Chainalysis doubles the valuation to $ 2 billion, with Benioff’s support

Chainalysis, a start-up that sells blockchain data analytics tools, said Friday it had raised $ 100 million in an investment round, valuing the company at $ 2 billion.

This is twice the value of Chainalysis just four months ago. The round was led by the encrypted venture capital firm Paradigm, with additional support from Salesforce CEO Marc Benioff, who invested through his Time Ventures investment fund. Existing shareholders Addition and Ribbit have increased their holdings, Chainalysis said.

Unlike some in Silicon Valley, Benioff has not been so vocal about bitcoin. However, Time Magazine – which the billionaire bought last year – recently posted a list of jobs for a CFO who is “comfortable with bitcoin and other cryptocurrencies.” Benioff declined to comment on bitcoin when asked by CNBC.

Founded in 2014, Chainalysis helps governments and private sector companies detect and prevent the use of bitcoin and other cryptocurrencies in illicit activities, such as money laundering, with its investigation and compliance software. The New York-based company competes with Ciphertrace, based in California, and Elliptic, based in London.

Chainalysis, Elliptic and CipherTrace aim to legitimize the cryptocurrency market, which has been full of high-profile hacks and other illicit activities. Last year, Chainalysis helped find $ 1 billion worth of bitcoin related to the Darknet market, Silk Road, which was then confiscated by the US government.

Michael Gronager, CEO and co-founder of Chainalysis, told CNBC that the company’s latest round of financing came at a time of increased momentum for cryptocurrencies, with institutional investors and companies like Tesla gathering in bitcoin.

“When we got up in the last round, we basically saw a lot of them in the beginning,” Gronager said in an interview. “What we’re seeing now is that the market is growing and that some traditional players are adopting crypto in a way we haven’t seen before.”

“What has changed in the last four months is the opportunity and the speed with which we will grow to become more customers and increase revenue more,” Gronager added. “That means we have to do a lot more buildings now.”

Chainalysis said its recurring annual revenue has doubled in the past year – without disclosing an exact amount – while its customer base has doubled. The company now has 233 employees, according to LinkedIn, and plans to use the new money to hire hundreds more.

Major Wall Street players have warmed to bitcoin in recent months as the price of cryptocurrency has risen to new highs. Goldman Sachs restarted its cryptocurrency trading desk earlier this year, while Morgan Stanley last week became the first US bank to offer wealth management clients access to bitcoin funds.

Bitcoin recorded a record price of over $ 61,000 earlier this month. It currently trades around $ 53,000, however it is up about 80% so far in 2021. Some investors say it is attractive as an asset due to its deficit, with a total supply capped at 21 million units and, it is also seen as a potential hedge against inflation. .

However, skeptics question the sustainability of the bitcoin rally. Digital currency has been known to be extremely volatile in the past, once rising to nearly $ 20,000 in 2017 before falling 80 percent the following year. Meanwhile, officials such as US Treasury Secretary Janet Yellen and European Central Bank President Christine Lagarde have sounded the alarm about the use of bitcoin in illegal transactions.

“We are involved in talks with regulators in the United States and the rest of the world,” Gronager said. “What is important to note is that this space has changed a lot, and the amount of criminal activities is decreasing a lot. It registers more and more legitimate use cases ”.

Illicit activity accounted for only 0.34% of the volume of cryptocurrency transactions last year, according to a Chainalysis report, down from about 2% a year earlier. However, ransom incidents – in which hackers encrypt files and then request a ransom to restore access – rose 311% year-on-year, while criminals exploited people working from home during the pandemic.