Simon Grunfeld, Cogni's Head Of Web 3, on Crypto/NFT Security, FTX, Celcius, And Neo-bank Benefits.

The pandemic not only drove a surge of retail traders into the stock market and cryptocurrency industry, increasing the demand of non-fungible tokens, but it also significantly aggravated cyber-security issues, with individuals and companies relying on digital infrastructure more than ever before.

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In terms of cryptocurrency, the 2022 bear market that followed the massive COVID-19 bull run exposed high levels of incompetence and/or fraud within the sector, raising the need for increased cyber-security to new heights and introducing the phrase "not your keys, not your crypto" into the mainstream.

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Cogni, a neo-bank that takes pleasure in enabling individuals to spend, keep, and manage both cash and digital assets on a safe platform, has eliminated the hazards associated with centralized exchanges and even traditional banking with a decentralized architecture built on Web 3. The platform employs multi-signature security and data encryption, and users can take self-custody of their crypto and NFTs after completing a Know Your Client (KYC) process.

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With the amount of time individuals spend online and the number of apps and websites they rely on, identity security is critical. "This is a cause of a lot of difficulties that the U.S. government is currently attempting to remedy. In fact, there is now widespread agreement that new KYC standards will be implemented in the Web 3 environment this year, and many people are scrambling to figure out how to address it," Cogni Head of Web 3 Simon Grunfeld told Trade Algo.

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According to Grunfeld, Cogni has already overcome that challenge by "using a Solbound NFT to mark your wallet with information that we handle as a regular Web 2 company, but we transmit all of that information into a Web 3 environment."

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Grunfeld, a licensed CTA with experience in capital markets, IT, crypto, blockchain, and fintech, will join Cogni in July 2022. Cogni is a multi-chain wallet created for the current lifestyle.

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"I think that's what it actually means to me as the CEO of Web3 - protecting the internal lifestyle of an individual (who) wants to preserve all access to all of their assets in a single app."

"For everyone that's banking, it simply means to be able to use the same app you're using for banking, but to use it to custody all your digital assets as well. Not just your fiat, but also your cryptocurrency (and) NFTs," he continued.

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"Unlike centralized exchanges like Coinbase, Kraken, Gemini, or Binance, when users come to us, they get a non-custodial wallet, which means they own the keys to it," Grunfeld stated.

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"The biggest advantage we have over the centralized exchanges is that first of all, we do provide a great deal of privacy. We don't know what you have in your wallet, what access you have, and what access you don't have. Secondly, if those centralized exchanges fail, you become a creditor, and you have to track them down. If Cogni, or any neo-bank for that matter, goes belly up, one of your fiats is protected up to $250,000. It is impossible for us to take your digital assets because we do not have access to them."

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“Neobanks are much safer for end users compared to centralized exchanges, simply because funds are sanctified and they have access to them,” he said.

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It's important for you to trust Coinbase and Gemini that they're going to follow proper procedures and protocols. As history has shown, it's a bit of a gamble."

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The bear market caused numerous crypto trading platforms to go bankrupt, which in turn led to fear spreading throughout the crypto sector.

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Simon Grunfeld On The Collapse Of Sam Bankman Fried’s FTX And Celcius

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Grunfeld detected warning signs prior to the bankruptcy filing of crypto software Celcius CEL/USD+0.37%+ Free Alerts in July 2022. Around a year before Celcius was delisted, Grunfeld approached Celcius on behalf of a colleague who wanted to transfer a significant account to the trading app, but Celcius replied they weren't interested, according to Grunfeld. "Something stinks if you're attempting to bring genuine business to an institution that says, 'we're not interested,'" he added.

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They have a ton of connections within the world of casinos and online gambling, and I'm 99% convinced that's exactly where they were making their money if it wasn't just a massive Ponzi scheme, according to Grunfeld, who doesn't personally know the co-founder of Celcius, Alex Mashinsky, or many other people involved.

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Making comments on the FTX issue, Grunfeld said it was an example of inexperienced individuals operating an organization that was supported by huge U.S. investors, who were captivated by Sam Bankman-Fried. "From the start, there were a lot of red flags. Anyone who sits on a gaming console and plays games during a business meeting knows something is wrong." "You had carelessness, you had apparent fraud, you can't trust a word this person says anymore," Grunfeld explained.

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"It's a good thing for Cogni, to be honest," he said, adding, "it only validates our thesis that at the end of the day, digital assets and the world of Web 3 should be manage with the owner, not a third party."

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"People choose to keep their assets with a platform because they feel comfortable trusting someone else," Grunfeld explained. But, according to Grunfeld, the purpose of these exchanges is not to protect the assets of investors. "They are only concerned about generating money. So, they'll take shortcuts, they'll do fugazi things like we've seen with FTX, with Celcius, with Voyager, with Luna, with UST, the list goes on and on."

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