the operations of virtually every company.

“We have amassed more information regarding blockchain activity than any other entity within the cryptocurrency sector,” Gronager stated. “This data empowers our clients to make more informed, data-driven decisions.”

Key Achievements Over the Past Year

• Increased annual recurring revenue (ARR) by over 100% compared to the previous year.
• Doubled its client base, now serving government entities in more than 30 countries and private sector businesses in over 60 countries.
• Expanded support to encompass more than 100 digital assets across 10 native blockchains, representing approximately 90% of total cryptocurrency economic activity.
• Doubled its workforce to a current total of 233 employees.
• Grew its partnership program to include over 50 companies, such as Fireblocks and Flashpoint.

Chainalysis intends to significantly expand its team throughout 2021 and will primarily allocate the new funds to enhance its enterprise data offerings.

“Our investment will continue in investigation and compliance software, but we will also develop new data products for both current and prospective customers,” Gronager explained.

Focus on the Asia-Pacific Region

The company is particularly prioritizing expansion within the Asia-Pacific region.

“Cryptocurrency operates on a global scale, and so does Chainalysis,” Gronager emphasized.

Transparency and Blockchain Analysis

Chainalysis views cryptocurrencies as offering an unprecedented level of transparency.

“They represent the first global payment systems operating independently of any single organization’s control, yet their blockchains generate public, permanent records of all transactions, including those involving illicit activities,” Gronager explained to TechCrunch.

Blockchain analysis involves interpreting these publicly available blockchain ledgers. Chainalysis’ tools are designed to help government agencies, cryptocurrency businesses, and financial institutions identify the real-world entities involved in transactions.

“For instance, we can demonstrate that a specific transaction occurred between two cryptocurrency exchanges, or between an exchange and an illicit entity, such as a darknet marketplace or a sanctioned organization,” Gronager clarified.

Paradigm’s Perspective

Fred Ehrsam, co-founder of Paradigm, stated that his firm was attracted by Chainalysis’ provision of essential data infrastructure and software for the cryptocurrency ecosystem.

“The team possesses an unparalleled understanding of the regulatory environment, has consistently refined their tools over the years, and deeply understands their customers’ needs. This is not a sudden success; it’s a team that has built with a long-term vision, navigating multiple crypto cycles, and establishing a market-leading position with the potential for continued growth,” he added. “As cryptocurrency adoption increases, so will the demand for Chainalysis’ offerings.”

Broader Cryptocurrency Market Trends

Demonstrating further growth in the cryptocurrency sector, BlockFi recently announced a $350 million Series D funding round at a $3 billion valuation. This financial services company caters to both retail and institutional cryptocurrency market investors.

Significantly, BlockFi is also a client of Chainalysis. In a statement, CEO and co-founder Zac Prince noted that Chainalysis provides BlockFi with data “that delivers insights beyond compliance that can help inform our business development activities, tailor our offerings, and identify new revenue streams.”