Why We Invested in CipherOwl

We back founders building the core infrastructure to make financial systems safer, more transparent, and more scalable — and nowhere is that more urgent than in on-chain and digital asset compliance. The industry is on an exceptional growth path and is fast becoming a core pillar of the global financial system. Without compliance infrastructure that financial institutions, regulators, and law enforcement can trust, the full promise of on-chain finance cannot be realized.

Few know this challenge more intimately than Leo Liang and Ming Jiang. At Coinbase, the largest U.S.-based crypto exchange, they built the company’s internal on-chain data and compliance systems after finding that no external vendor could meet its needs. That experience gave them a rare understanding of both the technical and regulatory challenges in scaling crypto compliance.

“After years of running Coinbase data, we learned a simple truth: institutions need provable, interpretable views of on-chain activity to power both humans and agents,” the two wrote in a founders’ letter. In 2024, they left Coinbase to solve the problem more broadly, launching CipherOwl. What began as an internal project is now a global company, already working with leading exchanges, custodians, and protocol builders such as Coinbase, OKX, 0x, Cobo, and Story Protocol, among other undisclosed public-sector customers. With a lean team, CipherOwl is delivering infrastructure that incumbents with hundreds of engineers struggle to match.

That’s why we are excited to co-lead CipherOwl’s $15 million seed round alongside General Catalyst, with participation from Coinbase Ventures, Enlight Capital, OKX Ventures, and Sancus Ventures. 

CipherOwl is the AI-native intelligence layer for digital assets, transforming raw blockchain data into evidence-backed explainable decisions that regulators can audit for financial institutions and the public sector. We believe it’s an invaluable tool for this next era of on-chain transactions.

The On-Chain Compliance Challenge

Blockchain transaction volumes have surged over the past five years and continue to grow at an exponential pace. Institutional and main street adoption is simultaneously accelerating on the back of renewed regulatory clarity, infrastructure maturity, and the rise of real-world use cases. 

As this shift continues, the compliance infrastructure required to support on-chain financial activity has not kept pace.

Existing tools were designed for an earlier era, when volumes were relatively smaller and investigations could be handled by teams of human analysts. Additionally, with more regulatory clarity, financial institutions, exchanges, and protocols are facing increasingly complex demands around anti-money laundering (AML), sanctions screening, and regulatory reporting in environments that are high-volume, pseudonymous, and with an ever-expanding permutation of tokens, chains, and networks.

Screening at scale can be prohibitively expensive. Existing infrastructure cannot handle the throughput required by leading exchanges and protocols. False positives overwhelm compliance teams. Risk scores are often opaque, with little explainability when regulators demand answers. Existing systems, which refresh daily instead of in real time, can’t match the near-instant nature of on-chain activity, leaving institutions exposed to fast-moving risks.

These challenges are not just a burden for financial institutions. As more financial crime moves on-chain, public agencies tasked with oversight also need tools that match the speed, transparency, and scale of this new environment. The lack of adequate compliance infrastructure threatens both institutional adoption and regulatory trust.

CipherOwl’s Approach

CipherOwl was designed to address these failures. 

CipherOwl’s platform delivers materially faster screening, higher accuracy, and consistent, auditable outputs that compliance teams and regulators can rely on. Built on a proprietary data and reasoning architecture, it transforms raw blockchain activity into explainable fund-flow graphs, automated narratives, and regulatory filings, reducing weeks of manual effort to minutes.

Beyond compliance, CipherOwl’s infrastructure enables a new generation of AI decisioning agents and applications to build on top of clean, interpretable blockchain data — a foundational step toward scaling on-chain adoption. It is designed for a world where both humans and AI agents transact on blockchain networks, providing the shared evidence layer they rely on to make compliant, explainable decisions.

The Trusted Bridge Between Public and Private

CipherOwl sits at the intersection of three of Flourish’s core themes: AI-enabled automation in financial services, fraud and compliance infrastructure, and digital asset rails as foundational financial infrastructure.

As a global investor, Flourish stays closely connected to regulatory and policy ecosystems worldwide — a perspective that gives us unique insight into the compliance gaps CipherOwl is solving. This perspective informs our conviction that CipherOwl’s platform can become the trusted bridge between private institutions and public oversight, helping accelerate responsible crypto adoption worldwide.

We believe CipherOwl will become the default compliance intelligence layer for the next era of finance. As crypto markets scale globally, CipherOwl’s GenAI-native infrastructure is built to keep pace, delivering the transparency institutions need and the trust regulators require.

Crypto adoption is accelerating worldwide, and compliance infrastructure must scale with it. CipherOwl is built for this future, making compliance faster, more accurate, and explainable from day one. We’re proud to partner with Leo, Ming, and the CipherOwl team as they build the trusted compliance intelligence layer that will help shape the future of global on-chain finance.