Chainalysis Acquires AI-Powered Fraud Detection Startup Alterya for $150M

Crypto analysis firm Chainalysis acquires AI-powered fraud detection startup Alterya for $150M - SiliconANGLE

Crypto analysis firm Chainalysis acquires AI-powered fraud detection startup Alterya for $150M Blockchain analysis giant Chainalysis Inc. said it acquired the Israeli startup Alterya Inc. today, which develops an artificial intelligence detection solution to beat financial scammers and fraudsters. Although the two companies did not disclose the details of the acquisition, sources familiar with the deal told Business Insider the total was around $150 million. Chainalysis is best known for providing analytical data about cryptocurrency transactions on blockchain networks to governments and banks allowing them to detect illicit financial activity. The New York-based company tracks over $1 trillion worth of cryptocurrency transactions every month allowing its customers to investigate, map and monitor the flow of funds. Alterya uses AI technology to help detect financial scams amid patterns in data in real time, allowing more rapid conclusions to investigations. Although not well known in the industry, the company has already begun work with big names including major crypto exchanges Binance Holdings Ltd. and Coinbase Global Inc., as well as financial services company Block Inc. "Our acquisition of Alterya represents a significant step forward in our work to provide a holistic risk solution that includes prevention, compliance and remediation," said Jonathan Levin, co-founder and chief executive of Chainalaysis. Levin added that with this acquisition it can provide real-time proactive fraud protection for payments and transitions during "Know Your Customer" onboarding processes for exchanges, blockchains and wallets. KYC is a process that financial institutions use to verify the identity of their users to ensure that they know who they are working with and that they are operating legally. Although this is usually a powerful way to thwart bad actors, Alterya said that with the rise of fraud and scams, a number have emerged that can bypass traditional identity-based solutions. Over the past few years, the addition of generative AI has provided scammers with sophisticated social engineering tools that enable them to make fraud more scalable and affordable than before. Problematically, according to internal research from Alterya itself, 85% of scams involve fully-verified accounts. No amount of pre-verification to catch inauthentic addresses or identities will keep fraudsters from generating fake accounts if such a large number of accounts are stolen identities. This means that both fraud detection and compliance must now rely more heavily on active intelligence, real-time data and pattern detection. Levin said that combining Chainalysis' already existing blockchain data analysis platform with Alterya's AI-powered fraud detection capabilities will allow its platform to uncover more fraudulent activity. Since its launch in 2022, Alterya has already helped cryptocurrency exchanges decrease fraud by 60%, reduce scam-related disputes and improve the efficiency of their manual operations, the company said. "Alterya has been a reliable partner in helping Coinbase identify wallet addresses tied to known investment scams," said Ilan Zimmer, director of payment and operational risk at Coinbase. "This collaboration has enabled us to better protect our customers and safeguard their hard-earned funds from bad actors." This acquisition is the second major deal Chainalysis has made recently, including the acquisition of the blockchain security platform Hexagate Ltd. in December. The companies did not disclose the financial details of the deal.

Chainalysis acquires AI fraud detection startup for $150M: Report

Blockchain analytics firm Chainalysis has made its first foray into artificial intelligence by acquiring a fraud detection startup. According to a Jan. 13 report by Business Insider, Chainalysis purchased Alterya, a tech startup that uses AI agents to detect fraud, for a reported $150 million. The news was confirmed by Chainalysis in a separate blog post, but the financial details were not disclosed. Chainalysis said the acquisition helps the company "provide real-time proactive fraud protection for payments and enhanced fraud detection during [the Know Your Customer process] for exchanges, blockchains and wallet providers." While not a household name in crypto, Alterya has contracts with industry stalwarts like Coinbase and Binance. It has reportedly monitored more than $8 billion worth of monthly transactions across both crypto and fiat channels to help detect and prevent the growing threat of "authorized fraud," according to Chainalysis. The deal marks Chainalysis' second major acquisition in as many months, having announced it acquired Web3 security platform Hexagate on Dec. 19. The financial details were not disclosed. Chainalysis described fraud and scams as the "scourge" of the financial services industry, which has bled over into crypto. As Cointelegraph recently reported, hacks and scams cost the crypto industry $3 billion in 2024 alone. The advent of generative AI -- a type of artificial intelligence that uses machine learning to create new content -- has made fraud "more scalable and affordable to conduct," said Chainalysis. According to the US Federal Bureau of Investigation (FBI), scammers have used generative AI to target cryptocurrency investments specifically. "Criminals generate content for fraudulent websites for cryptocurrency investment fraud and other investment schemes," the FBI warned in a Dec. 3 bulletin. Zooming out more broadly, generative AI and the use of deepfakes are expected to cost the US economy up to $40 billion by 2027, according to Deloitte's Center for Financial Services. Deloitte said the dark web is flush with businesses selling deepfake and other generative AI scamming software for $20,000. "This democratization of nefarious software is making a number of current anti-fraud tools less effective," said Deloitte.

Chainalysis acquires anti-fraud startup Alterya

Alterya is a real-time fraud prevention company that focuses on early detection of social engineering scams. Blockchain giant Chainalysis will be acquiring Israeli fraud prevention company Alterya, they announced on Monday. This is the second acquisition the company has made in Israel after it acquired Hexagate just last month. Chainalysis develops analytics, operations analysis, and data accessibility products on blockchain, employs over 700 employees worldwide, and its customers include financial institutions, governments, and law enforcement agencies. Alterya was founded in 2022 by Elad Fox (CEO) and Shachaf Gonen (VP of Technology). Fox is a veteran of technology and operational units in the Israeli Intelligence Service, and Gonen is a graduate of the Talpiot Program and served in Unit 8200. He previously worked at Google. Upon its establishment, the company raised a seed investment of $9.8 million, led by Battery Ventures and with participation from Nyca, NFX, and Y Combinator. The company currently has 28 employees who will continue to work for it after the acquisition. It will operate as an independent product line and a local R&D center. "There is a high level of synergy between the technologies built by both companies, and we expect the merger to lead to rapid growth, deepening value for existing customers and expanding operations into new markets," Fox said. "Social engineering fraud has become the biggest problem for financial services around the world, which strive to adopt faster and more efficient payment infrastructures." Real-time fraud prevention Indeed, Alterya is a real-time fraud prevention company that emphasizes crypto payments and other instant payment methods. It focuses on early detection of social engineering scams, a threat that has grown steadily as attackers increasingly use Gen AI technologies to build synthetic identities and content designed to defraud end customers. The company has developed a solution that combines cyber capabilities with artificial intelligence to detect these scams early and broadly. Alterya, which has operated under the radar until now, has experienced rapid growth since launching its product about a year and a half ago. The company helps some of the world's largest financial institutions, including Coinbase, Square, Binance, and leading US banks, protect hundreds of millions of end customers from fraud. Advertisement In 2024, the company detected over $10 billion in crypto fraud in real time and helped its customers protect over $100 million in assets. Stay updated with the latest news! Subscribe to The Jerusalem Post Newsletter Subscribe Now "With this acquisition, Chainalysis can now provide proactive real-time fraud protection for payments and enhanced fraud detection during the KYC (know your customer) process for exchange, blockchain, and wallet providers," explained Chainalysis Co-founder and CEO Jonathan Levin. "Alterya has already helped the world's leading crypto exchanges reduce fraud by tens of percent and streamline manual investigation processes." Sign up for the Business & Innovation Newsletter >>