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Solidus Labs, a crypto monitoring startup that detects malicious transactions using cryptocurrencies across its trading platforms, has raised $20M from Evolution Equity Partners in a Series A round. The proceeds shall be used to develop its technology and in doubling its headcount predominantly. The funding has come at a time when the US Treasury aspires to improve crypto monitoring
Solidus Labs, which detects manipulation across cryptocurrency trading platforms using its surveillance and risk-monitoring software, has raised $20 million in a Series A funding led by Evolution Equity Partners.
According to Solidus CEO Asaf Meir, the proceeds shall be used in developing and researching its technology. They also aspire to double their headcount to about 60 or 70 by the end of 2021 and open an office in East Asia.
Existing investors like Hanaco Venture Capital injected a $3.5M seed round fund in 2019, and others- Avon Ventures, 645 Ventures, the exchange FTX, former CFTC chair Chris Giancarlo and former SEC commissioner Troy Paredes- had participated in the funding round.
The funding for Solidus has come at a correct timing amid growing concerns over improving crypto monitoring. Last week, the US Treasury had pressed for stringent cryptocurrency compliance with the Internal Revenue Service (IRS), as those involved in it can evade tax. Transfers greater than $10000 were to be reported to the IRS.
Founded in 2017, Solidus Labs uses machine learning to comprehend the behavior of large matrices of trading accounts. They are all about detection and prevention, and not tracing transactions like Chainalysis, CipherTrace, and Elliptic.
“We’re bomb-sniffing dogs, so we’re not coming to disable the bot. We know how to take the data and point out manipulation, but it’s then up to the financial institution to handle the case.” Asaf Meir, in an interview.
Solidus collects private data from its clients and inputs them in their detection models. They are then surfaced through insights and alerts on their dashboard, which the clients have access to. According to Meir, the crimes can range from an easier-to-perform wholesale manipulation to rare and complex sophisticated manipulation schemes.
Commenting on the investment, Richard Sewald, Founder and Managing Partner at Evolution Equity Partners, said that they were “deeply impressed” with Solidus’s ability to unify numerous financial risk data sources and process them effectively.