02 September 2022 |

Congress Looking At Crypto Fraud, Alloy Raises At A $1.5B Valuation


Congress turns its head towards crypto fraud

  • On Tuesday, the House Committee on Oversight and Reform released a series of letters addressed to four government agencies: SEC, CFTC, FTC, and DOT; as well as five crypto exchange platforms: Binance US, FTX, Coinbase, Kraken, and KuCoin. These letters represent the committee’s first attempt to understand issues around crypto fraud, with the objective of preparing future legislation to prevent it, and protect consumers. 
  • According to a study released by the FTC in June 2022, 46K people have reported losses of over $1B to crypto scams since the start of 2021. This is, of course, a significant amount of consumers and volume that is concerning to the industry. Recent high-profile collapses such as Terra’s UST and LUNA, as well as Voyager Digital and Celsius have made the problem more apparent. 
  • The inquiry asks the aforementioned government agencies and exchange firms to provide information and documents dating back to 2009 related to their efforts to prevent and pursue fraud related to digital assets, including guidance and regulations, initiatives, best practices, policies such as coin listing due diligence, etc. 

Solid raises $63M for embedded finance hyper growth

  • Solid, formerly Wise, closed a $63M Series B round earlier this week. The fintech-as-a-service company offers digital banking, payments solutions, cards, and crypto products through API integration. It had previously raised a $12M Series A round to focus on product-market fit in 2020. FTV Capital led the round, and existing investor Headline also participated. 
  • The company is focusing on providing an easy to integrate B2B tool for developers through simple APIs that allow implementation of embedded finance. Arjun Thyagarajan, co-founder and CEO, described it as DI/DX instead of UI/UX. 
  • Over the past year the company became profitable, grew its revenue 10x, and doubled its customer base to 100. Seeing these as signs of product-market fit, the firm decided to go after additional funding to enter hyper growth mode and go after mid-market and larger companies in new verticals such as travel, logistics, construction, healthcare, education, and the gig economy. 

Alloy raises at $1.5B valuation

  • Alloy, an identity management/KYC tool for fintech companies, closed a $52M round almost a year after their last raise. In September 2021, the company raised a $100M Series C at a $1.35B valuation, becoming a unicorn. As you can see, their most recent round was a lot smaller, and its new $1.55B valuation is a 15% increase from their previous valuation
  • The intersection between identity fraud and fintech is an interesting space at the moment, with a direct correlation to the newly minted interest on digital asset fraud by Congress that we are sharing today. With regulatory and compliance requirements increasing in order to prevent fraud, firms like Alloy might receive a big spotlight amidst expectations of new legislation. The new funds are reportedly being directed towards global expansion and growth acceleration. 
  • The round was led by Lightspeed Venture Partners, who also led their last raise, and with participation of other existing investors including Canapi Ventures, Bessemer Venture Partners, Avid Ventures, and Felicis Ventures. 
  • Is it possible that “inside rounds” led by existing investors are becoming a new trend as a response to recent macroeconomic conditions and new capital allocation strategies by VC firms? Just this week Solid and Alloy both closed their rounds with this structure, we’ll see if other firms follow.