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

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

It’s twice what Chainalysis was worth just four months ago. The round was led by cryptocurrency-focused venture capital firm Paradigm, with additional support from Salesforce CEO Marc Benioff, who invested through its Time Ventures mutual fund. Existing shareholders Addition and Ribbit increased their holdings, Chainalysis said.

Unlike some in Silicon Valley, Benioff has not been as vocal about bitcoin. However, Time Magazine, which the billionaire bought last year, recently published a list of jobs for a CFO “comfortable with bitcoin and other cryptocurrencies.” Benioff declined to comment on his views on Bitcoin when CNBC asked him.

Founded in 2014, Chainalysis helps governments and private sector companies detect and prevent the use of bitcoins and other cryptocurrencies in illicit activities such as money laundering with their research and compliance programs. The New York-based company competes with Ciphertrace, based in California, as well as the London-based firm Elliptic.

Chainalysis, Elliptic and CipherTrace aim to legitimize the cryptocurrency market, full of hackers and other illicit activities. Last year, Chainalysis helped locate $ 1 billion worth of bitcoins related to the darknet silk network market, which was confiscated by the U.S. government.

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

“When we posed for our last round, we basically saw a lot of it in our childhood,” Gronager said in an interview. “What we’re seeing now is that the market is growing and that some traditional players are often adopting cryptography in a way we haven’t seen before.”

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

Chainalysis said its annual recurring revenue doubled more than last year (without revealing an exact amount), while its customer base has also doubled. The company now has 233 employees, according to LinkedIn, and plans to use the new cash to hire hundreds more.

Top Wall Street players have warmed to bitcoins in recent months as the price of the cryptocurrency rose to new records. Goldman Sachs restarted its cryptocurrency trading desk earlier this year, while last week Morgan Stanley became the first U.S. bank to offer wealth management clients access to bitcoin funds.

Bitcoin set a new record price of more than $ 61,000 earlier this month. It is currently trading at around $ 53,000, although it is still rising by around 80% so far in 2021. Some investors say it is attractive as an asset due to its scarcity, with a total bid limit of 21 million units and is also considered a possibility of hedging against inflation.

Still, skeptics question the sustainability of the Bitcoin rally. Digital currency is known to have been highly volatile in the past, once rising to nearly $ 20,000 in 2017 before falling by 80% the following year. Meanwhile, officials such as U.S. Treasury Secretary Janet Yellen and European Central Bank President Christine Lagarde have sounded the alarm over the use of Bitcoin in illegal transactions.

“We are involved in talks with regulators in the U.S. 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 activity is decreasing a lot. There are more and more cases of legitimate use.”

According to a Chainalysis report, illicit activity accounted for only 0.34% of the total volume of cryptocurrency transactions last year, about 2% the previous year. However, ransomware incidents, where hackers encrypt files and then demand a ransom to restore access, rose 311% year-over-year as criminals exploited people working from home during the pandemic. .