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Chainalysis

Chainalysis Reaches $8.6 Billion Valuation In $170 Million Series F Funding Round

14/05/2022 by Idelto Editor

Chainalysis

Chainalysis, a cryptocurrency security and blockchain auditing firm, has announced it has completed a new funding round for its operations. The company raised $170 million in its Series F funding round, which was led by GIC — the Government of Singapore Investment Corporation — and also had the participation of earlier investors. With this capital influx, the company reached a valuation of $8.6 billion.

Chainalysis Gets Investment From GIC

Chainalysis, a cryptocurrency and blockchain auditing firm, has announced it raised $170 million in its latest funding round, with investments led by GIC, the Government of Singapore Investment Corporation. The Series F funding round also had the participation of earlier and new investors, including Accel, Blackstone, Dragoneer, Fundersclub, the Bank of New York Mellon, and Emergence Capital.

With this new investment, the company reaches a valuation of $8.7 billion, in a context where crypto regulation is starting to be adopted by more countries and government bodies around the world. This funding round dwarves the latest raise of the company, which raised $100 million last June, giving it a valuation of $4 billion at that time.

The investment comes to complement other blockchain-based investments from GIC, which was also involved in the earlier Series E round and has put funds behind Anchorage and the BC Group. On the subject, Chainalysis co-founder and CEO Michael Gronager stated:

Our partners at GIC understand the power of Chainalysis’ data platform and customer network, the strength of our team of leaders, and the market opportunity before us.

Furthermore, Gronager also stated the company would be expanding its business to the APAC zone.

Expansion and Growth

Chainalysis has also provided an overview of the objectives it wants to fulfill with the funds raised. The company stated that this investment will contribute to “product innovation and scale its global operations to meet customer demand as the asset class gains mainstream acceptance.”

Chainalysis’ growth has been significant, according to the numbers given by the company. Its customer count has increased by 75% year-on-year. Furthermore, the company has included new business by adding NFT-related operations in partnering with Dapper Labs. It has also been involved in solving landmark crypto-related crimes, including the Colonial Pipeline attack, where it helped to seize $2.3 million, and the establishment of sanctions on several Russian-based services involved in money laundering processes.

What do you think about the latest Series F funding round and the $8.6 billion dollar valuation reached by Chainalysis?

Filed Under: $170 million, Auditing, Chainalysis, English, GIC, News, News Bitcoin, security, series f funding round

ETH Mixer Tornado Cash Reveals Blocking OFAC Sanctioned Ethereum Addresses via Chainalysis Oracle Contract

16/04/2022 by Idelto Editor

ETH Mixer Tornado Cash Reveals Blocking OFAC Sanctioned Ethereum Addresses via Chainalysis Oracle Contract

According to the project’s official Twitter account, Tornado Cash, the ethereum mixing service that allows participants to shuffle ether, is blocking flagged ethereum addresses listed on the Office of Foreign Assets Control’s (OFAC) Specially Designated Nationals And Blocked Persons list (SDN). The decision follows the recent OFAC update, that lists the Ronin exploiter’s ethereum address, and further notes that the ether wallet is allegedly associated with the infamous North Korean hackers, Lazarus Group.

Ethereum Mixer Tornado Cash Blocks OFAC Sanctioned Addresses


Tornado Cash announced on April 15, 2022, that the project is leveraging a Chainalysis oracle to block OFAC sanctioned wallets. “Tornado Cash uses [a] Chainalysis oracle contract to block OFAC sanctioned addresses from accessing the dapp,” the official Twitter account said on Friday. “Maintaining financial privacy is essential to preserving our freedom, however, it should not come at the cost of non-compliance,” the Tornado Cash Twitter account added.

The decision comes after the U.S. Treasury and OFAC published an update concerning the Ronin bridge hacker’s ethereum wallet. The ethereum address that was used by the Ronin bridge exploiter is now sanctioned and U.S.-based companies and citizens are banned from transacting with the address. According to the OFAC update, the address is associated with the North Korean hacking organization known as Lazarus Group. Following the decision, Tornado Cash got a lot of criticism for the move.

