While many cryptocurrency custodians and exchanges busy themselves with building secure wallets to store digital assets, fewer companies recognize the need for safe transitions of crypto assets between those wallets.
Fireblocks, which already counts over-the-counter trading firms Galaxy Digital and Genesis Global Trading as customers, aims to fill that gap. Previously operating under stealth mode, the firm announced today a $16 million Series A from Tenaya Capital, Fidelity-backed Eight Roads, Cyberstarts, and others.
Claiming to be the “secured highway” of cryptocurrencies, Fireblock’s platform brings multiple digital wallets and exchange accounts under one roof and allow traders to move their funds freely between these wallets.
Although a swelling number of companies such as Ledger, Bakkt, and Coinbase are trying to strengthen their custody business, the need among institutional traders to efficiently transfer these cryptocurrencies seems to be neglected, according to Fireblocks CEO Michael Shaulov.
“You have a lot of cold storage solutions like Xapo and Coinbase, but all of those solutions are completely irrelevant for movement and people are really exposed to risk when they are trying to move bitcoins,” Shaulov told The Block.
Targeting OTC desks
Fireblocks’ solution targeted institutional traders such as OTC desks, which usually manage many digital wallets at once. Shaulov noted the solutions these institutions use to transfer funds are usually fragmented, requiring traders to log onto different wallets and exchanges in order to move coins around.
“It [Fireblocks] allows us to utilize this technology instead of us taking potentially more onerous steps,” said Genesis Trading co-head of sales and trading Martin Garcia. “It has the promise to really streamline things.”
At the center of Fireblocks’ product is security, which, as Genesis Trading CISO Uri Stav put it, is also what sets the firm apart from its competitors. The company successfully implements secure multiparty computation (MPC), the Holy Grail in cryptography once considered unachievable, according to Stav.
As opposed to a single party controlling a private key, which risks being hijacked, MPC allows multiple parties to compute a function together and collectively derive the private key. Stav said that this technique is cryptographically proven to be immune to hackers’ attempts to steal private keys.
“The engineering implementation of MPC is a big concept that Fireblocks brings to the market and to us,” said Stav. “For us, it means that we can use the true secure MPC by using Fireblocks.”
“Many cryptographers had been dreaming that MPC will come to the market as a product,” he added.
However, the firm is not the only one that uses MPC to boost its security offering. Digital wallet provider ZenGo launched on Monday what it claimed to be the first crypto wallet without private keys, which leverages MPC and other cryptographical techniques as well.
Fireblocks noted in a statement that to date, its service has been integrated with 15 digital asset exchanges and can support transitions of over 180 cryptocurrencies, tokens, and stablecoins. The firm plans on expanding its engineering and sales effort with the newly raised fund.
Frank Chaparro contributed reporting.