Chainalysis is a blockchain analysis firm that provides data and software to government agencies, exchanges, and financial institutions.
As cryptocurrencies became more popular over the years following the launch of Bitcoin, the market value grew, and they became a target for cybercriminals. Since digital asset transactions leave a unique, on-chain trail, the rise in crime led to a demand for specialist tools and intelligence services for tracing stolen and illicit funds, creating a segment known as blockchain analytics.
Chainalysis is one of the earliest operators in this segment and has become a leading player, although now it competes with several others, including CipherTrace and Elliptic.
History of Chainalysis
Chainalysis was founded by CEO Michael Gronager, CSO Jonathan Levin, and former CTO Jan Moller. The company emerged from the aftermath of the infamous Mt.Gox incident after the bankruptcy trustee appointed Kraken to investigate the exchange hack. At the time, Gronager was the COO of Kraken and went on to create the company with Levin and Moller to develop specialist software to scan the blockchain ledger to detect suspicious activity.
Chainalysis quickly became a provider of choice for investigators of cryptocurrency-related crimes. It was credited with assisting with the recovery of over $1 billion from the takedown of Silk Road and has also been instrumental in identifying international crime syndicates behind several prominent hacking incidents.
As of early 2024, Chainalysis raised over $530 million in funding from backers, including Paradigm and Barclays Bank, with the most recent estimates valuing the company at around $8.6 billion. Chainalysis employs around 900 people globally and is headquartered in New York City.
Chainalysis Crypto Tracking Services
Chainalysis owns and operates a proprietary set of tools for on-chain analytics. However, to protect its business and clients, the firm doesn’t disclose extensive details of how its tools operate. Rather, Chainalysis provides a set of services tailored to various types of clients, including law enforcement agencies, regulators, financial institutions, corporations, and other entities.
Chainalysis Investigations
Chainalysis Investigations focuses on crypto-related crime and compliance breaches. A law enforcement agency may use Chainalysis activities like identifying and following up on leads that indicate a crime or breach has occurred. To do this, they would trace the movement of funds across wallets, blockchains, and exchanges, and develop the case by supporting it with the presentation of on-chain evidence.
Other entities using Chainalysis Investigations include tax agencies seeking to investigate tax avoidance, and private sector clients carrying out due diligence and risk checks on prospective business associates.
Chainalysis Intelligence
Chainalysis Intelligence is a database that maps over 65,000 real-world entities to over a billion on-chain addresses and accounts. It uses machine learning and forensic techniques to cluster activity, which helps facilitate investigations.
The company claims that its tools have helped to recover over $11 billion in stolen assets.
Web3 Growth
Web3 companies seeking data and information to support their growth in the sector can also use Chainalysis tools and intelligence. For example, a new project may need to know which blockchain platforms attract the most users in a particular segment, when those users are most active, which wallets and services they rely on, or which competitor dapps they use.
Crypto Compliance Services
Chainalysis supports firms with their compliance-related needs for interacting with digital assets and digital asset users. For example, it offers tools that can scan addresses for illegal or suspicious activities and carry out checks to evaluate prospective clients for compliance-related risks, such as being under government sanctions.
It can also carry out monitoring at the transaction level. For example, centralized exchanges may use Chainalysis to carry out continuous crypto tracking of transactions, identifying those that originate from or are sending funds to suspicious entities. Many of these requirements are now becoming mandatory under anti-money laundering regulations.
Chainalysis also supports companies with cybersecurity measures relating to digital assets, such as implementing effective policies and practices based on the most recent known threats.
Chainalysis Insights
Although not one of its core services, Chainalysis has become renowned for delivering regular, reliable surveys and reports based on the data and intelligence it gathers using its tools. For example, it issues an annual report on the state of crypto-related crime, which has helped cement its status in the industry as a leading authority on the subject matter.
In these reports, the company previously provided insights into the outcomes of its investigations into specific incidents, such as the 2019 phishing attack on Singaporean exchange DragonEx which was attributed to a renowned crime ring.
Insights also publishes a “Geography of Cryptocurrency” report that details the popularity of cryptocurrencies by country, using a proprietary ranking methodology.
Chainalysis Essentials
- Chainalysis is one of the leading providers of blockchain-related intelligence and analytics services used by clients such as law enforcement and government agencies, Web3 startups, centralized exchanges, and more.
- The company uses proprietary tools to provide services, categorized into Investigations, Intelligence, Compliance, and Web3 growth.
- More than $11 billion in stolen funds has been recovered thanks to Chainalysis tools, according to the company.