This article has been updated to correct that GreatPoint Ventures, not General Motors, led the funding round.
United States-based blockchain startup Spring Labs has raised $23 million in a Seed A funding round, according to a press release on June 12.
Among the investors for this seed A funding round — led by GreatPoint Ventures — were Galaxy Digital, the cryptocurrency investment bank founded by crypto enthusiast Michael Novogratz, and automotive giant General Motors (GM).
Spring Labs will purportedly use the funds to improve its blockchain-based platform Spring Protocol and develop three new fraud protection products that are designed to combat fraud in the auto financing sector.
According to the press release, the new products are Spring Verify, Spring Defense, and Spring Protect, which are designed for identity verification, fraud monitoring/mitigation, and loan stacking prevention, respectively.
The products will purportedly provide information to lenders anonymously, for the purpose of financing activities such as unsecured consumer lending, small business lending, credit card issuance, and secured auto lending.
According to the report, auto financing fraud has nearly quintupled from 2011 to 2018, purportedly becoming a relatively easier way to commit fraud as other credit options become more secure than auto lending options.
The report estimates that industry losses range between $4–$6 billion each year, largely due to auto credit established with fake ID credentials. Somewhat like a clone firm scam, Spring Labs says that scammers will typically mix in some real information along with the fake, in order to establish falsified credit accounts.
As previously reported by Cointelegraph, GM announced that it was joining the Spring Founding Industry Partners (SPIF) Program in February. The SPIF is reportedly a project launched by Spring Labs which aims to provide security solutions through research and collaboration.
Chief strategy officer at GM Mike Kanarios commented on GM’s decision to join the project as a partner, saying:
“As the captive finance arm for General Motors and one of the world’s largest auto finance providers, we are continually innovating and evolving our fraud prevention and detection capabilities to better serve and protect our customers and dealers.”