“So let me get this straight,” one individual tweeted, “if my address is on the OFAC sanctioned addresses list, I just need to transfer it to another address and then I can begin my money laundering.”

The news also follows the controversy surrounding the claims that the blockchain surveillance and intelligence company, Chainalysis, deanonymized Wasabi-based Coinjoin transactions. After the deanonymizing claims, Wasabi told the public a blacklist would prevent some UTXOs (unspent transaction outputs) from registering to Coinjoin transfers. The founder and creator of Wasabi wallet, Adam Ficsor, told the public: “Blacklisting arrived to Coinjoins. IMO it is a major setback to Bitcoin’s fungibility.”

Meanwhile, the changes Tornado Cash added may be bypassed by not only simply switching to other ether addresses, but also by leveraging the contract without using the Tornado Cash protocol’s frontend. “Don’t worry guys, your favorite hackers will still be able to wash the money they have stolen from you using the smart contract directly,” one individual replied to the Tornado Cash Twitter statement. “This just affects the website frontend, contract is permissionless.”

What do you think about the statements the Tornado Cash team made on Friday about blocking OFAC sanctioned ethereum addresses? Let us know what you think about this subject in the comments section below.

Filed Under: Adam Ficsor, Chainalysis, Chainalysis oracle contract, Compliance, dApps, English, ethereum addresses, Lazarus Group, News, News Bitcoin, NK Hackers, north korean hackers, North Korean hacking organization, OFAC sanctioned, permissionless, Ronin Bridge, Ronin Hack, SDN List, Tornado Cash team, Tornado.cash, Wasabi wallet, Web3 Dapps

Elliptic Identifies ‘Several Hundred Thousand Crypto Addresses’ Tied to Russia-Based Sanctioned Actors

17/03/2022 by Idelto Editor

As the Russia-Ukraine conflict continues, blockchain surveillance companies have discussed and implemented ways to combat sanctioned countries from using digital assets. Last week, Chainalysis revealed screening tools for crypto firms that aim to comply with international sanctions. On Monday, the CEO of Elliptic published a blog post describing the company’s work to combat sanction evasion.

Elliptic CEO Speaks on the Company’s ‘Work to Combat Sanction Evasions in Crypto’

This week, Simone Maini, the chief executive officer of the blockchain surveillance firm Elliptic, published a blog post concerning how the company deals with sanction evasions tethered to crypto assets. Maini’s blog post stresses that “the war in Ukraine has demonstrated that powerful technologies such as cryptocurrency can be used in both positive and negative ways.”

The Elliptic CEO details how funds were raised for the Ukrainian government and other Ukraine-based NGOs. On the other hand, Maini’s blog post notes that digital assets have been used by Russian-backed forces. The Elliptic executive adds:

There is also the real risk of Russia using crypto assets to circumvent sanctions through state-sponsored cybercrime, concealment of wealth, and even crypto mining.

Maini explains that Elliptic has “redoubled” its efforts to help the fintech industry “prevent sanctions evasion by Russia.” So far, Elliptic has managed to identify over 400 virtual asset service providers (VASPs) that accept rubles for digital currency trades.

Elliptic ‘Links 15 Million Crypto Addresses’ to Russian Criminal Activity, ‘Several Hundred Thousand Crypto Addresses’ Linked to Sanctioned Russian Actors

Moreover, the firm has “directly linked more than 15 million crypto addresses to criminal activity with a nexus in Russia.” On top of all that, Elliptic has managed to flag a great number of cryptocurrency addresses that are allegedly tied to sanctioned Russians. The Elliptic CEO states:

We have identified several hundred thousand crypto addresses linked to Russia-based sanctioned actors. This goes beyond those included in sanctions lists to include other addresses that we have been able to associate with these actors through our own analysis.

At the time of writing, the Russian ruble is the 23rd most-used trading pair against the crypto asset bitcoin (BTC), but against tether (USDT), the ruble represents USDT’s 15th most-used trading pair. In addition to Elliptic, Chainalysis revealed five days ago that the blockchain surveillance firm was launching two tools to help crypto companies combat sanction evading entities.

