Former traders from Wall Street firms Jane Street and PIMCO have raised $15 million for a new proof-of-solvency protocol called Proven. The protocol uses zero-knowledge proofs to reveal an institution's assets and liabilities without revealing customers' personal data. The initial $15 million seed round was led by crypto-oriented venture capital fund Framework Ventures.
Proven aims to make centralized exchanges, stablecoin issuers, and other asset managers in the crypto space more transparent while protecting customer privacy. The team has already lined up clients such as CoinList, Bitso, TrueUSD, and M11 Credit.
The move comes after several high-profile fraud cases in the crypto space, including the collapse of Sam Bankman-Fried's crypto exchange FTX. Proof-of-solvency protocols like Proven aim to increase transparency to prevent such incidents from happening again.
However, some experts have raised doubts about whether zero-knowledge proofs can ensure transparency and prevent fraudulent activity. Matthew Niemerg, founder of Aleph Zero blockchain, said that zero-knowledge proofs become limited in auditing the solvency of a firm unless all liabilities are published on-chain. He also stated that cryptography alone may not solve the problem if the party being audited is deceitful.
Despite these concerns, the Proven team believes that their protocol can help crypto firms regain the trust of the public while simultaneously protecting privacy. Richard Dewey, co-founder of Proven, said that the last few months have highlighted the issue of fostering trust with customers while maintaining a necessary level of privacy, which Proven aims to solve.
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Zero Knowledge Proofs
Fund Raising
