Coincover raises $30 million to protect digital assets from attacks and human error

Coincover, a digital asset protection company led by Foundation Capital, has raised $30 million in funding to protect people and their digital assets from attacks or human error, announced David Janczewski, CEO and co-founder of Coincover TechCrunch .

“We made this investment not in spite of the tumultuous crypto year, but because of it,” Charles Moldow, general partner at Foundation Capital, told TechCrunch. “One of the major constraints in digital asset adoption, at both the individual and institutional levels, is the fear of asset loss or theft.”

Founded in 2018 and launched in 2019, the platform has raised $41.6 million to date, Janczewski said. Past investors include Volt Capital, Avon Ventures, DRW Venture Capital, SMT Digital, Valor Equity Partners, Element, Fintech Collective and Susquehanna International Group, the website said.

The new funds will be used to recruit talent, upgrade products and add partnerships to protect against cryptographic attacks or human error. “We have reached a turning point in the industry; As a result, the demand for our product has increased enormously,” says Janczewski.

Coincover works with over 300 companies, including cryptocurrency companies such as BitGo, Fireblocks, and Bitso, as well as hedge funds, family offices, and banks.

The company’s two flagship products, Disaster Recovery and Theft Protection, aim to help anyone who works with digital assets avoid theft and loss.

“The opportunity is huge today — cryptocurrencies are a $1 trillion asset class, but the digital asset protection industry remains small, with billions stolen in the past year alone,” Moldow said. “Besides the dollar value, there is an ongoing stigma of being hurt – providers of digital assets must avoid this at all costs, so the willingness to pay is very high.”

Since the collapse of FTX, there has been an increase in questions about Coincover, Janczewski said.

“Every company is concerned about losing access to their cryptocurrency and wants to protect their end-user funds from theft,” added Janczewski. “For our customers, private key backup provides an additional layer of protection, allowing them to recover assets if they lose their keys or if their platform becomes unavailable. We’ve also seen a marked increase in demand for early sentence backups where we provide a pathway to fund recovery.

Seed Phrases or Recovery Phrases are a series of random words that serve as a password to someone’s crypto wallet. It is provided to users when they first create a wallet, but is never shared again. Sometimes people lose their minds and cannot access their wallets resulting in the inability to access funds.

Attacks in the crypto space have also become more sophisticated as more people enter the space, and the industry needs to respond, Janczewski noted.

“All companies must invest in mechanisms to protect themselves, their employees and their end users,” he added. “Companies often have an independent third party that helps them back up their data or protect it against malware, for example. In that sense, what we are doing is not revolutionary, it is almost obligatory.

For Coincover, it’s about “tackling the next frontier of risk, which is social engineering,” Janczewski said.

“If someone persuaded you to send a lot of money and you did it, that’s considered fraud, not theft,” Janczewski said. “In traditional finance, banks cannot refund users who have voluntarily transferred money in this way, even if they have been scammed. At Coincover, we are working to solve this problem by leveraging the power of blockchain technology in combination with our proprietary risk data.”