The Mastercard-owned crypto analytics firm CipherTrace is informing clients that it is pulling the plug on key services, according to people familiar with the matter. In response to inquiries from Coins2Day, the credit card giant confirmed this is the case but offered no further details as to the rationale.
The affected products include Armada, which helps financial institutions with risk and fraud models for crypto transactions, Inspector, which provides an interface to trace transactions, and Sentry, an anti-money laundering tool.
Seth Eisen, a senior vice president for communications at Mastercard, told Coins2Day that despite the decision to stop offering the products, CipherTrace is not shutting down. “We remain convinced of the longterm potential of crypto analytics and crypto intelligence,” he said.
The decision to stop offering products comes just a month after Mastercard informed a federal judge that it was pulling a report written by its director of investigations and intelligence in an ongoing criminal trial. The company said at the time its decision to pull the report came about due to issues of data quality.
Mastercard’s crypto bet
Mastercard acquired CipherTrace in 2021 as the payments company expanded into crypto, touting the potential to combine CipherTrace’s analytics tools with Mastercard’s cyber security solutions to provide businesses with “greater transparency” to identify and understand risks.
“Digital assets have the potential to reimagine commerce,” Ajay Bhalla, Mastercard’s president of cyber and intelligence, said in a press release at the time. “With the rapid growth of the digital asset ecosystem comes the need to ensure it is trusted and safe.”
Blockchain analytics have long been one of the hottest sectors in crypto, with organizations from law enforcement to private companies employing the services of firms like CipherTrace to analyze crypto transactions on their platforms and help identify scams and illicit activity.
CipherTrace’s main competitors include Chainalysis, which was valued at $8.6 billion in a 2022 funding round, TRM Labs, and Elliptic.
Following the 2021 acquisition, the three cofounders, who had launched Ciphertrace in 2015, stayed on with Mastercard. According to LinkedIn, former CipherTrace CEO Dave Jevans left his position as an executive vice president at Mastercard last month.
The rise of tracing
Blockchain analytics have played a key role in recent civil and criminal trials, including the recent conviction of FTX founder Sam Bankman-Fried. The reliability of crypto tracing came into question during the trial of the founder of the crypto mixer Bitcoin Fog, with the defense team alleging that data findings from Chainalysis should be ruled inadmissable.
The attorneys commissioned a report from Jonelle Still, the director of investigations and intelligence at CipherTrace, who argued that Chainalysis’ attributions were “unverifiable” and the prosecution’s investigation was “massively incomplete.” The attack on its competitors sent shockwaves through the blockchain analytics world, especially as the report seemed to call the entire sector into question, with many of the firms relying on government clients to operate.
In February, Mastercard pulled Still’s reporting, with an attorney stating in a letter that the data CipherTrace had relied on was itself “unverifiable and unauditable,” with issues apparently stemming from data collection practices that predated the acquisition. In the letter, Mastercard said it was conducting an “expedited, privileged investigation” about the reliability of the report. When asked by Coins2Day whether the decision to sunset the products was related to the investigation, Eisen declined to comment.
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