Singapore crypto risk platform extends Series A to $24m

K3 is a local VC that has backed the likes of Grab, Spacex, AirBnb, and ByteDance. Darrow is a subsidiary of US financial technology company Susquehanna. Founded in 2012, Beco is Dubai’s oldest early-stage VC firm.

Incoming investors include 500 Global, Hashkey Capital, Summer Capital, Republic Crypto, Aspen Digital, and Coinhako. Fenbushi Capital, Kraken Ventures, Digital Currency Group, Kenetic Capital, Uncorrelated Ventures, and Libertus Capital re-upped.

Merkle was founded in 2018, with the core team coming from the US Department of Justice and the FBI, as well as Paypal, Bank of America, cybersecurity company Forter, and cryptocurrency and investment app Luno.

The company focuses on predictive and machine learning-driven transaction monitoring for anti-money laundering compliance, cross-chain analytics, and decentralised finance (defi) liquidity pool analysis. It also offers a crypto forensics tool that tracks stolen funds and enables investigations, enhanced due diligence and entity reporting, and crypto compliance and investigations training.

The platform provides allows compliance teams and investigators to conduct analysis across multiple blockchains. It screens more than 3m digital assets per month and covers cryptocurrencies representing 96% of the current USD 1.1trn crypto market.

Merkle claims to be able to uncover a large amount of risks that were previously undetected through a more advanced approach to risk mitigation that goes beyond blacklists. This entails a combination of machine learning and a proprietary behaviour engine.

Clients include financial institutions, crypto businesses, defi participants, non-fungible token (NFT) platforms, and government agencies. Law enforcement and government clients are said to use the technology to create visualisations of illicit fund movements across blockchains on a single screen, helping them conduct more effective and efficient investigations.

Merkle CEO and co-founder Mriganka Pattnaik claims the company has grown more than 300% over the past year despite a bear market in the crypto space and a broader macro slowdown.

He described the traction as a sign that web3 companies, financial institutions, and regulators are continuing to invest heavily in crypto compliance and forensics in light of several recent high-profile events in the space.

In 2022, more than USD 2bn has been lost via cross-chain bridge exploits. According to Merkle, more than 97% of all stolen cryptocurrency has been taken from defi protocols, and there has been significant growth in NFT-related money laundering, wash trading, and pump-and-dump activities.

Merkle plans to invest in new web3 risk management and forensics systems, including additional capacities in the NFT space, while building out the technology, R&D, and go-to-market teams. The fresh capital will also be used to drive an expansion across the US and Europe.

“Merkle Science is expanding the definition of blockchain analysis,” Meng Xiong Kuok, founder of K3, said in a statement. “The company takes a unique approach to new and increasingly complex challenges, such as the growing number of crypto bridge exploits, de-risking DeFi and empowering their customers to prevent increasingly sophisticated and previously undetectable crypto crime.”

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• Topics
• Southeast Asia
• Financials
• Technology
• Support services
• Early-stage
• Singapore
• K3 Ventures
• SIG
• 500 Startups
• blockchain
• Cryptocurrency
• non-fungible token (NFT)
• metaverse
• Cybersecurity
• Fintech
• Financial Services
• artificial intelligence