Crypto wallet provider Fordefi announced today via press release that it has raised $10 million in funding to help bring its institutional-grade crypto wallet to retail platforms.
In other words, the company wants to develop its user-owned self custody wallet-as-a-service (WaaS) solution for exchanges, fintech platforms and other centralized crypto services.
The central security feature of Fordefi’s institutional wallet service is multi-party computation (MPC). This works by dividing users’ private keys among multiple parties to make it harder for hackers to compromise.
The service also utilizes transaction simulation, where users can see the results of prospective transactions before sending them on-chain.
The seed-extension round was led by crypto VC firm Electrical Capital and included contributions from stablecoin issuer Paxos and Web 3 developer platform Alchemy.
FordeFi’s WaaS has already onboarded institutional clients like Pantera Capital, DeFiance Capital, and Flare Network, bagging the team $3 billion in on-chain transaction volume.
A previous seed round on 8 November, 2022, raised $18 million from investors like Jump Crypto, Castle Island, Digital Currency Group, and Alameda Research—the trading firm that was later revealed to have been misusing customer money from its affiliated company, FTX, in the biggest case of fraud in crypto history.
Fordefi’s Wallet Protects From Criminals and Exchanges
Fordefi’s mission to bring decentralized crypto custody to centralized platforms is timely. Regulators and skeptics routinely decry crypto as fundamentally unsafe and the statistics support some legitimate security concerns.
In January this year hackers looted $127 million in crypto and continued to be a much greater source of losses in the community than fraudsters, with both criminal groups accounting for 96.8% and 3.2% of the losses respectively.
This number is up 6x from January 2023, when total losses amounted to £21 million.
Crypto fans have learned some hard lessons recently. In May 2022, Terra’s UST collapsed and spread a chain of contagion throughout the industry, bankrupting FTX/Alameda, VC firm Three Arrows Capital, and crypto lender Celsius. Throughout the recession, many crypto platforms freezed customer withdrawals, further spiralling consumer paranoia around crypto.
Customers are increasingly drawn to self-custody solutions like Fordefi’s because many of the events of 2022 validated the industry adage “not your keys, not your coins.” This saying refers to the fact that users can’t be sure of their holdings unless they hold the keys to their wallet themselves.
Typically, centralized exchanges store crypto on behalf of their customers. Coinbase bucks the trend with a decentralized app, but with companies like Fordefi trying to extend the arm of self-custody throughout the industry, crypto appears to be returning to its founding ethos of decentralization.
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