Crypto is notorious for scams and hacks—a situation that not only results in billions of dollars lost every year, but an ongoing stain on the industry's reputation. There are signs, however, that the industry is starting to take security more seriously.
This includes an announcement on Monday by Tel-Aviv-based Blockaid that it's raised a $33 million Series A round led by Ribbit Capital and Variant, with contributions from Cyberstarts, Sequoia Capital, and Greylock Partners.
Blockaid's security solution involves scanning blockchains for wallets held by bad actors and then warning its customers not to transact with them. In an interview with Fortune, founders Ido Ben-Natan and Raz Niv offered a recent example of their technology in action. They pointed to a scam this month where hackers got hold of Ethereum creator Vitalik Buterin's Twitter account and tricked people into connecting to a nefarious wallet. Blockaid, they say, detected the wallet even before news of the hack became public and worked to ensure their customers didn't interact with it.
"The headlines are about big hacks, but most [hacking incidents] are in the form of millions of smaller transactions," said Ben-Natan, explaining that Blockaid's solution is not aimed at stopping high-level attacks on blockchains but instead shielding ordinary users.
The startup's clients include the popular Ethereum wallet MetaMask and the biggest NFT platform, OpenSea, which used Blockaid to extend an umbrella of protection to their customers. Blockaid also says it's working with larger companies in the sector but can't yet disclose which ones.
In a statement, the startup described its service as "an essential layer of security for any blockchain application by scanning every transaction originating from a wallet, engaging with a dApp, or reaching a smart contract" and noted that it is compatible with all manners of blockchain.
The Blockaid founders are well versed in security, having met in the Israeli military's elite Unit 8200 that focuses on cyber intelligence, and which has launched numerous tech and crypto founders.
Blockaid's funding announcement is a bittersweet moment for the founders. The good news is tempered by the fact their country is preparing to go to war in response to the recent atrocities by Hamas terrorists—a situation that's resulted in both men—and many of their two dozen or so employees—being called up as reserves.
"What’s been amazing to witness is how everyone has stepped up to help each other during this time to ensure that we’re operating Blockaid and supporting customers as usual," Ben-Natan told Fortune.
The funding round also coincides with media reports calling attention to the use of crypto to fund the operations of Hamas and other terror groups—reports that forensics firms have called out as overstated but that nevertheless underscore how crypto is used by nefarious actors. Ben-Natan noted that this phenomenon is hardly unique to crypto and is inherent to new technologies whether they're messaging apps, mapping tools, or crypto wallets. He added that the public nature of blockchains means it's also possible to design systems to thwart bad actors.
"Open tools hold vast potential," he added, "and we’re hopeful that more security in Web3 will make it hard for would-be attackers, terrorists, and criminals to extract value."
