In a press release today, crypto wallet provider Fordefi disclosed that it has secured $10 million in funding to facilitate the distribution of its institutional-grade crypto wallet on retail platforms.
Alternatively stated, the organization intends to create wallet-as-a-service (WaaS) solutions for exchanges, fintech platforms, and other centralized cryptocurrency services that utilize user-owned self-custody.
Fordefi’s institutional wallet service employs multi-party computation (MPC) as its primary security mechanism. By distributing users’ private credentials across multiple entities, this mechanism effectively increases the difficulty for hackers to breach.
In addition, the service employs transaction simulation to enable users to observe the outcomes of potential transactions prior to their execution on the blockchain.
Electrical Capital led the seed-extension round, which also received funding from Alchemy, a Web 3 developer platform, and Paxos, an issuer of stablecoins.
FordeFi has secured $3 billion in on-chain transaction volume with the onboarding of institutional clients such as Pantera Capital, DeFiance Capital, and Flare Network onto its WaaS.
A preceding seed round, which took place on November 8, 2022, garnered $18 million from investors including Jump Crypto, Castle Island, Digital Currency Group, and Alameda Research—a trading firm that subsequently came under scrutiny for misappropriating customer funds through its affiliated entity, FTX, in the most significant fraud case in the history of cryptocurrencies.
The timing is right for Fordefi’s objective to introduce decentralized crypto custody to centralized platforms. Skeptics and regulators condemn cryptocurrencies on a regular basis for their inherent dangers, and the statistics confirm some valid security concerns.
Hackers continued to be a much greater source of losses in the community than fraudsters, stealing $127 million in cryptocurrency in January of this year compared to fraudsters’ 3.2% contribution. Both criminal organizations accounted for 96.8% and 3.2% of the losses, respectively.
This value is six times greater than in January 2023, when overall losses reached £21 million. Recently, crypto enthusiasts have learned some difficult lessons. The failure of Terra’s UST in May 2022 triggered an industry-wide contagion that resulted in the insolvencies of FTX/Alameda, Three Arrows Capital, a venture capital firm, and Celsius, a cryptocurrency lender. Numerous cryptocurrency platforms froze customer withdrawals during the recession, which intensified consumer concern regarding cryptocurrencies.
Also Read: Argentina Buys and Holds Most Stablecoins in Latin America February 13, 2024
Wallets