StateUp 21 member Chainalysis has just announced a $100 million Series D funding round, bringing its valuation to $2 billion. This latest round was led by Paradigm, with participation from TIME Ventures, Salesforce CEO Marc Benioff’s investment fund, and previous investors Addition and Ribbit. Here’s what you need to know.
What’s interesting about Chainalysis?
- Chainalysis’ products make it easier to map and assess blockchain transactions. This is important because blockchain applications are decentralised, (pseudo) anonymous, and cryptographically secured. These features underpin blockchain’s innovative internal regulation, but also make it uniquely difficult to govern.
- Regulation lagging behind blockchain innovation has led to a broad scope for abuse. High-stakes heists, like the 2018 crypto exchange hacks amounting to $1 billion, are the result.
- Chainalysis stands to gain from an uptick in positive regulation around cryptocurrency. Most notably, the Financial Action Task Force released guidance on regulating digital assets in 2019, leading to a flurry of national regulations in 2020.
What does this funding mean for Chainalysis?
- Chainalysis plans to use these funds to expand their product offerings. This includes new products for government agencies that need to connect on-chain activity to other data sets.
- The startup also plans to hire hundreds of employees in 2021, with a particular focus on their engineering department.
- Fred Ehrsam, Co-founder of Paradigm, the investment firm that led this funding round, said that Chainalysis “knows the regulatory landscape better than anyone.” He believes that “as cryptocurrency adoption grows, so will demand for Chainalysis offerings.”
- In particular, an upsurge in illicit uses of cryptocurrency is likely to continue boosting government demand for Chainalysis’ products.