Chainalysis Receives New Funding in Series B
Blockchain tracking and analysis company, Chainalysis, has received $13 million in Series B funding from Ribbit Capital and Sound Ventures. This increases the Series B funding total to $49 million joining Benchmark, Accel, Sozo Ventures, and MUFG.
Chainalysis offers services to both private and government offices, analyzing blockchain and cryptocurrencies. Blockchain analysis tracks payments both locally and internationally. Its products are used extensively in compliance. Specifically, Chainalysis KYT (Know Your Transaction) and Chainalysis Kryptos, are used across 44 countries. The nature of blockchain as an encrypted protocol requires specialized tools to provide transparency.
A recent press release explains the need and desire to provide transparency to the blockchain.
“Chainalysis is founded on the belief that providing data insights into cryptocurrency activity will unite government agencies, exchanges, and financial institutions to fuel the industry’s growth,” said Michael Gronager, CEO and Co-Founder, Chainalysis.
The Tax Man Cometh
The IRS has shown a renewed interest in cryptocurrency. The IRS Criminal Investigation Division announced it is searching for tools to track decentralized cryptocurrencies designed to be anonymous, including Monero, Dash, and Zcash.
In a report made in late June, the government agency made a public request for potential tools that will be better able to track crypto transactions. Released documents also show that the IRS is requesting $40.54 million in additional funding to enforce virtual currency compliance better.
Tom Robinson, the co-founder of the Chainalysis competitor Elliptic, explains that tracing these transactions can prove challenging.
“The development of technologies to enable the tracing of Monero transactions or of Zcash transactions between shielded addresses will be extremely technically challenging . . . “Even if such techniques are developed, they are unlikely to be effective for long, as either the exploits are patched, or criminals move to using other cryptoassets.”
This cat-and-mouse chase is familiar to users of privacy-centric cryptocurrencies. Specifically, Monero transactions have proven to be extra tricky to track. Unlike Bitcoin wallets, Monero wallets do not reveal balances or the sender/receive addresses. It also utilizes Ring Signatures that further make tracking funds difficult as it “mixes” the coins sent. These measures make Monero widely used for private transactions.
As a result of these anonymizing features, privacy coins have had difficulty finding a home of mainstream crypto exchanges. DASH is the exception to the rule as it has been available on Coinbase since 2019, albeit with its privacy features disabled.