Published:
Jan 23, 2023
Author:
Sarah Parsons Wolter
Share:
Blockchain may be best known for transaction transparency, but the US government has quietly been building up their own case…from a very different angle. Uncle Sam’s system for tracking cross border flows of funds is far from a decentralized, immutable ledger, instead housed at a database in an unassuming nonprofit known as TRAC: the Transaction Record Analysis Center.
What began as a 2014 deal with Western Union to address cross-border drug trafficking has exploded into a resource that more than 600 law enforcement entities can tap into at their whim – tracking payments via money services from the US to every corner of the world.
Branded as a “law-enforcement investigative tool,” any considerations surrounding the implications for the average user seem to have been overshadowed. Courts have ruled that customers cannot expect the same treatment from money transfer services as they can from banks, which inevitably evokes questions for immigrants and other individuals with family overseas that could be disproportionately affected by leveraging non-institutional channels.
For those who value privacy, blockchain-based solutions may be looking more and more appealing to keep the government from collecting your sender, recipient, and transaction data on every large international (or domestic!) transaction. After this week’s Miss Universe pageant, at least we know where El Salvador stands.
Portfolio News
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Mattilda ranks as the largest Seed deal in LatAm in Q4'22 - Latin American fintech seed deal activity reached 33 deals in Q4 2022, almost doubling from previous quarter levels. Seed activity for the year totaled at 112 deals, exceeding projections based on first three quarters pace by 3.5%. Read more
Fireblocks enlists crypto protection firm Coincover for third-party key recovery service - Fireblocks, which employs a clever key sharding technology called multi-party computation, encourages customers to independently back up their keys and combine that with third party disaster recovery services from Coincover, one of the first crypto firms to work with Lloyd's of London. Read more
Embroker launches ONE by Embroker to simplify business insurance for startup founders - ONE by Embroker is a universal application that utilizes AI and machine-learning technologies to generate business insurance products tailored to specific industry needs. The streamlined process focuses on critical business information and removes the need for unnecessary and redundant questions, enabling brokers and startup founders to get quotes for a comprehensive bundle of products instantly. Read more
2023 SXSW pitch finalists announced: 40 innovative tech startups - Congratulations to portfolio company Boto (a platform for creating no code bots and actions in crypto) for being named one of the SXSW 2023 pitch finalists in the metaverse and web3 category. Read more
1inch Network enters the hardware wallet business - 1inch's hardware wallet is undergoing its final stages of development and testing before being released for sale later this year. The hardware wallet will be a physical device that claims to offer a secure way to store users' private keys offline, and comes alongside 1inch's existing web-based wallet. Read more
Data On Display
Little-known surveillance program captures money transfers between U.S. and more than 20 countries - Hundreds of federal, state and local U.S. law-enforcement agencies have access without court oversight to a database of more than 150m money transfers between people in the U.S. and in more than 20 countries, according to internal program documents and an investigation by Sen. Ron Wyden. Read more
Industry News
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Alibaba seeks to boost sales abroad with buy now, pay later - The Chinese internet giant started allowing shoppers in Europe to pay for purchases on its international e-commerce platform only after receiving their merchandise, in an attempt to boost global sales as growth at home slows. This week, a fintech company called Splitit Payments said it would join with Ant Group’s Alipay to provide a delayed-payment option to customers of AliExpress, an online marketplace operated by Alibaba outside of China. Read more
What to know about extraordinary measures as debt ceiling hits - The U.S. has reached its $31.4t debt ceiling, the Treasury Department announced on Thursday, with no obvious deal in sight. Treasury Secretary Janet Yellen in a letter to Congress said that Treasury was instituting a "debt issuance suspension period" beginning Thursday and running through June 5. In addition, Treasury will not be able to fulfill certain investments, including to the Civil Service Retirement and Disability Fund. Read more
Crypto lending unit of Genesis files for U.S. bankruptcy - Genesis' lending unit said it had both assets and liabilities in the range of $1b to $10b, and estimated it had more than 100,000 creditors in its filing with the U.S. Bankruptcy Court for the Southern District of New York. Genesis owes its 50 biggest creditors $3.4b, according to calculations from the bankruptcy filing. Its largest creditor is crypto exchange Gemini, which it owes $765.9m. Read more
