Tiger Global, Amex Ventures, Visa And PayPal Ventures Invest In Blockchain Intelligence Firm TRM Labs

TRM Labs\’ founders Esteban Castaño and Rahul Raina

TRM Labs

The Cambrian explosion of interest in digital assets this year has led to record prices for cryptocurrencies and NFTs and sky-high valuations of blockchain companies, but also to record amounts of capital for the firms providing the industry with risk management infrastructure against hacks and other illicit activities.

In today’s latest example, San Francisco-based blockchain intelligence outlet TRM Labs has raised a $60 million Series B funding round led by Tiger Global.

Revealed exclusively to Forbes, several financial institutions including American Express’ Amex Ventures, Visa, Citi Ventures, DRW Venture Capital, Jump Capital, Marshall Wace, Block (formerly Square, Inc.) and PayPal Ventures and new and existing venture firms including B Capital Group, Bessemer Venture Partners, Blockchain Capital, Cap Table Coalition, Castle Island Ventures, Initialized Capital and Operator Partners also participated. 

Besides the rising prominence of the blockchain analytics sector amid increased regulatory scrutiny, some investors also see this bet as an opportunity to tap into the future of the internet, often referred to as Web3. “We’ve made investments in visionary startups building out the infrastructure for Web 3 such as FalconX and Abra,” Margaret Lim, managing director of Amex Ventures, told Forbes. “Investing in TRM, which leads the market in building out mission-critical infrastructure for risk and compliance, is a natural extension of what we’ve been doing.”

TRM helps financial institutions and governments investigate crypto fraud, money laundering and other instances of financial crime by analyzing blockchain data and packaging it into Statistical Analysis System (SAS) applications and APIs that enable their clients to screen wallets and monitor transactions across over 900,000 assets on 23 different blockchains. 

Esteban Castaño, TRM’s co-founder and CEO, believes it is this breadth of coverage that positions TRM well against the competition. “Part of the reason why we have the win rate that we do and why our customers stay with TRM is because we offer the same capabilities as Elliptic, Chainalysis or CipherTrace,” he says, “but we\’re monitoring orders of magnitude more assets and more blockchains than traditional solutions.”

Indeed, Chainalysis, New-York-based blockchain data company, which in June raised $100 million at a $4.2 billion valuation, tracks the flow of funds only across 10 of the top cryptocurrencies in the market. Other competitors Castaño named, Menlo Park, California-based CipherTrace, which is being acquired by Mastercard for an undisclosed sum, and London-based Elliptic, which in October also raised $60 million from investors including SoftBank and Wells Fargo\’s venture capital arm, cover hundreds of assets but still fall behind.

And even though over 90% of crypto trading volume is spread across just a handful of major coins like bitcoin and ether, wide asset coverage constitutes an important factor in crime prevention, notes Castaño. For instance, last September, Singapore-headquartered crypto exchange KuCoin suffered one of the largest crypto hacks, with more than $275 million worth of cryptocurrency stolen (as of November, 2020, 84% of the affected assets had reportedly been recovered via on-chain tracking, contract upgrade and judicial recovery). The majority of those funds was held in altcoins like XRP and litecoin and some of the lesser known ERC-20 tokens, which hackers later attempted to move and launder.

“Having visibility across the entire crypto ecosystem allows our customers to better manage risk on their platform as well as to investigate these attacks, which may include the 10,000th largest token,” Castaño says.

Since launching out of Y Combinator in 2019, TRM says it has grown revenue 600% year-over-year and expanded its team, which includes threat finance experts from the FBI, U.S. Secret Service and Europol and data scientists from Apple, Amazon and Google, from 4 to 60. According to Castaño, among its high profile clients are FTX.US, American affiliate of billionaire Sam Bankman-Fried’s crypto exchange FTX, USDC stablecoin operator Circle, and several (undisclosed) traditional financial institutions and government agencies, both in the United States and internationally. With raised capital, TRM plans to continue enhancing its product line.

With reporting assistance from Steven Ehrlich