Categories: Bitcoin Business

Two Sigma Ventures backs cryptocurrency security startup Trustology

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NEW YORK (Reuters) - The venture capital arm of quantitative hedge fund manager Two Sigma has backed Trustology, a young company that develops technology to help investors safeguard digital assets such as cryptocurrencies, the companies said on Thursday.

FILE PHOTO: A collection of Bitcoin (virtual currency) tokens are displayed in this picture illustration taken December 8, 2017. REUTERS/Benoit Tessier/File Photo

Two Sigma Ventures led an $8 million seed round in the London-based startup, with participation from blockchain company ConsenSys.

Security is one of the biggest risks facing the nascent cryptocurrency market, where investors trade digital coins online, often using pseudonyms. Around $1.7 billion worth of cryptocurrency has been stolen between 2012 and the first half of 2018, according to financial research firm Autonomous NEXT and Crypto Aware.

Trustology will use the funding to offer its service for more types of cryptocurrencies and to expand globally, the company’s CEO, Alex Batlin, said in an interview.

Trustology hopes to make it simpler for investors to secure their virtual assets through its product which stores “private keys” in hardware security modules, or highly secure processors that are specifically designed to safeguard passwords and digital keys. Private keys are alphanumerical characters that give users access and control over their cryptocurrencies.

Matt Jacobus, a venture partner at Two Sigma Ventures, said in a statement that a similar solution was needed “to develop a larger, institutional trading ecosystem around digital assets.”

Trustology originally designed the product with banks in mind as potential customers, but has been focusing more on individual investors and cryptocurrency hedge funds, according to Batlin.

“The original thinking was we would build the tech and sell to the banks,” he said. “They are not moving as quickly as we are and we have quite a lot of demand from individuals, as well as crypto funds.”

Batlin was previously at UBS Group AG and Bank of New York Mellon Corp where he headed initiatives on blockchain, the technology underpinning cryptocurrencies.

He said he has not seen a decrease in demand for his company’s products even though cryptocurrency prices were rocked by a crash this year.

The price of bitcoin soared to around $20,000 last December and has since fallen more than 80 percent. The total value of all cryptocurrencies is now about $121 billion, down from about $830 billion at the start of the year, according to cryptocurrency data provider Coinmarketcap.com.

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