Robinhood launching new media arm led by Joshua Topolsky - Retail trading platform Robinhood is launching an independent media brand called Sherwood that will be led by veteran tech editor and media entrepreneur Joshua Topolsky. The entity will build on the success of Robinhood's popular daily markets newsletter, Snacks, and will serve as a branding and customer acquisition tool. Read more
Founders of bankrupt crypto hedge fund 3AC mocked after pitching new venture - Su Zhu and Kyle Davies are seeking to raise about $25m for a crypto exchange called GTX that will focus on trading in crypto claims, according to a pitch deck for the proposed business seen by Bloomberg News. They’re teaming up with the founders of CoinFLEX, a digital-asset exchange that filed for restructuring in the Seychelles in August. Read more
Fed directs big banks to disclose how they are preparing for climate change risks - The six largest banks in the U.S. have until the end of July to show the impact that climate change could have on their operations, according to details of a pilot program the Federal Reserve unveiled this week. Under the review, the institutions are to show the anticipated impact that events such as floods, wildfires, hurricanes, heat waves and droughts could have on their loan portfolios and commercial real estate holdings. A hypothetical scenario focuses on events in the Northeastern U.S. Read more
Congress' FTX problem: 1 in 3 members got cash from crypto exchange's bosses - Most of the politicians who responded said they handed it over to charities to remove the taint of contributions from executives such as former FTX CEO Bankman-Fried, whose federal fraud charges also include an accusation that he violated campaign-finance laws. Others have revealed they had conversations with the U.S. Department of Justice about setting aside the money until it can be dropped into a fund to compensate FTX victims. Read more
Federal Reserve probes Goldman's consumer business Marcus - The Federal Reserve is investigating Goldman Sachs's consumer business to determine whether the bank had appropriate safeguards in place as it ramped up lending at Marcus. Marcus has racked up steep losses—more than $3 billion since 2020. The Fed investigation and related issues could lead to additional costs. Read more
Buy now, pay later demand soars among all age groups in the UK - Despite the knock BNPL has had in the venture world, demand for BNPL deals has surged among all age groups in the UK, including older people (65+), who find themselves squeezed by the cost of living crisis and in need of short-term credit. Worryingly new data also shows late fees are on the rise across the board. Read more
Select Financings
Amberflo.io - California based usage-based pricing startup raised $15m in Series A funding led by Norwest Venture Partners. Read more
Arch - New York based lending platform raised $2.75m in pre-Seed funding led by Castle Island Ventures and Tribe Capital. Read more
Chord - New York based commerce platform-as-a-service raised $15m in Series A funding led by Bright Pixel Capital and Eclipse. Read more
CloseFactor - Palo Alto based go-to-market operating system for revenue teams raised $15m in Series A funding led by Vertex Ventures and Sequoia Capital. Read more
ContractSafe - California based contract management platform raised $27.5m in new funding led by Five Elms Capital. Read more
Core10 - Tennessee based provider of lending and account opening products raised $6.5m in Series B funding led by Patriot Financial Partners. Read more
CyberX - Singapore based digital asset market maker raised $15m in Series A funding led by Foresight Ventures. Read more
Diva - Decentralized ethereum liquid staking protocol raised $3.5m in Seed funding led by A&T Capital. Read more
Elixir - California based DeFi market maker raised $2.1m in Seed funding led by FalconX. Read more
Grazzy - Austin based tipping, pay and tax compliance platform raised $4.3m in Seed funding led by Next Coast Ventures and Tuesday Capital. Read more
KLYM - Bogota based SME financing startup for LatAm raised $27m in growth funding led by JPMorgan Chase and International Finance Corp. Read more
Komunal - Indonesia based fintech platform for rural banks raised $8.5m in new funding led by East Ventures Growth Fund. Read more
Kwara - Kenya based credit union digitization company raised $3m in Seed funding led by DOB Equity. Read more
Link - San Francisco based provider of open banking API solutions raised $20m in Series A funding led by Valar Ventures. Read more
Oro - Malaysia based B2B e-commerce platform raised $13m in new funding led by Zubr Capital. Read more
Parfin - London based web3 infrastructure provider raised $15m in Seed funding led by Framework Ventures. Read more
PeopleFund - South Korea based P2P lender raised $20m in Series C funding led by Bain Capital. Read more
PhonePe - Bengaluru based payments and financial services firm raised $350m in growth funding led by General Atlantic. Read more
SphereOne - Austin based crypto payment platform raised $2.5m in Seed funding led by Distributed Global. Read more
Sprinque - Netherlands based B2B payments platform raised €6m in Seed funding led by Connect Ventures. Read more
ThriveCart - Texas based provider of cart and funnel software for SMEs raised $35m in new funding led by LTV SaaS Growth Fund. Read more
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