Jonathan Levin comes across as an Oxford scholar with his beard, spectacles, and plummy English accent. And indeed that’s what he was when the conversation in the pub one night turned to Bitcoin and, before long, drew him into a world of cops, hit men, and a global web of cybercrime. Today, Levin is the CEO of Chainalysis, one of the world’s preeminent crypto forensic firms, whose origins he shared on the latest episode of Fortune’s Crypto Playbook podcast.
When Levin cofounded Chainalysis in 2014, most people still hadn’t heard of Bitcoin and far fewer understood the workings of a blockchain. That included nearly everyone in law enforcement. That began to change, however, when special agents began investigating so-called dark-web sites where a wide variety of illicit goods and services could be bought and paid for using Bitcoin.
Soon, Levin’s startup had its first customer: the U.S. agency known as the Bureau of Alcohol, Tobacco, and Firearms. Agents at the ATF asked Levin to come over from England and show them how Bitcoin—far from being anonymous—left an indelible trail as money moved from wallet to wallet, providing clues about the location and often the identity of criminal actors.
Chainalysis’s help tracing the steps of would-be hit men helped the company land its first contracts, which Levin says were paid for as a credit card expense rather than as part of a full-blown contract. Business really took off, however, when the startup showed U.S. law enforcement how its tracing tools could help identify the perpetrators of the Mt. Gox hack, a notorious event in the early days of crypto that saw Russian criminals make off with a good portion of Bitcoin then in circulation.
“We helped them figure out where the money had gone, and when we figured out that the money had actually been stolen from the exchange, obviously, the law enforcement agencies in the United States took a great interest in figuring out where that money went and how was it laundered,” Levin recalls.
Today, Chainalysis has teams on the ground in over 30 countries, and works with around 330 government agencies around the world. The firm also has a thriving line of business catering to the private sector, helping companies with compliance and, more generally, keeping bad guys off their platforms. All of this has helped Chainalysis raise over $536 million in funding, and achieve a multibillion-dollar valuation that puts it in position to go public.
The world of crypto has changed dramatically since Levin helped ATF agents chase hit men on the dark web. Most obviously, it is not viewed primarily as a tool for criminals, but instead as a mainstream technology used by banks, brokerages, and Fortune 500 companies. The criminal element still remains, however, and the tactics of bad actors have become more sophisticated, meaning the blockchain detective work of firms like Chainalysis remains as essential as ever.
To hear the full interview with Levin and a broader history of criminals and crypto, check out the whole episode of Crypto Playbook on Spotify, Apple, or YouTube.
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