Blockchain security co Fireblocks raises $16m

Fireblocks founders Photo: PR Yossi Zeliger

The Israeli company has developed a security platform for protecting blockchain assets.

Israeli startup Fireblocks, which is developing a secure platform for financial institutions, has announced that it has come out of stealth and raised to date $16 million, of which $12 million was in its Series A financing round. Tenaya Capital fund led the round, with participation from Cyberstarts, led by general partner Gili Raanan, who led Fireblocks' seed round, in which it raised $4 million. Among the company's other investors are Check Point cofounders Shlomo Kramer and Marius Nacht, Mickey Boodaei, Nir Zuk, and Amichai Shulman, as well as Eight Roads Ventures (controlled by the Fidelity Funds group), Swisscom, and MState.

Fireblocks was founded in 2018 by CEO Michael Shaulov, VP R&D Pavel Berengoltz, and CTO Idan Ofrat. They were among the founders of Lacoon Mobile Security, acquired by Check Point (Kramer and Boodaei also invested in Lacoon). Ofrat, whom Shaulov and Berengoltz knew from the army, previously served as VP R&D in C4 Security, acquired by Elbit Systems.

Following the financing round, Raanan, Gil Mandelzis, and Tom Banahan joined Fireblocks' board of directors. The company also announced that it had hired cybersecurity experts from Symantec, Trusteer, and IBM's security division, as well as encryption consultant Prof. Ran Canetti.

Fireblocks calls the financial security product that it is developing a platform for securing transfers of blockchain assets between cryptocurrency exchanges, digital wallets, and various parties in a deal, while guarding the blockchain assets with immediate availability using advanced cyber technologies of isolation and protection at the processor level and multi-party computation (MPC).

Shaulov explains that the product is composed of two main parts. One is a secure transfer environment component based on an invention that facilitates safe communications between customers, brokers, and exchanges at the processor level and protects their accounts and passwords for exchanges. This component prevents an attack of middleman type - it prevents hostile parties from breaking into the information traffic between customers and exchanges. The second component is a secure digital wallet that is able to protect the private key online by breaking the private key (which is actually a password for the cryptocurrency) into a number of unrelated parts that are also protected at the processor level.

"The financial world is moving towards a revolution"

Fireblocks has 15 employees, 12 of whom are in Israel. The company says that it plans to enlarge its developers and sales teams. According to Fireblocks, it has dozens of paying customers who provide it with several hundred thousand dollars in revenue. Shaulov is also one of the investors in Armis, which develops security solutions for the Internet of Things (IoT), and raised $65 million two months ago.

Shaulov told "Globes" about how Fireblocks was founded, saying, "In 2017, there was an attack on four cryptocurrency exchanges in South Korea in which $200 million was stolen overnight. It was a bitcoin deal, so as soon as the deal took place, it was immediately approved, and there was no way to revoke it. Since our team at Check Point was one of the biggest experts in the world at analyzing viruses on mobile devices, we starting investigating the break-in. We started getting curious about what happens in this market, because in the standard financial world, you don't see things like this happening."

At this stage, Shaulov says, he and his partners began to take an interest in the matter, and to talk with "a fairly large number of financial organizations, brokers, exchanges, and banks, which began to take a broader view of digital currencies and assets, or they were already trading in them and realized that there was a substantial gap in their defensive capabilities. "At best, these organizations worked with all sorts of products designed for private users, and used these in the organization. We discovered an organization with $10 billion in trade that used a mobile memory (DiskOnKey) device, on which the money was stored. In order to secure it, the security task was split among four people: two of them remembered a different part of the password, one of them held the connecting device for the disk, and one held the disk itself. That's how they used it day-to-day. Their situation was still relatively better, because others had no idea what they were doing."

The period was early 2018, and the founding team realized that the state of the market went far beyond the question of bitcoin or Etherium, and that there was, as Shaulov put it, "an entire revolution that the financial world was moving towards. In the coming years, most of the financial devices and organizations will switch to blockchain infrastructure. So we decided to leave Check Point, and we founded Fireblocks."

"Globes: On what basis do you say this? It appears that meanwhile, there is a lot of talk, but quite a few regulatory and technological difficulties.

Shaulov: "People look at the collapse of the cryptocurrencies in 2018, but in the banking world this year, there are a great many real projects by the biggest banks and exchanges in Europe. Some of the world's largest financial concerns, such as the stock exchanges of Germany and Switzerland and large banks such as UBS and Credit Suisse, are already in the construction processes. It's exciting for me that the old financial world is adjusting the technology, while simultaneously building a new financial world. It is interesting to see who will win: the old world or the new. It reminds me of the argument that began in 2011 about whether organizations should move to a private or a public cloud. The large companies said that they wouldn't work on the public cloud, but today, even large banks like JP Morgan are switching."

"An enormous worldwide movement is taking place in the realm of digital assets," says Raanan. "Two weeks ago, even Starbucks and Whole Foods announced that they would accept digital currencies." He adds, "This creates a challenge for an organization like Starbucks, because from an organization that did not handle digital currencies and assets, it now has to begin thinking about how to keep, render mobile, and secure them. It can no longer be an ad hoc solution. We're actually seeing entire industries moving towards the world of digital assets, and it won't stop in the food world or coffee. It will reach everywhere: health, insurance, and everywhere that the consumer reaches and which affects him or her."

Published by Globes, Israel business news - en.globes.co.il - on June 11, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

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Fireblocks founders Photo: PR Yossi Zeliger
Fireblocks founders Photo: PR Yossi Zeliger
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