"We want to soothe fears about cryptocurrencies"

Yoav Keren, Yuval, Zantkeren, David Fridman, Itai Galmor photo: Amir Meiri

BrandShield has developed a blockchain platform that issues fraud alerts.

The enormous growth in the cryptocurrencies market in the past year is being accompanied by a stream of investments in the sector, reflected in increased financing rounds by companies making initial currency offerings (ICOs). According to figures published by the Coindesk website, more than $8 billion was raised in such offerings in the first five months of 2018, compared with $5 billion in all of 2017. Joining these is the biggest ICO yet by US startup Block.one, which has raised $4 billion. The yearly figures for ICOs bear this out: 64 ICOs in 2016, 343 in 2017, and 334 in the first five months of 2018.

Together with the surge in financing rounds, however, an alarming increase in the number of digital currency fraud cases has begun. Research has already found fraud in most ICOs; a "The Wall Street Journal" investigative report in May found hundreds of such ICOs used misleading tactics to entice investors, including the publication of phony documents, promises of unrealistic returns, and reports of fictitious management members. Several of the financing rounds also used fictitious Israeli names on the managerial teams they presented.

In contrast to public offerings, sales of cryptocurrencies are usually conducted outside the regulatory framework and do not require the publication of a prospectus. In most cases, investors must do their own thorough research in order to discern whether or not these offerings are legitimate. The basic source of information in cryptocurrency offerings is the issuing company's white paper - a document presenting the venture's targets and technical particulars and the background of the company's managers. Despite the duty to publish such a paper, the great uncertainty and many cases of fraud are deterring many from participating in the purchase of digital currencies.

In an attempt to handle this problem, various companies around the world have begun offering solutions to protect those active in the sector. One Israeli company has taken this idea one step further by using tools from the cryptocurrency sector to clean it up.  It has founded a blockchain platform aimed at detecting fraud and has itself begun the process of issuing a digital currency for it. This process is beginning now and is due to mature in early 2019. The company told "Globes" that it was planning to raise at most $30 million, but it is not disclosing the volume of advance sales of its tokens, which began in recent months.

This platform, MyShield, is an initiative of CEO Yoav Keren, CTO Yuval Zantkeren (Yoav's cousin), and chief strategy officer David Fridman (who replaced Keren as manager of the Domain the Net company). The three men are partners in software company BrandShield, which detects and combats fakes, fraud, and phishing on the Internet. MyShield is designed to provide a solution for end users in the cryptocurrencies sector who are not protected against cheating, thereby making cryptocurrencies accessible to the public.

BrandShield is currently in the pre-sale stage for its digital currency on the blockchain-based platform it has developed. MyShield is designed to warn users about a phishing website, attempted fraud, and a website that has been breached. For example, if the customer's digital wallet address has been replaced without he or she being aware of this, the customer will be alerted. The MyShield system is also designed to enable the user to report a website that seems suspicious. The report is recorded in MyShield's blockchain, and when there are enough reports and MyShield's cyber intelligence system identifies the website, it will be classified as a fraud. Customers who reported the malicious website will be rewarded for their report with one of MyShield's tokens.

Another advantage promised to users by MyShield is that it offers to take responsibility for deals and compensation in case of fraud. If MyShield gives a customer a green light for a given deal and it turns out that fraud is involved, the users receives compensation in the platform's digital currency.

BrandShield founder and CEO Keren,46, is an experienced entrepreneur in protection against ecommerce fraud. He served in the IDF as a field security officer in charge of a technology team. Immediately after being demobilized in 1994, he began studies in physics and economics at Tel Aviv University. In 1996-2000, he was an advisor to then Minister of the Interior MK Haim Ramon, and later managed domain software company The Net Technologies, which specializes in digital brand security and domain names management solutions, for 18 years. The Net was the first company licensed by the Israel Internet Association (ISOC) as a registrar of domain names with the Israeli extensions co.il and org.il. It current provides the entire range of global domain names with over 1,000 extensions.

In addition to founders Keren, Zantkeren, and Fridman, several prominent names in finances and fraud prevention were recruited to MyShield's advisory committee, including Nimrod Lehavi; Simplex CEO Robert Cohen, who was a senior executive in anti-virus company AVG; and Maj. Gen. (res.) Uzi Moskovitch, former head of the IDF's cyber defense and IT directorate.

Keren told "Globes" that BrandShield was currently offering a solution for companies and organizations with a branded product aimed at countering the phony brands industry swamping the Internet. He said that among others, BrandShield was working with giant companies such as Microsoft and Levi's. MyShield is a platform designed to provide a similar solution for preventing fraud in the cryptocurrencies market.

