Coinbase Ventures Joins $23M Funding Round for Crypto Custody Firm

Curv, a company that provides increased secrecy when it comes to holding crypto assets, has closed a $23 million Series A funding round. 

Announced Wednesday, the crypto custody tech provider, which uses a technique called multi-party computation (MPC), received investment from CommerzVentures, Coinbase Ventures, Digital Currency Group (DCG), Team8 and Digital Garage Lab Fund.

Curv closed a $6.5 million seed round in February of last year, which makes the total raised so far almost $30 million. Backing from the likes of CommerzVentures (the venture arm of German banking powerhouse Commerzbank and the main investor in the Series A) and Coinbase Ventures suggests MPC is popular with both the traditional and crypto space. 

“We are now one of the highest-funded custody technology companies, and have the largest funding to date for MPC,” said Curv CEO Itay Malinger. “It’s a strong signal that the market is looking at MPC, and that there’s still a lot of innovation to be made in the custody and security space.”

Stepping back, blockchains are based on public key infrastructure (PKI), which means your identity is determined by a set of digits called a public key that allows you to receive funds. That public key is a mathematical function of another set of digits, a private key, which must be known in order to send funds.  

Instead of a single private key, MPC involves several parties each with different strings of numbers that interact using a protocol. The process creates a public key to receive funds, and a way to sign transactions in order to send funds. This latter part is kept distributed and separate at all times. 

“There is not any point in time or space where there will actually be a private key,” said Malinger. “MPC breaks that paradigm, so you don’t have additional layers of security like guards or cameras or World War II bunkers that can take 24 hours to get at.”

Curv is not alone in employing MPC. Other firms specializing in digital asset custody and using some form of the technology include GK8 out of Israel and Libra Association member Anchorage.

Malinger pointed out some other MPC custody firms in the market make use of hardware security modules (HSMs), while Curv would rather trust mathematics.

“Our approach is that trusting math is better than trusting an engineered piece of hardware,” Malinger said. “Math is the foundation of cryptography; hardware is an engineering effort, not a mathematical effort.”

Two models

Onerous service level agreements (SLAs) that come with some cold storage solutions may not be ideal for the fast-paced trading world. Curv has two models, explained Malinger, one in which the MPC secrets are online, and one where they are offline. This means the customer can decide how difficult it should be to move assets around. 

“You can say there must be 15 employees to approve a transaction, or you can say I want this hot wallet machine to approve transactions of up to $10,000. So you get much more flexibility and the ability to dictate how difficult it should be to move assets around,” Malinger said.

New York-based Curv, which has about 30 staff and an office in Tel Aviv, said the funding will partly go towards tX, an elite group of cryptographers and engineers who will use Curv’s keyless technology to push international growth.

“Few areas within fintech are as exciting as digital assets. Tokens and coins are increasingly finding their way into asset managers’ books,” CommerzVentures managing partner Stefan Tirtey said in a statement. “Curv is unlocking this market with [its] industry-leading technology and we are happy and excited to partner with Itay, Dan [Yadlin] and their impressive team.”

Existing Curv customers include investment firm Franklin Templeton, trading platform eToro and Genesis Trading, owned by CoinDesk parent DCG. Asked if Coinbase might be the next exchange to start using Curv’s MPC tech, Malinger politely declined to comment.

“We are speaking to exchanges, and are also in advanced conversations with players on Wall Street and across the globe,” he said.