Blockchain analytics firm Chainalysis has acquired Alterya, an AI-powered fraud detection startup, for a reported $150 million, marking its first significant foray into artificial intelligence (AI).
“With Alterya, Chainalysis is doubling down on its strategy to invest in the prevention of illicit transactions,” the company stated in its blog post from Jan. 13, following the acquisition of Web3 security platform Hexagate last month.
We are thrilled to announce our acquisition of Alterya, the AI-powered fraud detection solution that identifies scammers before they meet their victims to provide real-time prevention for fintechs, crypto exchanges and banks.
Together, Chainalysis and Alterya will provide a… pic.twitter.com/2FBkhqDthP
— Chainalysis (@chainalysis) January 13, 2025
A "Holistic" Approach to Financial Crime
Alterya, founded in 2022 and backed by $9.8 million in seed funding from Battery Ventures, Y Combinator, NFX, and Nyca, uses AI agents to detect and prevent scams targeting financial institutions, fintech, and crypto service providers.
Alterya has already worked with major crypto exchanges like Binance, Block, and Coinbase. The acquisition will enable Chainalysis to improve its fraud detection capabilities, particularly in the Know Your Customer (KYC) process and real-time payment protection.
Chainalysis aims for a "holistic" approach to financial crime, integrating prevention, compliance, and remediation. This includes tracing fraud origins from traditional finance into crypto. Alterya’s expertise in monitoring over $8 billion in monthly transactions across crypto and fiat rails will be crucial for Chainalysis to offer new services addressing the financial crime landscape.
Generative AI Fuels Sophisticated Scams
This deal comes amid a surge in crypto-related fraud, with scams costing the industry billions of dollars annually. According to Chainalysis, the rise of generative AI has further exacerbated the problem, making fraud more scalable and easier to execute:
"Fraud and scams have long been a scourge on the financial services industry, from the rise of credit card fraud to today's sophisticated social engineering scams. Scammers can easily produce high-fidelity fake content and identities, deceiving users across social media and communication platforms to authorize payments under false pretenses."
Generative AI makes it more difficult for financial institutions and crypto businesses to detect when scammers "quickly monetize through crypto and real-time payment systems".
Alterya itself detected $10 billion sent to scams in 2024 and found that 85% of scams exploit fully verified accounts, bypassing traditional identity checks.
Effective fraud detection and compliance "rely on granular, real-time data," and, by integrating Alterya’s technology with Chainalysis’ blockchain data, Chainlink tries to enhance both.
Cryptocurrency Crime on the Rise
Cybercriminals continued their relentless assault on the cryptocurrency ecosystem in 2024, stealing over $2.3 billion across 760 reported on-chain incidents, according to CertiK’s Web3 Security Report 2024.
This represents almost 32% increase compared to 2023, with criminals averaging $3.1 million per incident.
The numbers from 2024 are in, and the Web3 ecosystem faces significant challenges. Over $2.36B was stolen across 760 incidents, marking a 31.61% increase from the previous year.
Dive into the 2024 Hack3d Report to see the insights that shaped the year and what's next.
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