Dive Brief:
- Card giant Mastercard said in a press release today that it's agreed to buy CipherTrace, a cryptocurrency security company that provides software and related cyber services to thwart money laundering and crypto fraud. Financial details of the transaction weren't disclosed, but it is expected to close by the end of this year.
- Purchase, New York-based Mastercard said the acquisition will help accelerate and expand its crypto strategy by providing business clients with an enhanced view of their digital assets, a better understanding of their risks and more tools to manage regulatory compliance requirements. The six-year-old CipherTrace has insights into some 900 cryptocurrencies, according to the release.
- “With the rapid growth of the digital asset ecosystem comes the need to ensure it is trusted and safe," Mastercard's Cyber & Intelligence President Ajay Bhalla said in the release. "Our aim is to build upon the complementary capabilities of Mastercard and CipherTrace to do just this.”
Dive Insight:
Like other payments companies, Mastercard has sought in recent years to increase its ability to service the financial institutions and businesses incorporating the use of cryptocurrencies and other digital assets, such as non-fungible tokens.
The drive to monitor that realm has risen in the industry with the climbing value of Bitcoin, the most widely used cryptocurrency that today has a value just over $47,000.
Mastercard said its purchase of CipherTrace will allow it to offer enhanced digital asset security and fraud detection services and more choices in its use of digital assets.
CipherTrace uses data analytics and algorithms to analyze digital assets and lets customers interact more safely with some 7,000 cryptocurrency entities, the release said.
Menlo Park, Calif.-based CipherTrace was founded in 2015 and has raised about $42 million, according to past news reports. In the latest fundraising round in June, CipherTrace raised $27 million from investors, including the high-profile New York hedge fund Third Point Ventures.
At that time, CipherTrace planned to double its 100-employee headcount over the next year to capitalize on the growing demand for crypto security, trade publication Coindesk reported.
CipherTrace raised $15 million in 2018 in a fundraising round led by Palo Alto-based Aspect Ventures, according to a press release the time. The startup has also received funding from the U.S. Department of Homeland Security, according to its web site, likely meaning CipherTrace has also done work for the federal government. Indeed, CipherTrace points to 100 customers, including regulators, banks, virtual asset service providers and other unidentified "agencies," on its web site.
CipherTrace's CEO, David Jevans, previously founded and led two other digital security companies, including Marble Security, which was sold to Proofpoint, and IronKey, according to his LinkedIn profile. Early in his career, he was a software engineer for Apple Computers.
“We help companies — whether they are banks or cryptocurrency exchanges, government regulators or law enforcement to keep the crypto economy safe,” the release quotes Jevans as saying.
The acquisition builds on Mastercard's prior efforts to buy assets and forge relationships that it said will help customers, merchants and businesses that it deals with operate safely in the digital asset environment.
The company has partnered with the crypto trading companies Gemini and Uphold and crypto wallet company BitPay to create cards that use cryptocurrencies.
Mastercard said it's also invested in creating platforms "to test and support Central Bank Digital Currencies," as well as programs to use of blockchain technology, NFTs, and select stablecoins.
Earlier this week, Mastercard said it would buy the Danish open-banking technology company Aiia, which lets businesses and financial institutions integrate financial data and account-to-account payment into their services for millions of European citizens.
