Do not invest more money than you can afford to lose.
Elliptic, a fintech company, specializing in blockchain intelligence, announced it has raised $5 million from a Series A funding round, led by the private equity group focused on security applications, Paladin Capital. The other investors are a subsidiary of the Spanish Santander bank – Santander InnoVentures, KRW Schindler, Digital Currency Group, and an existing investor – Octopus Ventures.
Elliptic, which is based in New York and London, uses graph analysis and machine learning to detect illicit activity and fraud in blockchain transactions. Considering the growing popularity of the blockchain technology and the growing number of national governments and financial institutions looking into it, it is likely that the company’s services will be in high demand in the upcoming years.
“Over the last three years we have built a top-tier client base”, said Elliptic cofounder and CEO James Smith, quoted in a press release. “Our products have already been used to assess risk on blockchain transactions worth billions of dollars, and we have delivered key evidence in major criminal investigations in the US and Europe. Our new investors bring deep expertise in law enforcement, international financial services, and blockchain technology and we are excited to work with them on our next phase of growth. We have already been able to expand operations to the US and will continue to extend our portfolio of products.”
Since its launch in 2013, Elliptic has attracted investments totalling $7 million. In 2014 it raised $2 million in seed funding from Octopus Ventures. It was used for the expansion of Elliptic’s bitcoin vault services. In the meantime the company has become a leader in blockchain monitoring and investigations. Its services are used by the major US and European bitcoin exchanges and it has assessed risk on bitcoin transactions worth more than $2 billion. The company has also advised governments on blockchain regulatory matters and has cooperated with various law-enforcement agencies.
Because of its complete anonymity and non-existent regulation, bitcoin is often used by criminal organizations for payment of drug and weapons deals and other illegal activities. A the same time, however, governments have started showing interest in regulating bitcoin and the potential of the blockchain – the decentralized ledgers, used for recording and tracing bitcoin transactions – as a more universal financial transaction technology.
The Japanese government, for example, has already made the first steps towards declaring bitcoin as a regular currency. Russia’s central bank has set up a committee to look into the implementation of the blockchain technology, although the official stance of Bank of Russia is that cryptocurrencies are surrogates. At the same time the European Union Court ruled bitcoin is a currency, while the US regulator, the Commodity Futures Trading Commission (CFTC) ruled that the cryptocurrencies are property, not a currency.