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An Innovative Start-Up Helps the Police!
Originally posted 24 Mar 2016 by
An Innovative Start-Up That Helps the Police Keep Track of Criminals Using Bitcoin Raised $5 Million A start-up named Elliptic assists the law enforcement agencies in the UK and US track down the criminals who use Bitcoin. This much needed start-up has raised £ 3.5 million from Santander Inno-Ventures and Paladin Capital. Elliptic doesn’t disclose the agencies the company is working with; however, it has said that the law enforcement agencies in the US are the biggest users of its services. Elliptic, has its offices in London and New York. The company was founded in London. It uses graph analysis and Machine Learning to scrutinize the blockchain of Bitcoin. The company uses the technology for determining transactions that look suspicious and to identify the Bitcoin users. Dr James Smith who is Elliptic’s co-founder as well as the CEO said that presently the company had 2 main customer groups. The first group is that of those companies who make a lot of transactions using Bitcoin. These are the payment processors and exchanges of Bitcoin. The second group includes law enforcement agencies. The law enforcement agencies in US, UK and Europe are the most active ones. Dr Smith didn’t name any specific agencies using the products of Elliptic. However, he did say that for law enforcement agencies it is more of forensic product. The agencies might have caught a phone or a laptop or they might have gone and done some action in street and now they need to follow the Bitcoins. He further said that for law enforcement agencies it is a product which helps them in tracing money through networks and in finding the way to the regulated companies from whom these agencies can get some information that is personally identifiable. For example, a law enforcement agency wants to trace some money and they want to find out which exchange that money ended up on so they can go to the exchange and ask them ’which customer bought it? We want to arrest him’. Ross William Ulbricht’s arrest and sentencing is the most high profile criminal case to date that has involved Bitcoin. He was the founder of Silk Road, an online black market which used Bitcoin to do transactions. Ulbricht is serving a life sentence. Dr Smith explained that Bitcoin payment processors and exchanges need help in identification of transactions having a high risk. There is a risk of money laundering or a transaction being connected to something like Silk Road. For them Elliptic can monitor the transactions and let them know which transactions they should investigate further. According to Dr Smith Elliptic will spend $5 million on exploring the new product areas and on hiring. He says that it very easily applies across other blockchains. However, the company thinks that this is generally interesting across the payments. The company thinks that there are some very advanced techniques to identify money laundering. Paladin Capital is a Washington-based Venture Capital firm and is little-known in the United Kingdom. Paladin Capital led Elliptic’s investment round. According to Dr Smith a customer introduced Elliptic to Paladin Capital. Dr Smith adds that Paladin Capital has got an excellent advisory board. They have got many ex-FBI or NSA or DEA People and it is great for Elliptic. A retired Lieutenant General is the managing director of Paladin Capital. Santander Inno-Ventures is a Fin Tech VC fund of Spanish bank. This VC fund also participated in funding round. According to Dr. Smith, Santander is really good for Elliptic as they provide the company with a view about where the company should go in future with blockchain and what affects it has on the financial markets. It is a great thing for the long term strategy of Elliptic. Octopus Ventures who are an existing investor also participated in the Series A round of funding of Elliptic. Digital Currency Group and KRW Schindler were also part of the funding round.
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