Toronto-based FinTech startup Ledn has raised $3.4 million CAD ($2.7 million USD) in seed funding, as the company looks to fuel the expansion of its digital asset savings and credit platform amid a steadily growing rise in registered users.
Ledn’s stated mission is to reinvent financial services around crypto assets.
Founded in 2018, Ledn offers Bitcoin and U.S. Dollar Coin (USDC) savings accounts and Bitcoin-backed loans (USDC is a stablecoin backed by Coinbase and pegged to the US dollar). The startup claims to have issued the first Bitcoin-backed loan in Canadian dollars in 2018.
The round was led by White Star Capital as part of its Digital Asset Fund. White Star Capital is a New York City-based venture capital and private equity firm that focuses on early growth-stage tech companies. White Star’s Digital Asset Fund invests in crypto-networks and blockchain-enabled business. The new Ledn investment marks the fund’s third to date.
Ledn’s round also saw participation from Darrow Holdings, Coinbase Ventures, Global Founders Capital, CMT Digital, and Kingsway. The $3.4 million brings Ledn’s total funding to date to $4.7 million CAD.
Ledn’s stated mission is to reinvent financial services around crypto assets. It offers Bitcoin-backed loans, where customers can put up their Bitcoin and receive fiat currency in exchange. According to Ledn, one of the advantages of this type of loan is customers getting to keep “all of the upside” of their Bitcoin position. Once the loan is repaid, the Bitcoin is returned to the customer.
Ledn also offers Bitcoin and USDC savings accounts, in partnership with Genesis Capital, which touts itself as the world’s largest digital asset lender. The accounts allow customers to earn interest on their Bitcoin and USDC holdings.
According to Ledn, the startup is already profitable, and its number of registered users is rising 25 percent month-over-month. The company says it serves thousands of customers in over 100 countries. A spokesperson for Ledn told BetaKit over 60 percent of its registered clients are from emerging economies. Ledn also claims to have the highest interest rates available in the digital asset lending space, at 6.1 percent for Bitcoin and 12.25 percent for USDC.
With a focus on regulatory compliance, Ledn aims to bridge the gap between traditional and digital asset-based financial services.
The startup recently underwent a formal proof-of-reserves attestation by an independent accounting firm, Armanino LLP. Proof-of-reserves is used as a way to allow customers to confirm the service they are using does in fact hold their crypto assets, on-chain. It is touted as a tool to earn and retain customer trust, in a space that has faced much uncertainty and turmoil.
Regarding its proof-of-reserves report, Ledn stated plans to allow its customers to verify that their digital assets are reserved, through Armanino’s TrustExplorer audit and assurance platform.
“We believe that proof-of-reserves reviews that cover all assets and lending activities should be an industry standard across lending platforms,” said Mauricio Di Bartolomeo, Ledn’s co-founder and CSO.
“Over time, clients have become painfully aware of why it’s important, and their preferences are evolving to demand transparency. We are making proof-of-reserves reviews a part of our standard processes,” he added.
Ledn plans to use the proceeds from its latest round to accelerate its growth and pursue expansion into global markets. The startup told BetaKit it also plans to use the capital to accelerate its regulatory compliance processes as well as its marketing and educational efforts around its own products and the value of Bitcoin in general.
“Over the past three years, we’ve focused on building a simple and secure platform that allows clients to grow their digital wealth through savings and credit products,” said Adam Reeds, Ledn’s co-founder and CEO. “As we expand on our product offering with no fee trading rolling out in the next several months and go deeper into new markets, we couldn’t be more excited to work with this select group of top venture investors that believe in our mission.”
“The Ledn team has built a robust platform that has achieved substantial scale in a short amount of time,” said Sep Alavi, general partner at White Star Capital Digital Asset. “The traction Ledn has achieved is nothing short of impressive and we are excited to help in expanding both product offering and market expansion.”
Ledn plans to triple the size of its team and hire for 20 additional roles over the next four months and will “likely” raise a Series A round later this year.
Photo by Dmitry Demidko on Unsplash