Elliptic raises $ 23 million to fight cryptocurrency crime

When Hamas was trying to generate bitcoin by channeling it through a number of digital wallets, a young company was able to see what was happening and warn its customers.

Based in London, Elliptic sells blockchain analysis tools to some of the world's largest cryptocurrency platforms, including Binance and Circle, as well as banks. The company's software is used to investigate criminal activity on the Bitcoin digital ledger and to monitor transactions to prevent money laundering.

The company recently learned that Al-Qassam Brigades, the military wing of Hamas, were using a donations website generating a different bitcoin wallet address for each person visited. This made it more difficult to track funds and locate their shipment. The group has been designated as a terrorist organization by Israel, the United States and the EU.

"Because we're always aware of what's going to happen, we can see when these funds start trading," Elliptic co-founder and CEO James Smith told CNBC in a phone interview. "We were able to inform our clients that these funds were paid to them and they were able to stop them."

The company announced Wednesday it raised $ 23 million during a round of talks led by the Japanese SBI Holdings to promote aggressive expansion in Asia. SBI, a financial services company from SoftBank, has made headlines in the past through partnerships with blockchain companies like Ripple and R3. Elliptic also counts the Spanish bank Santander as investor.

Terrorist financing is only one of the areas of illicit activity that the company's platform deals with. It is also used to track traffickers of child pornography and drugs, as well as hackers that cause the theft of funds. Elliptic presents a different aspect of the cryptography industry, as its technology is considered more favorable to financial services companies and regulators.

Smith said the cryptocurrency sector had grown more in the last 18 months than in previous years. Bitcoin advertising has more than doubled in value since the beginning of the year and Facebook has announced plans to launch a virtual currency called Libra, leveraging assets, partnering with others technology and finance companies.

But Libya has faced a fierce crackdown on regulation. President Donald Trump said Facebook may be forced to apply for a banking license to launch it, while several US lawmakers have rejected the company's digital currency plans. Central bankers also praised the idea. Federal Reserve Chairman Jerome Powell said the project should be suspended until regulators' concerns are addressed.

Elliptic's boss said that although Facebook is "taking the lead," many other companies are exploring virtual currencies backed by assets. "He's out of the box," he said. "People are now thinking about this and the best way to do it." Even central bankers have pitched the idea, the governor of the Bank of England, Mark Carney, proposing a digital reserve currency and the Chinese central bank, claiming that she was about to release his own virtual tokens.

Elliptic is now opening offices in Singapore and Japan as part of its expansion into the Asian market. Japan is an example of a country that has shown more advances in the industry than others, said Smith, the "big banks" examining ways to offer cryptocurrency services to their customers. The company said its revenues in Asia had increased tenfold in the last 12 months alone.

Elliptic said it would also use the new funds to develop its product to support new digital currencies, including Libra, Link – a token developed by the Japanese company Line Corporation – and the bank's crypto-currencies. Central.