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Exclusive: Former BlockFi CSO raises $5M for crypto recovery startup

Illustration of a key floating in a glass dome.

Illustration: Maura Losch/Axios

Station 70, a crypto recovery and backup startup founded by BlockFi's former chief security officer, raised $5 million in seed funding, it tells Axios exclusively.

Why it matters: The company helps crypto owners that have lost access to their wallets — an all-too-common problem.

Zoom in: Station 70, whose seed round was led by Castle Island, acts as a kind of secure password manager for institutional crypto keys.

  • It focuses on self-custody wallets, which surged in popularity in the aftermath of FTX.
  • Considered a more secure storage method, self-custody wallets are less user-friendly and generally lack a "forgot my password" option.

How it works: Station 70 requires a quorum to confirm a key backup request is legitimate.

  • The default requires three of five authorized users within the customer's organization. Each user also is equipped with a YubiKey — a physical cryptographic device that helps verify identity.
  • The user is then sent an encrypted backup. Station 70 itself has no access to the actual keys, says CEO Adam Healy.
  • In the case of a wallet provider outage or hack, Station 70 users can also move their keys to a different wallet without downloading the key onto a device.

What they're saying: "There are backup keys sitting on a USB drive or laptop in the CFO's safe in his office, and we want to avoid that," says Healy. "We want to mature the industry."

  • The laptop could break, a hacker could steal the keys, and it could be a new nightmare if an employee decided to go rogue.

The big picture: Self-custody wallets are not foolproof. Over $100 million was stolen after North Korean hackers broke into decentralized, self-custody wallet Atomic last summer.

  • In 2013, a hard drive containing the keys to a bitcoin stash now worth over $555 million was mistakenly binned, according to its owner, IT engineer James Howell.
  • Over a decade later, he is still petitioning to excavate the landfill that he claims houses his golden goose.

More egregiously, crypto custodian Prime Trust filed for bankruptcy last year in due to its inability to access a wallet that houses tokens now worth over $85 million.

  • Prime Trust lost the physical, engraved plates needed to access the wallets.

Between the lines: Launched in 2023, Station 70 currently serves only Fireblock customers, though it plans to expand to other wallets and to retail customers.

  • Fireblocks, Notation Capital, SCB 10X and CoinShares joined lead investor Castle Island in the round.
  • The company formally closed the round in November, valuing it at $20 million.

Zoom out: Station 70 isn't the only one out there with a wallet recovery solution, with recent entrants also relying on a social aspect.

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