Cryptocurrency supervision co Solidus Labs raises $3m

Assaf Meir Photo: Ken Pao Photography
Assaf Meir Photo: Ken Pao Photography

The company's system detects cryptocurrency trading manipulation in real time.

Israeli startup Solidus Labs has raised $3 million in a seed financing round led by venture capital fund Hanaco Ventures, founded by Alon Lifshitz, Lior Prosor and Pasha Romanovski. Solidus Labs has developed software that uses machine learning and artificial intelligence to improve credibility in the cryptocurrencies market.

CEO Asaf Meir founded Solidus Labs in December 2017 after working at Goldman Sachs for three years as an analyst and software engineer. The company aims to provide a solution for financial concerns, many of which have refrained from entering the cryptocurrencies market because it is subject to manipulation - irregular influence on the rates and trading volumes in cryptocurrencies. This is also one of the reasons that the US Securities and Exchange Commission (SEC) rejected quite a few requests submitted in the past year to launch a bitcoin-based exchange traded fund (ETF).

The financial regulators in the US recently stated that in the coming year, they would focus their activity on digital assets, after hundreds of investigations were opened in the second half of 2018 against companies in the sector. Several of these companies were fined over $2 million for violations of securities laws. Furthermore, the US Congress is currently considering legislation to prevent manipulation of digital trading.

"Response in real time, not retroactively"

As regulatory supervision of the market increases, the companies operating in it are being force to prepare accordingly. Solutions like that of Solidus Labs can help them do so. Solidus Labs's customers include stock exchanges, brokerages, hedge funds, and market makers in the US, Europe, and Israel. The company says that it will use the money it raised to expand its development and machine learning teams, as well as its marketing, sales, and customer service teams.

Meir says, "Blockchain-based digital assets have enormous potential for improving and streamlining the capital markets, but at the same time, they add new layers of complexity to trading processes. In this case, this more complicated trading includes new types of information, different operational requirements, new forms of manipulation, and a dynamic regulatory environment. These pose challenges to which older supervisory systems, based on old technology, are incapable of responding effectively."

In order to solve this problem, Meir stresses the importance of the machine learning and artificial intelligence used by Solidus Labs in order to achieve more accurate identification of manipulation. Solidus Labs' system also includes efficient management of alerts, a flexible system that can be adapted to the customer's needs, advanced research tools, and features that make it easier to report to the regulators. "The manipulations in digital currency trading will develop with time, and will probably be completely different two or five years from now. An effective system must be capable of constantly learning and identifying new patterns of manipulation as soon as they appear. This will facilitate a response in real time, not merely retroactively," Meir says.

Prosor from Hanaco Ventures says, "The biggest need today in the digital assets sector is for an infrastructure tool, not necessarily new apps. We believe that regulation and information security are the critical elements that will enable the sector to continue growing. Supervision of the market propelled by innovative technology requires innovative infrastructure. Solidus has the necessary experience that Wall Street requires and the right vision for the world of digital assets for building a bridge between the conventional financial world and the new digital economy."

Published by Globes, Israel business news - en.globes.co.il - on February 24, 2019

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

Assaf Meir Photo: Ken Pao Photography
Assaf Meir Photo: Ken Pao Photography
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