CipherOwl, a startup that builds software to monitor crypto transactions, announced a $15M seed round on Thursday. The lead investors were General Catalyst and Flourish Ventures.
Coinbase Ventures and Enlight Capital also took part, and the company was formed by Leo Liang and Ming Jiang.
They began selling the product in December in London and the U.S. The startup aims to give banks, fintechs and law enforcement clearer signals when crypto transfers look risky. Its tools use AI to flag questionable flows and to make the review process faster.
The funding and investors
The new seed round brings CipherOwl fresh capital to expand. General Catalyst and Flourish Ventures led the round, and other backers include Coinbase Ventures and Enlight Capital.
Liang would not say what valuation the company took the money at. The founders will use the funds to scale the product and hire more staff. For now, the team is small, with 8 employees.
What does CipherOwl do?
CipherOwl builds software that watches crypto transactions, and the product looks for patterns that suggest fraud or money laundering. When the system flags a transfer, it creates a short report.
That report explains why the activity was flagged, and the goal is to give human reviewers a head start. Liang and Ming say this speeds up investigations. They also say it reduces the time teams spend sifting through raw blockchain data.
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Why do banks and fintech care?
Banks and fintech firms already run tools to spot suspicious fiat moves. As crypto becomes part of mainstream finance, similar safeguards are needed for token transfers.
John Onwualu, a principal at Flourish Ventures, said the shift to on-chain payments will require equal or more advanced compliance and fraud systems. Big banks that have been cautious are moving into crypto, which increases demand for tools that let them monitor token flows.
A crowded field
CipherOwl is entering a field with several established players. Chainalysis, Elliptic and TRM Labs already provide transaction surveillance for Bitcoin, Solana and other chains. Those firms have long relationships with exchanges and regulators.
Liang and Ming believe their product can stand out despite the competition. They argue their startup is AI-native and built from the ground up around generative models.
How does the product use AI?
CipherOwl applies AI at multiple stages, and the founders say the system uses generative models to produce readable reports after a transaction is flagged. This helps compliance teams triage cases faster.
Marc Bhargava, managing director at General Catalyst, said an AI-native team is likely to move faster with these new tools than older incumbents. That view helped attract lead investors.
What could come next?
The $15M seed gives CipherOwl room to grow, and the firm will likely refine its models and expand sales efforts. It may also face scrutiny as it works with banks and regulators.
Competing firms will continue to improve their offerings. For CipherOwl to succeed, it must prove its AI reports save time and reduce false positives.
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