By Anna Irrera
NEW YORK (Reuters) - New York-based cryptocurrency compliance startup Chainalysis has raised $6 million in funding from Japanese financial group Mitsubishi UFJ Financial Group Inc and venture capital firm Sozo Ventures, the company said on Tuesday.
Chainalysis hopes the strategic investment will help it further its expansion plans in Asia, Chief Executive Michael Gronager, said in an interview.
"We are looking into opening an office in Japan in the next year or so, but we don't yet have a specific timeline," Gronager said.
Chainalysis is known for its work in helping law enforcement, regulators, and businesses including banks track flows of cryptocurrency to spot illicit activity.
While big banks have largely steered clear of investing in the nascent asset class, they provide banking services to companies in the space and are required to conduct anti-money laundering and other checks on their clients' flows.
"Chainalysis' compliance technology is important to providing the insight and anti-money laundering controls banks need in order to establish next generation compliance frameworks," said Nobutake Suzuki, president and chief executive of MUFG's corporate venture capital arm MUFG Innovation Partners, which carried out the investment.
Chainalysis has been growing in the Asia Pacific region, having more than doubled the number of clients there over the past year, the company said. Contracted revenue from clients in the region has grown more than 16 times, it said.
Koichiro Nakamura, a managing director at Sozo Ventures, said his firm was drawn to invest by Chainalysis' plans to provide its services to banks and other large financial firms. "That is a very interesting and potentially huge market," Nakamura said in an interview.
The investment follows a $30 million fundraising round from venture firms Accel and Benchmark in February.