Bringing Security to Centralized Exchanges: Fordefi Raises $10 Million to Revolutionize Crypto Wallets

Fordefi, a crypto wallet provider, has announced today through a press release that it has secured $10 million in funding to further develop its institutional-grade cryptocurrency services.

Fordefi secures $10 million in funding from Electric Capital and Paxos to enhance the security of retail wallets.

Last updated: February 13, 2024 12:50 EST | 2 min read

Crypto wallet provider Fordefi has recently raised $10 million in funding to support the development of its institutional-grade crypto wallet for retail platforms. In a press release, the company announced plans to create a user-owned self custody wallet-as-a-service (WaaS) solution, specifically tailored for exchanges, fintech platforms, and other centralized crypto services.

Enhancing Security with Multi-Party Computation

Fordefi’s institutional wallet service distinguishes itself through the implementation of multi-party computation (MPC) as its central security feature. This technology divides users’ private keys among multiple parties, making it significantly more challenging for hackers to compromise the wallet’s security.

Additionally, the service employs transaction simulation, enabling users to preview the results of prospective transactions before executing them on the blockchain. This feature serves to enhance user confidence and minimize the potential for errors or loss of funds.

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Funding Round Led by Prominent Players

Electrical Capital, a well-known crypto venture capital firm, led the seed-extension funding round for Fordefi. Notable contributors to the round also include stablecoin issuer Paxos and Web 3 developer platform Alchemy. The involvement of these prominent players further solidifies Fordefi’s reputation within the industry.

It’s worth noting that the team has already onboarded institutional clients like Pantera Capital, DeFiance Capital, and Flare Network, resulting in an impressive on-chain transaction volume of $3 billion.

Addressing Security Concerns in the Crypto Space

Fordefi’s mission to bring decentralized crypto custody to centralized platforms is critical, considering the persistent concerns regarding the security of cryptocurrencies. Regulators and skeptics often highlight the inherent risks associated with crypto, and the figures validate some of these concerns.

In January of this year alone, hackers stole $127 million in crypto, significantly surpassing losses caused by fraudsters. Criminal groups accounted for a staggering 96.8% of these losses, whereas fraudsters accounted for only 3.2%. These numbers have risen sixfold since January 2023, when losses amounted to £21 million.

Lessons Learned and the Rise of Self-Custody Solutions

The crypto industry has experienced significant challenges recently, highlighting the importance of self-custody solutions like Fordefi’s. The events of 2022, including the collapse of Terra’s UST and the subsequent ripple effect on FTX/Alameda, VC firm Three Arrows Capital, and crypto lender Celsius, have solidified the industry adage: “not your keys, not your coins.”

Customers are increasingly drawn to self-custody solutions as they recognize the risks associated with entrusting their assets to centralized exchanges. While Coinbase has embraced decentralization with its decentralized app, companies like Fordefi are striving to extend the reach of self-custody throughout the industry, bringing crypto back to its core principles of decentralization.

📢 Q&A: Addressing Reader Concerns

1. Is multi-party computation (MPC) the most secure solution for crypto wallets? Multi-party computation (MPC) is considered one of the most secure methods for protecting crypto wallets. By splitting private keys among multiple parties, it significantly reduces the risk of a single point of failure. However, it’s important to note that no solution is entirely foolproof, and keeping up with security best practices is crucial in the ever-evolving landscape of cybersecurity.

2. How does transaction simulation benefit users? Transaction simulation allows users to preview the outcome of a transaction before it is finalized on the blockchain. This feature provides a valuable opportunity to review and verify transaction details, ensuring accuracy and preventing potentially costly mistakes.

3. What impact have recent security breaches had on the crypto industry? Recent security breaches have highlighted the importance of self-custody solutions. They have proven that storing crypto on centralized exchanges exposes users to significant risks, making self-custody an attractive alternative. By holding their own private keys, users regain control over their assets and reduce their dependence on third parties.

🔮 Future Outlook: Shaping a Secure Crypto Landscape

With the increasing demand for self-custody solutions and the rise of companies like Fordefi, the crypto landscape is likely to witness a transformation towards enhanced security and decentralization. As the industry adapts to address security concerns, users can expect to see more innovative tools and approaches to safeguard their assets.

🌐 Reference Links:

• Fordefi Official Announcement (Press Release)
• Multi-Party Computation Explained
• Criminal Hackers vs. Fraudsters: Statistics on Losses
• Decentralized Wallets: The Importance of Holding Your Own Keys
• Coinbase’s Decentralized App (DApp)

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