Blockchain Surveillance Firm Is ‘Actively Investigating Crypto Asset Wallets’

Furthermore, in a recent blog post published during the first week of March, the popular crypto exchange Coinbase disclosed it had blacklisted more than 25,000 crypto addresses tied to Russian individuals or entities. Elliptic’s announcement stemming from the CEO’s blog post on Monday, highlights that not only did the company flag several hundred thousand crypto addresses, it is also monitoring crypto asset wallets.

“We are actively investigating crypto asset wallets believed to be linked to Russian officials and oligarchs subject to sanctions,” Elliptic’s CEO Maini concluded. “We are collaborating with government agencies and other organizations to ensure that those responsible for enabling the invasion of Ukraine cannot use crypto assets to hide their wealth.”

What do you think about the Elliptic CEO’s blog post about the company flagging several hundred thousand crypto addresses tied to Russia-based sanctioned actors? Let us know what you think about this subject in the comments section below.

Filed Under: Blockchain Surveillance, Blockchain Surveillance Firm, Chainalysis, Chainalysis tools, Coinbase, Crypto Asset Wallets, crypto companies, Elliptic, Elliptic blog post, Elliptic CEO, Elliptic Executive, English, Linked Crypto Addresses, Monitoring, News, News Bitcoin, Russia, Russia Ukraine war, Russian Ruble, Sanction Evasion, Sanctions, Simone Maini, Ukraine

Chainalysis: Watching Those Who Are Watching Us

15/03/2022 by Idelto Editor

A recent event by blockchain surveillance firm Chainalysis explained how its tools are used and raised questions about whether they should be.

Blockchain analysis firm Chainalysis recently held the one-day “Chainalysis Links” conference with a variety of speakers, from former members of MI6, the police force, financial institutions and the United Kingdom’s HM Treasury to internal Chainalysis speakers and moderators.

The conference did not offer a lot of details on Chainalysis’ products or methods for surveilling activity on blockchains like Bitcoin’s, but it offered a high-level look at the context, uses and potential future of its various services and products, giving Bitcoiners a glimpse into those who are watching them.

The Chainalysis Business

As one aspect of its business, Chainalysis provides market data on some insightful metrics measuring Bitcoin activity. This included information on cryptocurrency-based hacks, information on the use of Bitcoin for child pornography, Bitcoin adoption metrics and its uses in criminal activity.

Another service Chainalysis offers is aiding companies in complying with government recommendations via a service that does real-time analysis of blockchains.

A third area is in transaction tracking and investigation, with a tool called KYT and a tool called Reactor, which are both used for investigations on Bitcoin and other blockchains.

In case you’re wondering what these platforms look like, here are a couple screens from the public website:

Source
Source

As a sidenote on the Chainalysis business, it recently purchased and put bitcoin on its balance sheet. But, as Bitcoin Magazine’s Namcios wrote, “the company doesn’t align very well to the true Bitcoin ethos as its business model is based on surveillance, allowing its customers to obtain information on bitcoin transactions for discrimination purposes.”

Definitions And Client Considerations

Given Chainalysis’ business lines and its ability to disrupt the pseudonymity Bitcoin is meant to provide, I went to the conference with questions about three main areas:

  1. What is the Chainalysis definition of “crime”? Within crime, how does it define categories like terrorism, illegal products and subverting democracy?
  2. What customers does it sell its investigative platform to, and who won’t it sell to or work with?
  3. How do its products work in detail?

With regards to the first question, an answer provided to a chat question during the conference stated that Chainalysis’ role is to produce a tool to be used in investigations. The firm is not a law enforcement agency.

Secondly, when asked if Chanalysis has criteria for entities it will not sell its products to, it responded that the criterion is “usually” whether or not the country or other client is sanctioned.

I reached out to Chainalysis to get a confirmation statement about these conference chat responses, but did not hear back from them.

During the conference, various people talked about use cases for the investigative platforms KYT and Reactor. These included:

  • MI6 investigations of those suspected of subverting democracy or child abuse
  • A specific U.K. investigation around firearms bought on the darknet
  • An investigation of stolen cryptocurrency laundered via debit card use

The conference did not get into much specific or under-the-hood details about any products.

