Non-fungible token (NFT) security startup Tokenproof announced on Tuesday that it raised $5 million in seed funding, led by Penny Jar capital, for its solution to the problem of scams that steal crypto collectibles.
Alfonso Olvera, CEO of Tokenproof, told CoinDesk, “A lot of people talk about the utility of NFTs, but there haven’t been the rails for the infrastructure to be able to unlock that utility in the real world.”
Tokenproof is building a way for NFT holders to prove they own their Bored Apes without putting that high-value NFT at risk. CEO Alfonzo Olvera said that this utility is becoming more and more important as the number of real-world ways for holders to get benefits from ownership, like growing to events, grows.
But each new integration gives phishers and scammers who want to steal money new ways to do it. Olvera says that when users connect their hot wallets to the outside world, they often put their NFTs and other valuable assets at risk.
Threats of attacks on NFT communities, like the one that happened last month to the Bored Ape Yacht Club, have caused products that integrate NFT to increase their security. The Sandbox, a Metaverse game company, hired BrandShield, a security company, last month to protect users from NFT phishing scams, which have cost users over $100 million in the last year, according to a report from Elliptic.
The real NFT is kept safe from scammers in cold storage by Tokenproof’s identity verification system. Through an app, users can still prove they own the NFT and get access to all the benefits that come with it.
Olvera said that Tokenproof is trying to “reduce the risk” that NFT holders face when they try to unlock the real-world use of their digital collectibles. He said that the opportunities are growing, but that “risk also grows proportionally” with them.
Corazon Capital, 6th Man Ventures, Canonical Crypto, and a number of angel investors, such as Sebastien Borget, Mark Cuban, Keith Grossman, and Patricio Worthalter, all took part in the round.
