Over the past year, trust has been lacking in the crypto industry. One startup, Proven, is trying to change that with new technology.
The New York City-based company, which was founded in 2022, on Thursday announced a $15.8 million funding round led by Framework Ventures that will help it develop its product and grow its team to 12 or 15 people by the end of 2023.
Started by veterans of the financial world from firms like Jane Street and PIMCO, the company is tackling the age-old conflict of trust in financial markets with an emerging technology: zero-knowledge proofs. The term describes the use of advanced cryptography to prove something is true while revealing little else. For instance, a zero-knowledge proof could be used to confirm someone is at least 21 years old but without revealing their birthday or any other personal information.
In the case of Proven, a company can prove that it is being truthful about its financial information without revealing a slew of confidential data. Using zero knowledge proofs, with outputs recorded on the Ethereum blockchain, Proven can conduct checks for regulators or customers daily, without having to wait for a long and costly audit, according to CEO and cofounder Rich Dewey,
These are run daily with kind of real time inputs, Dewey said. Often audits are quarterly, and youre kind of looking back a month or two.
Provens process of proving a companys financials also sets it apart from other solutions, said Roy Learner, a partner at Framework Ventures.
While were seeing all sorts of proposed solutions pop up, we felt Proven differentiated itself by taking into account both assets and liabilities, which removes the opportunity for sleight of hand when it comes to proving reserves, Learner said in a statement to Fortune.
At a time when former crypto industry giants, like FTX and Three Arrows Capital, have crumbled in part because of their lack of transparency, Proven wants to make it easier for crypto companies to build trust with their customers and business partners.
Already, the companys tech is being implemented by a stablecoin, TrueUSD, and a crypto exchange, Bitso, among others. Proven says its tech would be especially helpful for investors in the crypto space, by helping with due diligence.
For a client trusting its money to an asset manager, the tech can also help give a customer proof that their money is being invested how they want without revealing the exact trades the manager is conducting.
Although the company is focusing on the crypto industry for now, Dewey said it could look to enter the traditional financial world in the future.
People are very hesitant to potentially deposit money on an exchange or borrow money, and that goes for crypto and [traditional finance], and so if we can reduce that we think that its a great benefit to society and a huge opportunity.
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