But the above use cases raise questions about the use of Chainalysis tools and tactics in the hands of “bad actors,” where the target of the investigation could very well be considered the “good guy.” To mirror the stated use cases with more complicated bad guy/good guy scenarios:

  • What if the investigator is a dictator and the target is someone opposing that dictator?
  • What if this is an investigation by a dictator or authoritarian regime purging or rounding up minorities, and they are looking to defend themselves by purchasing arms or other banned security mechanisms?
  • What if the bad actor country or leader was using the financial tracking against an oppressed person or group of people to determine where and what they purchase?

All of these cases could also occur for smaller entities, like an organization or an individual.

Can Chainalysis Be Hacked?

One main tactic that Chainalysis is used for is tracking ransomware payments and money movement. Below is a Chainalysis Reactor graph showing the money laundering process for five of Evil Corp’s ransomware strains (yes, that’s the listed company name).

Source

(Per the image above, you can also look at some info of how the Colonial Pipeline ransomware payment was tracked.)

If Chainalysis tools are sometimes used to track down ransomware companies’ money, these companies may be motivated to attack the platform. If you think about all of the information that is being aggregated for subjectively good or bad purposes, what happens if Chainalysis is hacked?

In that case, the information it obtains could be ransomed. That would affect everyone’s privacy.

Chainalysis Products, Use Of Dust And Behavioral Alerts

One of the questions that has come up around Chainalysis is whether its products use Bitcoin dust (microscopic transactions below the minimum limit) to correlate recipient addresses. Jameson Lopp wrote recently that he believes that Chainalysis does not use dust in this way, based partly on its below statement and the cost benefits of doing so, per a CoinDesk article:

“CoinDesk reached out to Chainalysis and CipherTrace to ask if they use dust in their analytics. Both companies denied using this technique, though Chainalysis Manager of Investigation Justin Maile added that dusting is ‘more often [used] by investigators’ to trace illicit funds. Maile continued that exchanges may use dusting to trace stolen funds following a hack.”

Chainalysis also has webinars about its “Behavioral Alerts” service, and how you can set them up.

Source: Behavioral Alerts Webinar

In the webinar, the presenter noted that most illicit actors are aware of the standard behavioral alerts, and make their transactions with thresholds and timing to avoid those alerts.

But how many typical blockchain users know what rules will put them on the alert list?

There seems to be a non-zero possibility of good or benign actors getting caught in this analysis. Colin Harper wrote about this issue (with regards to mixing specifically) in a previous Bitcoin Magazine article, “The Bitcoin Mixing Case At The Center Of The Fight For Transaction Privacy”:

“Honest, privacy-savvy Bitcoin users should have nothing to worry about legally, so long as they have nothing to hide, Jesse Spiro, head of policy at Chainalysis, told Bitcoin Magazine… But Spiro’s comment betrays the consequence of this surveillance: Honest users can get caught in the crossfire.”

Future Directions: Automation Of Flags And False Positives

If you’ve ever encountered a positive-outcome vending machine malfunction, you’ve come upon the upside of an error and automation of that error — the machine continues to dispense snacks for free. (Yes, I know, Bitcoiners don’t eat that stuff).

As another example, anyone with a credit card has seen the number of false positives with regards to fraud. When you automate anything, if the methodology is imperfect, you can then automate errors at a more efficient and faster rate.

To make the platform more efficient and able to handle a higher number of smaller cases, many sessions talked about automating the data analysis and flagging of issues.

For false positives with a bank or credit card, the issue is a minor inconvenience. However, being falsely flagged for nefarious activity within other systems can put you under the wheels of that system and it can be difficult to prove innocence and extricate oneself. The systems mentioned included organizations such as the U.S. Internal Revenue Service, police and international crime units and banking systems worldwide.

It was noted during the conference that input from more data systems are going to be sourced, aggregated and otherwise used within the Chainalysis platform. It is yet to be seen what that will mean for generating false positives around what the platform deems to be “criminal” activity using platforms like Bitcoin.

Chainalysis, Privacy And Censorship-Resistance

In 2019, Chainalysis made a public statement of its privacy policy in response to public scrutiny around the privacy implications of deanonymizing blockchain transitions. If you don’t have financial privacy, you are not censorship resistant. Bitcoin is not censorship-resistant without privacy.

