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The Technology That Traces the Origin of Funds

Chainalysis, an American analytics firm, empowers financial institutions and law enforcement agencies to trace the origins of funds in blockchain transactions, thereby mitigating risks. Odalia Ben Shimon, who oversees the private customer division at Chainalysis Israel, discusses the intricate process of tailoring their product to meet the diverse needs of various business sectors

Ruth Noy, in collaboration with ICBW3. 03 September 2023



Odelya Ben Shimon
Odelya Ben Shimon | Photo: Private

While blockchain transactions are publicly recorded and accessible to all, deciphering the specifics from these records can be a challenge for the average person. "The data on the blockchain is open, yet what you typically encounter is just a string of 24 characters, a mix of words and letters, which doesn't readily convey the underlying details," Odalia Ben Shimon, the manager for the private sector at Chainalysis Israel, clarifies.


Established in 2014, Chainalysis is an American company that specializes in analyzing blockchain activities. With a global workforce of 950, the firm is dedicated to demystifying blockchain data for financial institutions and law enforcement agencies.


Ben Shimon further details the capabilities of Chainalysis: "Our technology enables the tracing of fund origins in each transaction, determining whether the money is tainted by illicit activities or linked to terrorist financing." Chainalysis offers a suite of data, software, services, and research to a wide range of clients—including governments, exchanges, financial institutions, and cybersecurity firms—in over 70 countries. "Our insights support investigations, ensure regulatory compliance, and provide valuable business intelligence. This contributes to solving major criminal cases and enhancing the accessibility and understanding of cryptocurrencies for users," she adds.



What is the advantage of using Chainalysis technology?


Odalia Ben Shimon details how Chainalysis categorizes blockchain activities by entities and wallet addresses, aiding in the legitimization of Bitcoin conversions to cash. In Israel, converting Bitcoin to cash at banks necessitates an expert report from top accounting firms, confirming the funds' legality. Israeli regulations compel banks to accept digital money unless proven illicit, leveraging tools like Chainalysis to ensure the money's clean origin. This technology traces the exact money trail, required in client reports, thus minimizing and quantifying risk. Chainalysis's efforts are supported by Israeli banks, investment, and cryptocurrency companies dealing with digital currency transactions.



How dominant is the crypto sector in Israel?


Between March 2022 and March 2023, Israel saw an influx of over ten billion dollars in cryptocurrency, positioning it eighth in the Middle East and Africa for crypto activity. The sector is burgeoning, with a KPMG report noting that Israel's crypto industry employs over 3,700 people and has raised $3.85 billion in the past decade. The industry encompasses trading, blockchain development, wallets, and risk management, among other areas. "Our aim is to build trust in blockchain technology," says Ben Shimon.

 

Before joining Chainalysis, Ben Shimon managed financial sector clients at Microsoft Israel. The move to Chainalysis presented her with the chance to delve into a burgeoning field. "It's like learning a new language, and the challenge lies in tailoring Chainalysis' solutions to meet the specific needs of various sectors, including insurance, banking, cybersecurity, investment, and payment services."


How many women are active in the crypto industry in Israel?


"There are not many women in the crypto industry in Israel. Chinalysis Global has women in senior positions and I would like to see more active women here." 



In collaboration with ICBW3.


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