Galaxy Digital Backs $15 Million Raise for Crypto Analytics Firm CipherTrace

Blockchain and cryptocurrency security firm CipherTrace has raised $15 million in funding from investors including Mike Novogratz's Galaxy Digital, the firm announced Tuesday.

CipherTrace provides analytics and forensics products for cryptocurrencies and blockchains that it says are already in use by government, regulators, law enforcement and auditors to help enforce anti-money laundering laws and tackle crime.

As part of the funding deal, Aspect venture partner Mark Kraynak will join the CipherTrace board of directors.

Kraynak said his firm believes that security and regulatory compliance will be "a key first hurdle to mass adoption."

"Appropriate AML technology is critical for the mainstream adoption of digital assets. Institutional investors are increasingly looking to platforms like CipherTrace to monitor the integrity of transactions with their counterparties."

Galaxy Digital is already a CipherTrace customer, he added.

Just today, Solidus Labs - a crypto surveillance startup led by former Goldman Sachs fintech engineers - raised $3 million in seed funding.

Coinbase, too, has emphasized the importance of blockchain analytics with the acquisition of a startup called startup Neutrino last week.

Made as part of its drive to offer more diverse crypto assets across borders, blockchain analytics-based compliance is "Important as we work with regulators and agencies in different countries to bring new assets there," the exchange said at the time.

The news of the acquisition was timely, as it came several weeks after Israeli blockchain analytics firm Whitestream said a Coinbase account has been directing bitcoin donations to the Palestinian military-political group Hamas, which is deemed a terrorist organization by some nations.