It’s been more than a decade since 850,000 BTC went missing from Mt. Gox, yet the collapse of the former exchange remains one of the most infamous black swan events of the cryptocurrency ecosystem.
While creditors of the defunct exchange are edging closer to some form of restitution, Mt. Gox’s demise ended up playing an important role in the development of tools to identify, track and tackle the illicit movements of funds through the wider cryptocurrency industry.
The search for answers and funds played a key role in the birth of crypto’s best-known blockchain analytics and tracing firm, Chainalysis, explains co-founder Michael Gronager.
Close to a decade later, Chainalysis’ analytics tools are being used by myriad private and public enterprises and institutions. From data analytics to pure law enforcement use cases, the firm’s services continue to prove influential — and sometimes controversial — across the industry.
Kraken the Mt Gox case
Gronager is a crypto OG, having previously co-founded cryptocurrency exchange Kraken. He got involved in blockchain analysis after Kraken went looking for a steady banking partner and met a wall of wariness over the lack of visibility in the cryptocurrency ecosystem along with KYC and money laundering concerns.
“These conversations with the banks, they all end in the same way. How do you do transaction monitoring? How do you track the funds you receive from someone that you are onboarding online?” Gronager tells Magazine.
The collapse of Mt. Gox around the same time presented another unique challenge for Gronager, who was tasked with figuring out what happened to the funds that Kraken and some of its clients had in the defunct exchange.
As explored in the book Tracers in the Dark, Gronager developed the tools that would lay the foundation for Chainalysis, with the nascent firm eventually appointed as the investigative team by Mt. Gox’s bankruptcy trustee in 2014. From there, Gronager and his team wasted no time…