Solidus Labs Raises Additional $ 15 Million As Crypto Risk Monitoring Tools Take Off – TechCrunch


Solidus Labs, a four-year-old New York-based company that claims its monitoring and risk monitoring software can detect manipulation on cryptocurrency trading platforms, raised $ 15 million in additional funding just six months after. having closed his Series A round with $ 20 million in funding. Liberty City Ventures led the most recent tranche, joined by Exor Seeds and crypto trading firm GSR.

We sat down last week with the company’s co-founder and CEO, Asaf Meier, who started the company with several former colleagues at Goldman Sachs, who worked with Meier on the company’s electronic trading desk and quickly realized that a lack of compliance tools would be a barrier to the adoption of cryptocurrencies by large financial institutions.

Unsurprisingly, Meier said that since the announcement of this round, the company has “been hammered with different perspectives coming in.” While at the start of the year, Solidus mainly worked with exchanges, brokers, over-the-counter offices, liquidity providers and regulators – anyone at risk of buying and selling digital assets – this pool exploded quite quickly thereafter.

Specifically, he said Solidus has heard more and more from players who have ties to – and concerns about – the world of DeFi, or decentralized finance, made up of all kinds of non-depository financial products, including (according to Meier’s words) “Automated market-making liquidity pools, lending networks, indices, stablecoins – there is a lot of demand coming from different directions. “

Why is this a new bucket of interest for Solidus Labs? Because it is full of risks. Meier cites “carpet draws” and “sandwich attacks”, front running and “flash loan attacks”, and he observes that these are “just the tip of the iceberg”. And while he declines to name Solidus’ clients (which would reveal a lot about who is most concerned with this experimental space), he notes that while “DeFi does not address widespread concerns about market integrity and consumer protection, it will not be able to deliver on its promise of better financial opportunities.

Solidus is not alone in trying to help its customers identify and anticipate fraud. After all, every financial market is a target, and cryptocurrency markets are in many ways more vulnerable as there are still relatively few regulations governing them.

This chaos led to the rise of Chainalysis, a seven-year-old company whose blockchain analysis software reports regulatory risks for cryptocurrency exchanges, government agencies and financial institutions and has been rated by its investors to $ 4.2 billion earlier this year after closing its latest round of financing.

Another startup that now sells blockchain compliance and data analytics to government agencies, financial institutions, researchers and investors, called Elementus, is also gaining traction. The forensic group announced $ 12 million in Series A funding last month.

Elliptic, an eight-year-old London company that also promises customers it can identify illicit activity on the Bitcoin blockchain and provides its services to financial institutions and law enforcement agencies, has also benefited from the massive surge in l interest in crypto and other digital assets. Last month, it announced $ 60 million in new funding, including from SoftBank and Wells Fargo, a round that brings its total funding to around $ 100 million, per Crunchbase data.

There is apparently plenty of room for growth for everyone, and indeed Meier says Solidus intends to operate as an independent business. Yet if that changed, the company wouldn’t be the first to sell to a buyer with deep pockets. Another six-year-old rival in the space, Menlo Park, Calif.-Based CipherTrace had raised around $ 45 million from investors before deciding in early September to sell to Mastercard on undisclosed terms.

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