Solidus Labs, which makes market surveillance tools to flag manipulation across cryptocurrency trading platforms, has raised $20m.
Solidus’ Series A was led by Evolution Equity Partners and Hanaco Ventures, which also led the startup’s $3.75m seed round in early 2019.
The Solidus Series A attracted heavy hitters from the crypto trading space like FTX and Fidelity Investments-affiliated VC Avon Ventures. Angel investors with vast regulatory, compliance, capital markets, and cybersecurity experience also joined the round including Commodity Futures Trading Commission alums Chris Giancarlo and Daniel Gorfine, former Securities and Exchange Commission Commissioner Troy Paredes, StarCompliance founder Marc Epstein, International Securities Exchange founder David Krell, AngelList founder Naval Ravikant, SecurityScorecard founders Sam Kassoumeh and Aleksandr Yampolskiy, serial entrepreneur Jeff Fagnan and Takoma Group founder Alex Acree.
Launched by former Goldman Sachs bankers Asaf Meir, Praveen Kumar and Chen Aradin 2018, the company plans to significantly expand its Tel Aviv and London R&D offices in order to address the demand for its solutions, as well as to grow its sales, regulatory affairs and product teams. Solidus Labs also intends to open offices in East Asia and other high-demand markets.
The Israeli-founded, New York-based firm aims to bridge the regulatory, risk and compliance gap between crypto and digital assets and the traditional financial world. To add on, the firm’s key goal is to transform financial risk monitoring, beginning with the new challenges posed by crypto and digital asset markets.
The firm offers an automated and testable market surveillance and risk monitoring hub tailored for digital assets. Solidus employs machine learning to understand how a large matrix of trading accounts behaves, enables detection and prevention.
Unlike Solidus, blockchain analytics companies like Chainalysis, CipherTrace and Elliptic are ones that trace transactions after the fact.
Commenting on the round, Meir said, “Crypto and digital assets aren’t just transforming financial services, they’re also driving a major transformation in how capital markets, and finance as a whole, will be regulated. As both innovators and regulators strive to harness these new technologies and make finance more accessible, transparent, and efficient, crypto has also exposed the soft underbelly of legacy risk monitoring solutions, which Solidus Labs addresses.”
Solidus’ clientele includes crypto firms as well as traditional financial institutions and regulatory agencies. The firm reported a 400% increase in inbound demand for its solutions in 2020, including a 10X spike in interest from banks and traditional financial institutions, it claimed.
The funding comes at a time when the US government voiced its intent on improving its crypto monitoring efforts such as the US Treasury’s call for stricter cryptocurrency compliance with the IRS.
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