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A fintech startup with an eye on decentralized finance (DeFi) has raised a $6 million strategic round—with crypto exchange Coinbase and S&P Global as major investors.
Privacy-focused Credora—formerly known as X-Margin—this week announced that the money would be used to “build transparent credit markets.” Credora monitors over $4 billion of borrower assets with coverage across the majority of CeFi and DeFi venues.
Referencing the collapsed digital asset hedge fund Three Arrows Capital (3AC) and failed centralized crypto lenders such as BlockFi and Voyager, Credora said it would accurately underwrite and monitor borrowers—but without revealing sensitive information.
Credora added that “Information asymmetry has been one of the root causes of recent credit events like 3AC and Alameda.” This is because collapsed crypto companies such as 3AC were unwilling to share basic financial information, which made it harder for them to determine the nature of risk.
“In the absence of data, it was unclear what the size or nature of their risk was, and lenders relied mostly on reputation and relationships to determine creditworthiness,” Credora continued in an email to Decrypt.
The idea, Credora says, is that borrowers can use their services to validate financial information in real-time while keeping sensitive details private.
— Credora Platform (@CredoraPlatform) April 25, 2023
Credora claims that by privacy-preserving technology, lenders’ can properly evaluate credit risk in real-time. It said it would use the money from Coinbase and other investors to “build institutional rails for credit and enhance Credora’s novel private computation technology that helps accurately underwrite and monitor borrowers.”
Last year, the crypto market was hit hard by the collapse of crypto project Terra and later the bankruptcy of mega digital asset exchange FTX. The ripple effects of the carnage are still being felt, with a number of crypto companies with exposure to the two entities having to shut down.
3AC was one of the major companies hit hard: the Singapore-based firm, which invested client cash in new crypto projects, went bust in July after a court in the British Virgin Islands ordered it to liquidate.
Credora claims that with its privacy-preserving technology, crypto companies can be more transparent—and prevent such failures.
Other investors in Credora include Spartan, Amber Group, CMT Digital, Hashkey, GSR, and KuCoin Ventures.
Credora claims to have facilitated over $1B in loans across various borrower types.