Sardine, a startup that provides what it calls “fraud protection as a service,” launched out of stealth today alongside news of $4.6 million in seed funding. Sardine was co-founded by CEO Soups Ranjan, formerly director of data science & risk at cryptocurrency exchange Coinbase.
Targeted at crypto and fintech businesses, Sardine’s platform takes a multi-pronged approach to combating potential fraud. The system essentially creates a “foundational fraud score” for each user of the business that's signed on to Sardine's service, such as a crypto exchange. To do this the company claims to collect data from a bevy of sources, including cross-referencing bank accounts, credit card info, social media, and other sources. It also says it can help companies guard against account takeovers, like SIM swaps.
“Banking-as-a-service platforms are leading a generational shift towards better financial services, making financial products more accessible than ever—that is, if fraud doesn't kill them first,” Ranjan told Decrypt. “That's why we launched Sardine to help digital businesses, like cryptocurrency exchanges and neobanks, onboard truly authentic users by providing a holistic approach to fraud detection”
The idea is to help crypto services stop fraud before it starts. And, in crypto, fraud happens a lot. According to a recent report from blockchain analytics firm CipherTrace, bad actors raked in $1.9 billion last year from crypto users and businesses, most of it due to fraud. In 2019, it was even more: $4.5 billion.
Ranjan suggested that many current anti-fraud ecommerce solutions are not primed for crypto exchanges and fintech platforms. Sardine, he said, is better equipped to detect fraud in such businesses and avoid false positives along the way. His new firm already counts such companies as Moonpay, Dharma, Relay Financial, and Unifimoney amongst its customers.
The $4.6 million seed funding round was led by XYZ Ventures, and includes participation from Coinbase Ventures, 11.2 Capital, and Village Global; Sardine incubated at Sweat Equity Ventures. The round also includes more than 25 angel investors, such as former WealthFront President and CEO Adam Nash, Greylock partner John Lilly, and Scalar Capital co-founder and Managing Director Linda Xie.
Alongside Ranjan, Sardine is staffed by former early employees of tech giants like PayPal and Uber, with their diverse fraud-fighting experience coming together for this new service. Ranjan saw the rising threat of crypto fraud firsthand at Coinbase, where he worked from 2015 to 2019, and told Decrypt that he co-founded Sardine as a way to help fintech startups battle the myriad threats they face.
“Cryptocurrencies are highly liquid and not reversible, and this means crypto exchanges get hit by the most sophisticated fraud attacks,” said Ranjan. “I had the opportunity to fight firsthand against these ‘bellwether’ attacks, many of which brought down our competitors and are only now making their way to other financial institutions.”
“I learned a lot during my time at Coinbase, but quickly realized that new fintech companies were left to navigate the massive burden of tackling fraud and risk on their own,” he continued, “so my team and I launched Sardine to help catch fraud from day zero.”