Crypto Due Diligence Startup Competing To Bring Transparency To The “opaque” Industry

  • To date, the firm has conducted more than 30 asset manager reviews at the request of institutional investors, with more in the pipeline.
  • This is a change from the many rounds of layoffs that have recently plagued crypto companies caught off guard by the steep market plunge.

A digital asset-focused due diligence startup led by two veterans of traditional finance is one of the few companies in the space to grow its business thanks to a deep-rooted market downturn.

London-based perfORM of Quentin Thom and James Newman has begun conducting deep dives into crypto exchanges and other service providers, in addition to the platform’s bread and butter of performing due diligence on venture capitalists and blockchain hedge funds at the behest of deep-pocketed institutionals. investors plan to support such entities.

Quentin Thom of perfORM | Source: performORM

“It highlights an area that is, rightly or wrongly, perceived as opaque,” ​​Newman told Blockworks.


The startup is a contrary bright spot in an industry beleaguered by layoffs, pay cuts and rescinded job offers as executives jockey to buffer their balance sheets in the wake of the UST stablecoin’s implosion and shockwaves that the demise of crypto lender Celsius has caused to skyrocket. trading desks this month.

Thom – a former executive in Deutsche Bank’s European prime brokerage department serving traditional hedge funds – and Newman – who recently spent around a decade in due diligence for Barclays – have now conducted more than 30 reviews of asset managers, not to mention the growing number of on the sell side, the co-founders told Blockworks. And they’re looking to hire, perhaps in a prime position to recruit talent seconded from other companies that are making cuts.

“It looks like a perfect storm,” Thom said of the market crash. “It’s such a good time, when the reviews are as high as they are today, to sell insurance and reinsurance to what should really be an excellent, interesting and dynamic industry to these institutions that are receding probably a bit on tiptoe.”

James Newman Profile
James Newman of perfORM | Source: performORM

A number of recent reviews for major sponsors have led these backers to write checks to crypto-asset managers, even though recent events have made them reluctant to do so, Thom said, declining to name the entities. involved.

The growth comes on the heels of Celsius and Voyager, the cryptocurrency lender facing deep losses after its hundreds of millions of dollars of margin calls to the industry’s sole star – and now embattled – fund company Three Arrows Capital’s digital asset-driven speculative was not met.

Unlike most companies in the industry, their woes are a potential boon to performance: the company can offer clients a review of how to protect their assets in the event of bankruptcy or large-scale restructuring, where they would likely be. away from the line of conduct. those seeking to recover funds as unsecured creditors.

There is also a long list of crypto skeletons in the closet – money laundering, unequal incentives, liquidity provision and shady governance – that Thom and Newman seek to capitalize on by preventing their clients from falling into such traps.

And that’s especially true with traditional financiers who know the ins and outs of due diligence on stock pickers but are lost when it comes to the crypto arena. From custody to leverage to counterparty risk is a whole different set of questions.

The company is also wrapping up a review of a top European sports league, as well as bringing in an outside firm to do “hardcore deep dives” on potential hires for crypto companies. The team could also help with tokenomics for companies issuing their own digital assets for the first time.

Due diligence reviews are now largely conducted on an ad hoc basis in the space, resulting in a “huge internal effort to manage multiple due diligence investigations,” the company wrote in marketing materials. In most cases, service providers do not see the reports that perfORM assembles in an effort to prevent them from influencing the content.

But the company is working on what it calls an “industry first”: conducting an operational review of service providers which the companies in question can then send to customers for free. And there are scheduled updates every six months in an effort to avoid outdated information.

A potential perfORM client, who was granted anonymity because he is not authorized to speak to the press, said that many startups receive “a lot of hype for being unique”, adding that this operation does something really different – ​​at least when it comes to digital assets.

“In TradFi, due diligence is a cookie cutter; it’s taken for granted,” the source said. “Crypto doesn’t have that, and it’s a big step towards transparency.”

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  • Michael Bodley

    Chief Editor

    Michael Bodley is a New York-based editor for Blockworks, where he focuses on the intersection of Wall Street and digital assets. He previously worked for the institutional investor newsletter Hedge Fund Alert. His work has appeared in The Boston Globe, NBC News, The San Francisco Chronicle and The Washington Post. Contact Michael by email at [email protected]

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Crypto Due Diligence Startup Competing To Bring Transparency To The “opaque” Industry

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