Blockchain tracking is becoming more and more important as the crypto industry grows. Today, some of the biggest cryptocurrency companies hire blockchain analytics firms to help monitor customer activity and comply with laws designed to stop money laundering. In bankruptcy proceedings, analytics firms sort through the remains of failed crypto firms, investigating public transaction logs to find missing funds.
The recent downturn in the crypto industry has taken a toll on the tracking business. Elliptic, one of Chainalysis’ competitors, cut 10% of employees in February. In the same month, Chainalysis laid off About 40 employees, layoffs about 5%.
But the blockchain analytics firm has been spared the worst of the market crash. Chainalysis declined to disclose its exact sales figures, but Mr. Gronager said the company’s revenue grew 70 percent last year despite the crisis in the cryptocurrency market. That growth depends in part on the company’s business model: The company says two-thirds of its revenue comes from work with public agencies, including law enforcement, and that revenue stream has remained relatively constant even as markets crash .
The Justice Department paid Chainalysis $12,500 to work on the Ryan Felton case, according to federal records. But that task is just a drop in the bucket. The Justice Department, Treasury Department and other federal agencies pay for the ability to use Chainalysis’s blockchain tracing software, including a tool called Reactor that maps transactions. The total value of Chainalysis’ contracts with the federal government is about $65 million, according to an analysis of federal records by Jack Poulson, executive director of the nonprofit Tech Inquiry, which tracks contracts.
More recently, though, Chainalysis has faced competition from smaller rivals, including TRM Labs, a tracking company that rose to fame by selling a new cryptocurrency software called Solana.
In 2021, a TRM official emailed the Treasury Department challenging its decision to award the exclusive contract to Chainalysis, according to email logs obtained through a public records request.