MyShield's model is based on a consensus forged from a combination of warnings about fraud from two sources: users, who will receive rewards for their reports; and "providers of artificial intelligence preventative cyber technology." The first such provider is BrandShield through its existing fraud detection technology. The reports from all of the sources, human and artificial, generate a consensus, enabling the platform to warn about fraud.

"Globes": You decided to hold an ICO in order to develop a solution for people afraid of fraud in the cryptocurrencies sector. It is hard to miss the irony.

Keren: "There many cases of fraud in the cryptocurrencies sector and the are many real things that are about to change the world," Keren says. "Like the entire cyber industry, people wind up trusting some technology company. Here is where our experience counts. MyShield will use the core technology of Brandshield."

Keren admits that up until two years ago, he himself was skeptical about bitcoin and other digital currencies. "I was critical of the cryptocurrencies because I knew that people were also using them in the criminal world," he says, but adds, "In the past two years, we've been seeing the entry of legitimate concerns into the market. Blockchain technology is providing an economic solution for problems that were previously unsolvable."

Keren says that MyShield's system is a demonstration of this and is likely to expand beyond the confines of cryptocurrencies. "Up until now, solutions for preventing fraud were based on artificial intelligence systems that conduct some kind of analysis. On the other hand, the crowd financing idea is being discussed a lot in the cryptocurrency sector, but it is very easy to manipulate the public. MyShield's idea is to combine these two things. The ability to generate a consensus among users, all of whom feel comfortable and trust us to give them rewards for reporting, can't happen without blockchain, in which everything is transparent and open. The rewards for such reports were small change compared with the cost of transferring money before blockchain came along."

"Helping less sophisticated users"

Whether the people involved are users of the platform or active participants in reporting fraud, the public's involvement is important for MyShield's success. Keren says that MyShield needs "a critical mass of tens of thousands of active surfers" for the service to work well. Is this a realistic target? "We checked a few people who use anti-virus, which is something that almost everyone has. If everyone who now believes in the cryptocurrencies sector is right that it will become something that everyone uses in a few years, then everyone will use our product."

And if not?

"Our product doesn't depend on the success of cryptocurrencies, because it can also be used for fraud protection in ordinary ecommerce. The distance between fraud of this type and other types of fraud is not great."

So why focus on cryptocurrencies?

"A solution for cryptocurrencies based on cryptocurrencies and blockchain is an obvious move. This is a market in its initial stages involving a few tens of millions of people - an order of about 30 million wallets worldwide."  

According to Keren, another reason for focusing on cryptocurrency fraud is that "it's an urgent problem. Almost everyone we speak with in the sector knows that one of the most difficult problems in this market is fraud. People are losing money and that's what's preventing the general public from getting involved. People are scared, and we're addressing just that." He adds that as he sees it, "An excellent solution is to introduce regulation in the cryptocurrencies market; that will make the market more legitimate."

Keren says that a third reason is that the cryptocurrencies market is a "very early" market and therefore, "It's right for us to penetrate this particular market." In contrast to BrandShield's service, which is provided for specific brands, protection like that of MyShield requires a broad scan of all the ICO sales carried out at any given moment. "From the development standpoint, the transition to a proactive scan requires smart development. The cryptocurrencies market is still just beginning, with reasonable volumes. In the cryptocurrencies sector, it is therefore possible to provide a good and effective solution more quickly than in ecommerce, which is far more extensive."

BrandShield wants to take its blockchain solution to the cryptocurrencies market first because the market is still on a relatively small scale. At the same time, Keren hopes that the entry into this sector will play a role in the company's growth. "Technological solutions were what enabled people to provide their credit details and transfer money online safely. We're at the same stage in the cryptocurrencies sector and we want MyShield to give less sophisticated users the same confidence that they have with a credit card."

Making the cryptocurrencies sector accessible to the general public is an impressive vision, but a little pretentious. How do you plan to achieve such broad distribution, or at least obtain the initial mass of users that you need in order to make the product work?

"We have several ideas. One of them is cooperation with companies operating in the sector. We have several customers of BrandShield who have made ICO sales, such as Cool Cousin. When MyShield comes they will distribute it to their users. They will promote the downloading of MyShield or integrate MyShield within their platform as a source of information. I think that this is a factor that will cause rapid distribution of this product in the market."

Published by Globes [online], Israel business news - www.globes-online.com - on July 11, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

Yoav Keren, Yuval, Zantkeren, David Fridman, Itai Galmor photo: Amir Meiri
Yoav Keren, Yuval, Zantkeren, David Fridman, Itai Galmor photo: Amir Meiri
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