Loeb’s Third Point Leads $27M Investment in Crypto Compliance Startup CipherTrace

Loeb’s Third Point Leads $27M Investment in Crypto Compliance Startup CipherTrace

Crypto intelligence company CipherTrace has closed a $27.1 million Series B led by Dan Loeb’s tech investing firm, Third Point Ventures, CoinDesk has learned.

The six-year-old crypto tracer also pocketed top-ups from early investors Neotribe, Acrew and Seraph Group. CipherTrace is one of the larger software companies servicing government investigators and financial institutions amid the current blockchain analysis rush.

A representative for Third Point Ventures, which received a CipherTrace board seat, confirmed its participation in an email to CoinDesk. Hedge funder Dan Loeb’s investment companies have now backed three crypto startups after last week’s Bitwise reveal and an earlier eToro deal.

CipherTrace plans to double its 100-person operation by June 2022 as it rushes for an edge in the busy crypto intelligence landscape. It’s hardly alone: TRM Labs and Chainalysis recently raised capital, Blocktrace unveiled a new product and Elliptic partnered with Spain’s largest bank.

All signs point toward growth mode for crypto sleuthing firms.

“It’s a good time to be in our space,” CipherTrace CEO Dave Jevans told CoinDesk in an interview. He’s had 12 months of steady business from asset recovery and insurance companies, and is looking to the banking sector next. “We’re seeing a lot of growth in basically everything we’re doing now.”

CipherTrace’s “everything” is stocking crypto-native exchanges, crypto-skeptic investigators and crypto-newcomer banks with an armory of compliance tools. It compiles intelligence on wallets to help organizations make sense of pseudonymous cryptocurrencies, though it does not share data on individuals.

Jevans said it’s up to the courts to unmask individual wallet-holders; his company’s just there to help investigators move from point A to B.

Rolling out specialty intelligence software has been one recent CipherTrace strategy. It launched a sanctions compliance platform for decentralized finance (DeFi) projects in April; the market for FATF “Travel Rule” tools is “really heating up,” Jevans said.

Another target area has been privacy coins. CipherTrace claims it can occasionally break through Monero’s veil of secrecy. Jevans, who said his team is “supportive of the monero project” insisted the privacy coin is doomed to fail without some degree of oversight.

He stuck to the industry’s party line: blockchain tracing and compliance tools are necessary if cryptocurrency is going to flourish.

“We’re not gonna get the next billion people into the market without these tools,” he said.