Digital asset theft is on the rise, enabled at least in part by poorly secured credentials and APIs. Over $3 billion in assets were stolen by hackers in the past 18 months alone, and recently, cryptocurrency exchange Binance lost $40 million in bitcoin as the result of an insecure virtual wallet. Furthermore, cyber security firm CipherTrace reported recently that cryptocurrencies stolen from exchanges and scammed from investors surged more than 400% in 2018 to around $1.7 billion.
Fortunately, Michael Shaulov and Pavel Berengoltz — whose Israel-based mobile security company Lacoon Mobile Security was snatched up by Check Point for a reported $100 million in 2015 — along with former vice president of R&D at C4 Security Idan Ofrat are on a mission to solve the problem once and for all. Their new venture, Fireblocks, is developing a secure platform that expedites digital asset operations for financial institutions, and today it emerged from stealth with $16 million in series A funding from Cyberstarts, with additional contributions from Tenaya Capital, EightRoads, Swisscom Ventures, and MState.
“While blockchain-based assets by themselves are cryptographically secure, moving digital assets is a nightmare. After interviewing over 100 institutional customers, including hedge funds, broker-dealers, exchanges, and banks, we concluded that the current process is slow and highly susceptible to cyber attacks and human errors,” said Shaulov. “We built a platform that secures the process and simplifies the movement of funds into one or two steps.”
The tool suite, speaking of, leverages “chip-level” security and secure multi-party computation (MPC) technology to securely transfer assets across exchanges and wallets and keep them readily available. Fireblocks’ secure environment works with hot vaults — tradeable wallets — to enable digital assets to be transitioned from virtually any storage solution for settlement and transfer to the blockchain.
“Securing blockchain-based assets is one of the key challenges in modern cybersecurity warfare, and it requires heterogeneous expertise in mathematics, system level programming and years of hands-on cybersecurity experience,” said Sequoia Capital and Cyberstarts partner Gili Raanan. “The Cyberstarts team is thrilled to partner with Michael, Idan, and Pavel, who amazed us with their technology breakthrough to eliminate risk from digital assets management.”
New York-based Fireblocks’ team counts among its members security engineers from Symantec, Trusteer, and IBM Security, according to Shaulov.
“Moving digital assets 24/7, across the globe, uninterrupted, while meeting all enterprise security requirements is industry changing,” said Galaxy Digital CISO Ivan Brightly, an early Fireblocks client. “For digital asset trading operators, the Fireblocks platform provides a robust security system for digital assets, whether stored or in transit.”