Chainalysis: The Startup Which Became the Accidental Winner of Crypto

The legendary Mt. Gox exchange hack set the beginnings of Chainalysis, a startup analyzing blockchain data.

Chainalysis, a startup dedicated to exploring blockchain data, has become one of the accidental winners in the crypto space. Chainalysis started off as a voluntary effort to track the missing Bitcoin (BTC) from the Mt. Gox hack. Later, its services became essential, as exchange hacks started to happen more often.

Now, Jonathan Levin, the founder of Chainalysis, has been honored in the latest edition of “30 under 30” by Forbes.

“We’re now helping banks understand how they can build programs to allow cryptocurrency businesses to access banking services, but also make sure there’s no illicit activity going on,” said Levin. 

Chainalysis has multiple competitors but has now taken the lead as the most successful blockchain analytics firm in the space.

The importance of Chainalysis was underlined just as US regulators were revving up their oversight. During the latest conference on crypto assets, US Treasury Secretary Steven Mnuchin underlined the dangers of Bitcoin to foster criminal activity or financial crimes.

Currently, most coins and tokens are traceable, despite the attempts of hackers to disguise their tracks. Usually, a hacker will try to move the coins between wallets, or attempt to liquidate immediately on an exchange.

Networks like Ethereum also allow detailed tracking of multiple tokens, and exchanges end up assisting researchers, often blocking the hacker from trading. Unfortunately, the discoveries of Chainalysis cannot return the coins themselves.

Chainalysis has also provided valuable analysis for the Bitcoin blockchain, and the potential for lost or locked coins to take up a large part of the supply:

As of April 2019, Chainalysis tracks the networks for Bitcoin, Ethereum (ETH), Bitcoin Cash (BCH), Litecoin (LTC), Binance Coin (BNB), Tether (USDT), USD Coin (USDC), Gemini Dollar (GUSD), Paxos Standard (PAX), and True USD (TUSD).

The possibility to obscure transactions has diminished, with exchanges already requiring KYC monitoring. Coin mixers are also getting a mixed opinion, as their usage is also potentially visible with more detailed analysis.

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