Blockchain forensics company Elliptic received $23 million in Series B financing led by Tokyo-based financial institution SBI Holdings.
The company announced on Wednesday that the funds will help boost Elliptic's expansion in Asia. Elliptic recently opened an office in Singapore and will open an office in Japan this week.
Tomoyuki Nii, executive director of SBI investment's overseas investment, will join the Elliptic board of directors. He said that SBI invested $10 million in this round of financing.
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Existing investors such as AlbionVC and SignalFire, Octopus Ventures and Santander Innoventures also participated in the financing. (AlbionVC's Ed Lascelles will also join the Elliptic board of directors.)
James Smith, CEO and founder of Elliptic, said that Tokyo and Singapore are notable because the cryptocurrency communities in these two places are active, and because there are regulators with a better understanding of technology in these areas.
“The Singapore Monetary Authority (MAS) and the Japan Financial Services Agency (FSA) are very proficient in cryptocurrencies. Japan has its own exchange license system, which I think is the key to the development of cryptocurrencies, because once you set the basic rules, then Companies can participate and innovate."
Elliptic sword refers to the Asian market
Elliptic uses artificial intelligence and machine learning to track and locate suspicious transactions on blockchains. Smith said Elliptic will be used in SBI's cryptocurrency business, including its exchange VC Trade and custody business, and is more widely used by SBI investing blockchain companies and their banks and financial partners.
“This will be a strong market driver, and we will work with SBI to enter the Japanese market and then the Asian market.”
Founded in 2013, Elliptic raised $12 million through five seed and A rounds of financing; in December 2017, SignalFire led a $5 million round of financing.
In addition to Asia, Elliptic's funds will also be used to develop monitoring services, primarily for Facebook's Libra network and the emerging central bank digital currency (CBDC).
When talking about Libra, Smith said:
“I think that from the perspective of the full popularity of digital currency, this may be a huge leap forward, and we will ensure that our platform supports this currency.”
Make XRP a global cryptocurrency
In addition to building a large number of businesses targeting cryptocurrencies, SBI Holdings is also the largest external investor in XRP. XRP is the native cryptocurrency of the Ripple blockchain system.
SBI's Nii said that SBI plans to establish an XRP ecosystem in Japan, and there are quite a few XRP "hardcore fans" in Japan. This is one of the reasons Elliptic is attracting SBI because it happens to be best at tracking the XRP blockchain.
"Compared to other anti-money laundering platforms, Elliptic has the advantage that it can track XRP. We surveyed these companies, and in fact I think Elliptic's products are doing the best in anti-money laundering."
Smith said there is no clear selection criteria for the monitored currency Elliptic, but he said many customers have asked XRP, especially as it enters the Asian market. Smith said that Ripple's books have a large amount of data on the chain, some of which are trading information about the transaction.
“There is a lot of data in the Ripple blockchain, which is probably the blockchain that carries the most data, and records a lot of information. XRP is slightly different from other cryptocurrencies because there are more financials like SBI. The organization puts it into business operations."
Nii said that SBI's goal is to make XRP appear as a global cryptocurrency at the 2020 Tokyo Summer Olympics.
“At the Tokyo Olympics, there will be many people coming to Japan. They need to shop and travel, they will be able to use XRP in a safe way, protected by a platform like Elliptic.”