What the business is
CipherTrace is a crypto analytics firm owned by Mastercard that traces blockchain transactions for financial institutions and law enforcement.
The bet
Mastercard's 2021 purchase bet that blockchain analytics paired with its cybersecurity business would give businesses transparency into crypto risk.
How it started
Mastercard acquired CipherTrace in 2021 as it expanded into crypto, touting a combination with its cybersecurity solutions. The three co-founders, who launched CipherTrace in 2015, stayed on with Mastercard; former CEO Dave Jevans left his executive VP position the month before Fortune's report, according to LinkedIn.
What happened
In February 2024 Mastercard told a federal judge it was withdrawing a report written by CipherTrace's director of investigations, Jonelle Still, in the Bitcoin Fog criminal trial. The report had called Chainalysis attributions unverifiable. A letter said CipherTrace's data was unverifiable and unauditable, with issues stemming from collection practices that predated the acquisition, and that an expedited, privileged investigation was under way.
How it ended up
CipherTrace began telling clients it was shutting Armada (risk and fraud models for crypto transactions), Inspector (a transaction tracing interface) and Sentry (an anti-money-laundering tool). Mastercard confirmed but gave no rationale and declined to say whether the investigation was related. It said CipherTrace is not shutting down and that it remains convinced of the long-term potential of crypto analytics.
What has to be true
Mastercard gave no reason for ending the products when Fortune asked.
The timing follows its February withdrawal of a CipherTrace court report over data it described as unverifiable and unauditable.
The data issues reportedly stemmed from collection practices that predated Mastercard's acquisition.
Blockchain analytics firms rely on government clients, so doubts about data reliability threaten the whole business line.
What can be applied
When an acquired unit's data quality is questioned in public, an owner may end the affected products while keeping the brand; the reason matters to customers, and silence leaves them guessing.
Aftermath
As of 2024-03-13 CipherTrace remains part of Mastercard but without Armada, Inspector and Sentry. Mastercard's expedited investigation into the withdrawn report had not reported findings in the article. Fortune did not say how many customers were affected.
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