Chainalysis Secures Strategic Investment from Japan Fintech Experts for APAC Expansion

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Japan-based financial institutions MUFG Innovation Partners and Sozo Ventures among strategic partners


NEW YORK, NY (April 16, 2019) – Chainalysis, the leading provider of cryptocurrency compliance and investigation solutions, today announced it raised an additional $6M to close its $36M Series B round with a strategic investment from Japan’s largest financial institution, MUFG, via its wholly owned corporate venture capital subsidiary MUFG Innovation Partners, as well as Sozo Ventures, the global expansion venture capital firm based in Tokyo and Redwood City, California. With the investment, which follows a $30M raise from Accel and Benchmark in February, Chainalysis will expand its business in Asia Pacific and plans to open an office in the region.

Chainalysis has substantially grown its business in Asia Pacific, in lock step with the growth of cryptocurrency in the region. In the past year, the company more than doubled the number of clients it serves in APAC and increased its contracted revenue from clients there by more than 16x. Chainalysis plans to build on this momentum with a physical presence and deeper engagements with entities including Sozo and MUFG, who will provide critical market insights.

“Cryptocurrency technology is global and inclusive by design,” said Michael Gronager, CEO, Chainalysis. “Our business was founded on the belief that in order for the industry to grow, all its stakeholders – governments, financial institutions, and cryptocurrency businesses – must be united in establishing ground truth for the industry. This strategic investment will strengthen our relationships with financial institutions in Asia in particular, and spearhead both our growth and the industry’s advancement in an important region.”

“Chainalysis is building foundational technology for the future of cryptocurrency and providing data-driven insights to help the industry understand how these networks behave,” said Phil Wickham, Sozo Ventures. “Chainalysis has already established itself as the industry standard for investigations and compliance, and we look forward to leveraging our fintech and blockchain expertise to support Chainalysis to grow in the region.”

“Chainalysis’s compliance technology is important to providing the insight and anti-money laundering controls banks need in order to establish next generation compliance frameworks,” said Nobutake Suzuki, President & CEO, MUFG Innovation Partners. “Today’s announcement signals our joint commitment to growing the cryptocurrency industry in Japan and Asia Pacific more soundly and broadly.”


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ABOUT CHAINALYSIS

Chainalysis offers cryptocurrency investigation and compliance solutions to global law enforcement agencies, regulators, and businesses as they work together to fight illicit cryptocurrency activity. Backed by Accel, Benchmark and other leading names in venture capital, Chainalysis builds trust in blockchains. For more information, visit www.chainalysis.com.

ABOUT SOZO

Sozo Ventures is a US-based venture firm that focuses on helping category leading startups in the US expand internationally, with a focus on Japanese markets. The firm leverages ~20+ large corporate strategic partners spread across industries in Japan and deep industry expertise to connect technology-forward global customers. Founded in 2012, the firm has over $400M AUM and has invested in and helped the international expansion efforts of Twitter, Palantir, Square, Coinbase, MongoDB, Flexport, Zoom, Servicemax, and more.

ABOUT MUFG

Mitsubishi UFJ Financial Group, Inc. (MUFG) is one of the world’s leading financial groups. Headquartered in Tokyo and with over 360 years of history, MUFG has a global network with more than 1,800 locations in more than 50 countries. The Group has more than 150,000 employees and offers services including commercial banking, trust banking, securities, credit cards, consumer finance, asset management, and leasing. The Group aims to “be the world’s most trusted financial group” through close collaboration among our operating companies and to flexibly respond to all of the financial needs of our customers, serve society, and foster shared and sustainable growth for a better world. MUFG’s shares trade on the Tokyo, Nagoya, and New York stock exchanges. For more information, visit https://www.mufg.jp/english

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Learn more about KYT for Stablecoins & Token Issuers

Monitor transactions across the token’s full lifecycle, from issuance to redemption—and any transaction in between.

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How Transaction Monitoring Works at Chainalysis

One of the reasons Chainalysis KYT is so popular is that it uses global anti-money laundering (AML) standards common across regulatory bodies. We apply these standards when each transaction is screened.

Cryptocurrency businesses also need to understand the aggregate risk profile of each of their users. That’s why Chainalysis KYT provides a view of risk profiles at the user level, which reflects all of a user’s screened transactions. For example, if an organization has a user who receives funds from a darknet market, our software automatically flags that transaction as high risk. If the user sends funds to a regulated exchange, our software marks that transaction as low risk. And so on. Every screened transaction feeds into a user’s risk profile. Chainalysis KYT displays all user profiles, sortable by high, medium or low risk (using traffic light colors) for easy scanning.

We apply our risk methodology in real time to all users within an organization’s user base. This saves compliance teams from laborious, manual screening work. They can instead focus on developing comprehensive compliance programs. Organizations that work with us tell us this has enabled them to meet regulatory expectations and launch or grow their businesses.

Customizable risk level

We’re now giving our customers the ability to adjust the risk level of a category or a service. For example, not all jurisdictions around the world treat gambling the same way. In some countries, gambling is not considered a legitimate business activity and thus online gambling sites would be treated as high risk. In other countries, gambling is not considered illicit, which means properly licensed online gambling sites would be treated as low risk.

The ability to customize the risk level of categories and specific services means our customers can automate even more of their compliance workflows.

Organization-wide dashboard

One of the most useful facets of Chainalysis KYT is having a view of all users and their risk profiles directly accessible upon first logging in. It provides a visual alert of which users have high risk profiles and therefore require the most immediate attention. In keeping with the spirit of simplified visual cues, we have now launched a dashboard that summarizes key indicators at the total organization level. For example, organizations can now see what percentage of their user base is falling under high, medium or low risk. They will soon be able to see things like total exposure by category, or total transaction volume per day. These and other metrics will provide our customers additional understanding of their organization’s total exposure trends over time.

In-app chat

At Chainalysis, we strive to provide as much support to our customers as we can. To make it easier to interact with us, we added in-app chat to Chainalysis KYT. This allows our customers to send us questions or feedback without having to leave the environment. Our team typically responds within minutes.

Looking ahead

We know software is most valuable when it makes the lives of our customers easier and more productive. This means we’ll continue to add intuitive capabilities to our compliance products while increasing versatility for ongoing transaction monitoring. In the coming months, we will improve how transaction information is displayed. We will also boost our monitoring capabilities for other cryptocurrencies beyond Bitcoin. And we will deepen the integration with Chainalysis Reactor, which is used for enhanced due diligence and investigations.

The momentum around cryptocurrency compliance is only just starting and we look forward to continuing to offer software that builds trust in blockchains.

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