Chainalysis, a New York City-based startup which “[spots] connections between digital identities”, has signed an agreement, in the form of a memorandum of understanding, to collaborate with Europol’s European Cybercrime Centre (EC3) in an effort to fight cybercrime. The agreement was sparked by the rising popularity of bitcoin and its usage by cybercriminals in fraud and extortion.
The CEO of Chainalysis, Michael Gronager, said in a statement:
“It is with great pleasure I signed the Memorandum of Understanding between Europol and Chainalysis. We have worked extensively with regulated entities and law enforcement in both US, Asia and Europe to help protect people and businesses from cyber crime attacks. This new collaboration is an important next step in the endeavour to move digital currencies out of the hands of criminals and into the hands of consumers and blooming commerce.”
As one can infer from its name, Chainalysis spots the connections between digital identities in digital currency, this includes bitcoin. One way they do this is by monitoring and analyzing the bitcoin blockchain. It provides “transaction based risk scoring” and a “Enhanced Due Diligence and investigation tool” presumably for law enforcement. This technology sounds very similar to anti-fraud tools employed by credit card payment processors, which is very useful for law enforcement and Chainalysis is eager to help.
Europol welcomes this collaboration in a statement by Head of Europol’s European Cybercrime Centre, Steven Wilson:
“I welcome this signing of a Memorandum of Understanding between Europol and Chainalysis. Close working co-operation between law enforcement and industry is the only way to successfully tackle the significant threat from cybercrime. Chainalysis bring a level of expertise that will be of significant benefit to our Europe wide investigations. I look forward to developing a rewarding partnership that will make the people and businesses of Europe safer online”
Even though Chainalyis works with law enforcement, they still believe in privacy. The CRO of Chainalysis, Jonathan Levin said in a statement, “We believe in a future of protecting civil liberties without sacrificing our right to privacy. Enabling regulation through greater transparency, will have much larger consequences beyond just financial transactions.”
Recently, Chainalysis raised $1.6 million in funding by investors, Point Nine Capital, Trifork, Techstars, Digital Currency Group, FundersClub, and Converge Venture Partners.