CipherTrace, a Menlo Park, California-based blockchain security company, has raised $15 million in funding. This round of funding was led by Aspect Ventures. Galaxy Digital, Neotribe Ventures, and WestWave Capital also participated in this round. In conjunction with this round, Aspect’s Mark Kraynak is joining the company’s board of directors.
What does CipherTrace do? The company develops cryptocurrency intelligence, anti-money laundering (AML), blockchain analytics and forensics, and compliance solutions. The company’s products are used by government agencies, regulators, law enforcement investigators, and auditors to enforce AML laws, reduce fraud, and combat crime. Plus cryptocurrency exchanges also use the platform to comply with AML laws. And banks use CipherTrace to mitigate threats related to customer cryptocurrency activity.
Every week, CipherTrace’s blockchain analytics de-anonymize funds flow by gathering millions of data points and then applies machine learning to its massive data pool to trace flows to legitimate entities as well as criminal enterprises.
“CipherTrace is pleased to announce this strong backing from top-tier investors who share our vision that cryptocurrencies and blockchains need to be secured, regulated, and made safe so that they can scale globally,” said CipherTrace CEO David Jevans in a statement. “Our investors have decades of experience investing in proven teams and technology companies in the Internet security and financial technology industries. CipherTrace will join the ranks of these successful companies.”
CipherTrace will be using the funding to expand its global reach and extend product functionality. Initially, CipherTrace was funded by the U.S. Department of Homeland Security (DHS) Science and Technology (S&T) and DARPA.
Kraynak pointed out that great blockchain companies will be forged as crypto assets achieve mainstream adoption and his team believes security and compliance with anti-money laundering and other financial regulations will be a key first hurdle to mass adoption. Greg Wasserman, the co-head of principal investments at Galaxy Digital, said that his company is a customer and investor and that AML technology is critical for mainstream adoption of digital assets.
Neotribe’s Aditya Singh said that the CipherTrace team executes better than 99% of venture-backed startups and they have worked well together at previous startups. Warren Weiss of WestWave Capital added that he is pleased to work with “this elite team of cybercrime experts.” And Tuff Yen of Seraph Group explained that his company backed CipherTrace’s management team while working at IronKey and they are “confident about the company’s ability to win in this market.”