The Cambrian explosion of interest in digital assets this year has led to record prices for cryptocurrencies and NFTs and very high valuations for blockchain companies, but also to record amounts of capital for companies that provide the industry with the infrastructure to manage risks against hacks and other illicit. activities.
In today’s latest example, San Francisco-based TRM Labs has raised a $60 million Series B funding round led by Tiger Global.
Detected exclusively for Forbes Several financial institutions including Amex Ventures, Visa, Citi Ventures, DRW Venture Capital, Jump Capital, Marshall Wace, Block (formerly Square, Inc.), PayPal Ventures, new and existing venture firms including B Capital Group and Bessemer Venture Partners and Blockchain Capital, Cap Table Coalition, Castle Island Ventures, Initialized Capital, and Operator Partners.
Along with the growing importance of the blockchain analytics sector amid increased regulatory scrutiny, some investors also see this bet as an opportunity to capitalize on the future of the Internet, often referred to as Web3. “We have made investments in visionary startups that will build web 3 infrastructure like FalconX and Abra,” said Margaret Lim, Managing Director of Amex Ventures. Forbes. “Investing in TRM, which is leading the market in building mission critical infrastructure for risk and compliance, is a natural extension of what we have been doing.”
TRM helps financial institutions and governments investigate crypto fraud, money laundering, and other cases of financial crime by analyzing and compiling blockchain data into Statistical Analysis System (SAS) applications and APIs that enable its customers to scan wallets and monitor transactions across more than 900,000 assets on 23 different blockchains.
Esteban Castaño, co-founder and CEO of TRM, believes it is breadth of coverage that sets TRM well against the competition. “Part of the reason we get our win rate and why our clients stay with TRM is that we offer the same capabilities as Elliptic, Chainalysis or CipherTrace,” he says, “but we monitor much larger orders of assets and more blockchain than traditional solutions.”
In fact, Chainalysis, a New York-based blockchain data company that raised $100 million in June at a valuation of $4.2 billion, tracks the flow of funds across just 10 of the top cryptocurrencies on the market. Other competitors dubbed Castano are California-based CipherTrace, which was acquired by Mastercard for an undisclosed amount, and London-based Elliptic, which in October raised $60 million from investors including SoftBank. And the venture capital arm of Wells Fargo, it covers hundreds of assets but still lags behind.
And although more than 90% of cryptocurrency trading volume is spread across only a few major currencies such as bitcoin and ether, the broad coverage of the assets is an important factor in crime prevention, Castano notes. For example, last September, Singapore-based cryptocurrency exchange KuCoin suffered one of the largest cryptocurrency hacks, with more than $275 million worth of crypto stolen (as of November 2020, 84% of the affected assets were). It said Retrieved via on-chain tracing, contract upgrade, and judicial redemption). Most of this money was held in altcoins like XRP, litecoin, and some lesser known ERC-20 tokens, which hackers later tried to transfer and launder.
“Visibility across the entire crypto ecosystem allows our customers to better manage risks on their platform as well as investigate these attacks, which may include the largest 10,000th digit in the token,” Castagno says.
Since launching from Y Combinator in 2019, TRM says it has grown its revenue 600% year-over-year and expanded its team, which includes threat financing experts from the FBI, the US Secret Service, Europol, and data scientists from Apple, Amazon and Google, from 4 to 60. According to Castagno, its notable clients include FTX.US, the US subsidiary of billionaire cryptocurrency exchange Sam Bankman-Fried’s FTX, the USDC stablecoin Operator Circle, and several traditional (undisclosed) financial institutions and government agencies, both in the US And at the international level. With the capital increase, TRM plans to continue enhancing its product line.
With the help of reporting from Stephen Ehrlich