As the crypto industry has expanded, blockchain tracking has become increasingly important. These days, some of the largest crypto companies hire blockchain analytics firms to help monitor their customers’ activity and comply with laws designed to stop money laundering. In bankruptcy proceedings, analytics firms sort through the remains of collapsed crypto companies, investigating public transaction logs to locate missing funds.
The crypto industry’s recent downturn has taken a toll on the tracking business. Elliptic, one of Chainalysis’ competitors, cut 10 percent of its staff in February. The same month, Chainalysis laid off about 40 employees, a roughly 5 percent cut.
But blockchain analysis companies have been insulated from the worst effects of the market crash. Chainalysis declined to reveal its exact sales figures, but Mr. Gronager said the company’s revenue increased 70 percent last year despite the crisis in crypto markets. That growth is partly a function of the company’s business model: Two-thirds of its revenue comes from partnerships with public institutions, including law-enforcement agencies, the company says, a source of income that remains relatively stable even when the market implodes.
The Justice Department paid Chainalysis $12,500 for its work on the Ryan Felton case, according to federal records. But that assignment was a drop in the bucket. The Justice Department, the Treasury Department and other federal agencies pay for the ability to use Chainalysis’ blockchain-tracing software, including a tool called Reactor, which maps transactions. In total, Chainalysis has active contracts with the federal government worth about $65 million, according to an analysis of federal records by Jack Poulson, the executive director of the nonprofit Tech Inquiry, which tracks contracts.
Lately, though, Chainalysis has faced competition from smaller rivals including TRM Labs, a tracking firm that has gained prominence by selling software for new types of cryptocurrencies with names like Solana.
In 2021, an official at TRM emailed the Treasury Department to question its decision to award an exclusive contract to Chainalysis, according to email logs obtained through a public records request.
