Highlights:

  • Alterya employs AI to assist in real-time financial scam detection amidst data patterns, enabling quicker investigational results.
  • After acquiring the blockchain security platform Hexagate Ltd. in December, this acquisition marks Chainalysis’ second significant transaction in recent memory.

Blockchain analysis company Chainalysis Inc. acquired Alterya Inc., an Israel-based startup that develops AI detection solution to combat fraudsters and financial scammers.

The two companies did not reveal the acquisition’s specifics, but it was informed that the total transaction was approximately USD 150 million.

Chainalysis is most renowned for giving banks and governments analytical information about bitcoin transactions on blockchain networks, which enables them to identify illegal financial behavior. The New York-based startup allows its clients to explore, analyze, and follow the movement of cash by tracking over USD one trillion in Bitcoin transactions each month.

Alterya employs AI to assist in real-time financial scam detection amidst data patterns, enabling quicker investigational results. Despite its lack of industry recognition, the company has already started working with well-known companies, such as financial services provider Block Inc. and significant cryptocurrency exchanges Binance Holdings Ltd. and Coinbase Global Inc.

Jonathan Levin, Co-founder and Chief Executive of Chainalysis, said, “Our acquisition of Alterya represents a significant step forward in our work to provide a holistic risk solution that includes prevention, compliance and remediation.”

With this acquisition, it can offer real-time proactive fraud protection for payments and transitions during ‘Know Your Customer’ onboarding procedures for wallets, blockchains, and exchanges, Levin continued. Financial institutions employ a procedure called KYC to confirm users’ identities in order to make sure they are operating lawfully and know who they are dealing with.

Despite the fact that this is typically a very effective method of stopping bad actors, Alterya stated that a variety of methods that can circumvent conventional identity-based solutions have surfaced in response to the increase in frauds and scams. The introduction of generative AI in recent years has given con artists access to advanced social engineering tools that allow them to increase the scale and affordability of the fraud.

According to internal Alterya data, the issue is that fully validated accounts are used in 85% of scams. If multiple accounts are created using stolen identities, then no amount of pre-verification to identify phony addresses or identities will prevent fraudsters from creating bogus accounts.

This implies that active intelligence, real-time data, and pattern recognition are becoming more important for both fraud detection and compliance. According to Levin, the integration of Alterya’s AI-powered fraud detection capabilities with Chainalysis’ pre-existing blockchain data analysis platform will enable its platform to detect additional fraudulent behavior.

According to the business, Alterya has already assisted cryptocurrency exchanges in reducing fraud by 60%, lowering disputes pertaining to scams, and increasing the effectiveness of their manual operations since its inception in 2022.

“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.”

After acquiring the blockchain security platform Hexagate Ltd. in December, this acquisition marks Chainalysis’ second significant transaction in recent memory. The financial specifics of that transaction were not disclosed by the companies.