NEW YORK (Reuters) - Chainalysis Inc, a New York City-based startup specializing in countering money laundering and fraud in the digital currency industry, is collaborating with Europol’s European Cybercrime Center, the company said on Thursday.

The agreement, in the form of a memorandum of understanding, comes as digital currencies such as bitcoin are becoming more popular and potential rivals to established online payment mechanisms but are also a target for criminals to commit fraud and extortion.

“This new collaboration is an important next step in the endeavor to move digital currencies out of the hands of the criminals and into the hands of consumers and blooming commerce,” said Michael Gronager, chief executive of Chainalysis, in a statement.

Europol said in a report last year that cyber crime is becoming a large business with criminals taking advantage of cloud infrastructure and often extorting their victims in bitcoin.

Chainalysis aims to fight cyber crime by tracking digital identities linked to digital currencies. The company’s software detects suspicious activity immediately and provides investigative tools for law enforcement.

Separately, Chainalysis said it raised $1.6 million in funding led by Point Nine Capital, a Berlin-based early-stage venture capital firm.

Techstars, Digital Currency Group, FundersClub, and Converge Venture Partners also participated in the financing round. These companies are active in the bitcoin and blockchain world.

On Thursday, one bitcoin traded at $417.30, up 0.3 percent on the day on the Bitstamp platform.