This is at the heart of the concern around the Chainalysis tools and its ability to do financial surveillance.

Chainalysis provides useful metrics that counteract false narratives. These include data on how much cryptocurrency is really used for “criminal” activities and data about cryptocurrency adoption by country and demographics.

However, the Chainalysis investigative analysis tools that are used against what most would view as “bad actors” can also easily be used against anyone. Its tools could also be used to suppress rights and freedoms where certain or arbitrary laws do not enable those rights and freedoms.

As world entropy increases, the greater good would be served if Chainalysis were to develop protocols regarding who it will sell their products to and what its definition of “crime” is in order to reduce the likelihood that they cause harm unintentionally.

Chainalysis may be enabling others to surveil the blockchains for nefarious actors. But privacy experts and Bitcoin plebs should also be watching and surveilling Chainalysis for similarly bad actors and actions.

This is a guest post by Heidi Porter. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

Filed Under: Bitcoin Magazine, Blockchain Surveillance, Chainalysis, English, Feature, freedom, Industry Events, privacy, surveillance

Privacy Crypto Assets XMR, ZEC See Double-Digit Gains Amid Tightened Global Economy

13/03/2022 by Idelto Editor

Privacy Crypto Assets XMR, ZEC See Double-Digit Gains Amid Tightened Global Economy

Over the last week, the United States and president Joe Biden’s administration tightened sanctions against Russia a great deal. The U.S. banned Russian energy imports, a number of other types of imported goods, and a series of harsh financial sanctions against Russia. In the midst of a restricted global economy, the top two privacy-centric crypto assets monero and zcash saw a significant increase in value last week.

Top 2 Privacy Coins Surge While Sanctions Against Russia Continue

As economic sanctions continue to restrict the world’s trade further, privacy coins may be reaping the benefit from a tighter financial world. On March 8, the top two privacy-centric cryptocurrencies monero (XMR) and zcash (ZEC) jumped 20% in value. The crypto community quickly took notice of the action and discussed the subject on social media platforms. That day, XMR jumped over 20%, ZEC lifted in value by 26% and other privacy-focused crypto assets like SCRT and ZEN jumped higher.

I really think Privacy coins are due a pump in 2022. All this Russia stuff will also push it further on. A coin that can store value privately will be very valuable in uncertain times.

— Kamal (@eth_kamal) March 12, 2022

Five days later and during the last 24 hours, the market capitalization of all the privacy coins in existence is up 1.4% to $10 billion. Seven-day statistics five days after XMR’s and ZEC’s initial pump last week shows both coins still hold double-digit weekly gains. Monero is still up 11.1% and ZEC has gained 29.7%, according to weekly metrics. Out of the $10 billion in privacy coins today, XMR and ZEC dominate in terms of market valuations.

what if Russia is buying privacy coins and not bitcoin lmfao

— im rotatingggg💎 (@TheRotatooor) March 8, 2022

Monero has a ​​$3.3 billion market cap and zcash has a $1.8 billion capitalization on Sunday afternoon (EST). Year-to-date, however, XMR is down 17.2% since this time last year and it’s $3.3 billion represents only 0.18% of the entire $1.8 trillion crypto economy. ZEC on the other hand is up during the last 12 months 4.4% but its market valuation equates to 0.10% of the entire crypto economy’s value.

Regulators and bureaucrats have been discussing the introduction of regulatory actions against the use of using crypto assets to skip sanctions. Coinbase has noted that it has blocked 25,000 addresses belonging to Russian entities and this week, the blockchain surveillance company, Chainalysis, launched a screening tool designed to prevent sanction evasion.

What do you think about privacy coins surging last week after financial sanctions tightened the global economy and trade? Let us know what you think about this subject in the comments section below.

Filed Under: Altcoins, Chainalysis, Coinbase, crypto assets, crypto economy, English, Global Economy, Monero, Monero (XMR), News Bitcoin, Privacy Centric, privacy coins, Privacy Cryptos, Russia, Russian entities, xmr, Zcash, zcash (ZEC), ZEC, zen

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