A US-based trade surveillance startup has raised approximately $3 million in seed funding to help combat crypto manipulation and its related effect in the space.
While announcing the development on Wednesday, the startup dubbed Solidus Labs said it intends to assist cryptocurrency service providers enhance compliance with regulations while dealing with digital assets. Solidus Labs, which focuses on tailored actionable alerts, intelligence surveillance, regulatory- reporting and ticket management, said the funds will be used to further its expertise in machine learning and engineering, improve the customer service desk while at the same time developing its platform with respect to emerging market challenges.
According to the report, Hanaco Ventures, an early-stage investment startup led the funding with Wall Street’s ex-engineers Norman Sorensen and David Krell chipping in as well.
Upgrading the space
Solidus observed that most cryptocurrency exchanges are still anchored on traditional survailence systems which though efficient for fiat currencies, cannot cop up with crypto-related demands including their regulatory and operational needs. As such, the firm believes there is need to upgrade the exchanges so they are able to react to issues instantaneously as opposed to retroactively.
“Our machine learning-powered survailence system is able to continuously learn as new patterns emerge and reveal new manipulation schemes or openings for manipulation,” Solidus CEO and Founder Asaf Meir said adding that “it enabled responding as things happen rather than retroactively”
To this end, the Solidus Labs “software –as-a- service application has managed to reduce trading manipulation false positives by 30 percent ,”says sources familiar with the matter.
Manipulation concerns
Given the success, Solidus systems have already been implemented in various platforms including hedge funds, market markers, exchanges, and broker-dealers across the US, Israel and Europe.
“Although it might sound clinched, the digital asset ecosystem is in dire need of good ‘picks and shovels’ rather than more end applications. We believe regulation and security are the ultimate ‘enablers’ in this space, and that regulating a market powered by groundbreaking technology requires groundbreaking compliance infrastructure,” Lior Prosor of Hanaco Ventures said.
For a long time, market manipulation has been seen as the main reason institutional investors have shunned the market, sentiments which have been echoed by both lawmakers and financial watchdogs. US Securities and Exchange Commission chair Jay Clayton also voiced his concern regarding the matter last November urging that unless a permanent solution is sought regarding manipulation in the space, dreams of a cryptocurrency exchange-traded fund (ETF) will remain elusive.
